Use of language matters, whether it’s talking about taxes or “what to do about mom and dad”

kevin | Decision Making | Thursday, April 5th, 2007

Tax cuts. I hesitate to even get into this discussion, but given that we are at our core a business committed to helping people make decisions, I just can’t resist what seems to me like an object lesson in how the information we pick changes the nature of the decision. The burr under my saddle comes courtesy of an editorial in the Wall Street Journal called "The Coming Tax Increase".

Already you can tell what the WSJ thinks by how they framed what’s gong on. Not . . .

Return to pay as you go
Return to fiscal sanity
Democrats step up to balancing the budget

. . . but the coming tax increase. But hey, it’s their editorial, and they can from it any way they want. So here’s what they have to say . . . [read]

The new House and Senate majorities have now passed budget resolutions — five-year budget outlines — that include the repeal of the Bush tax cuts of 2001 and 2003. Republicans are overstating things when they imply this means a tax increase this year. The Bush tax cuts don’t expire until the end of 2010, and Democrats aren’t about to tip their tax hand before the 2008 election. But under the cover of zero media attention, Democrats are constructing a budget process that will make a tax increase all but inevitable.

The ploy here is "pay-as-you-go" budget rules that Democrats are implementing in the name of "restoring fiscal responsibility." A few journalists even quote that phrase with a straight face. But everyone in Washington knows that "paygo" is all about making tax cuts more difficult, and not about slowing the growth of spending.

Under "paygo," extending the Bush tax cuts is itself a tax cut that must be offset either with cuts in entitlement spending or with other tax increases. And paygo merely constrains the growth of "new" entitlements. Entitlement rules already in place don’t count under paygo rules, so Medicare, Medicaid and the new "children’s" health-care program (SCHIP) will keep growing on autopilot. So-called discretionary spending — defense, education, highways, etc. — isn’t affected at all.

No surprise here. A little pissy but accurate. Where it gets dodgy is the next party.

But the lower rates also provided a spur to incentives that led to a rebound in investment, stock prices and ultimately in economic growth, individual incomes and corporate profits. This produced, in turn, a very sharp rebound in federal tax receipts — to 17.6% of GDP in fiscal 2005 and 18.4% in 2006. The Congressional Budget Office — now run by Democrats — predicts it will reach 18.6% in fiscal 2007.

This is slightly above the 40-year historical average of 18.3%, and CBO says it will climb again in each of the next two years before dipping in 2010. Despite the Bush tax cuts — or we should say because of them — federal revenues are above where they’ve been for most of the last half century. The government is far from starved for cash. [emphasis added]

Lets’ stipulate for a moment that the Bush tax cut did spur growth, and that the tax take as a percentage of GNP is approaching historical highs (and will go higher still if the tax cuts aren’t renewed). What’s up with the bit about ". . . the government is far from starved from cash"?

Without putting too fine a point on it, starving occurs when something gets fewer calories than it needs to sustain existence. Unless I missed something, the government has been running deep in the red for the last six years. So while it is true that the federal tax receipts amount to a very, very large number, federal expenditures are much larger. In other words, the beast needs more calories than it’s getting. Sounds like at least malnutrition to me.

I get that there are lots of reasons why we spend more than we take in. Whether or not you or I like those reasons isn’t the point here. Personally, I think that editorials like this are disingenuous at best. Language matters if you care about making quality decisions. The writer of this opinion piece has an axe to grind, which is, after all, the whole point of the opinion page in a newspaper. But an example of promoting clear thinking through clear use of language it is not.