Lil White Lies: The Tax Cut Billemma

Emphasis added is a very important feature of this critique, for it spells out the differences for which PolitiFact’s critics think it can be rebuked.

PolitiFact Virginia’s fact-check reads as follows (emphasis added): that Robert C. “Bobby” Scott (D-Va.) claimed “The tax-cut deal [Tax Cuts Compromise] ‘adds more than $800 billion to the deficit over two years -- more than the cost of TARP and more than the cost of the Recovery Act’ and about the same as health care reform.”  It ruled his statement Mostly True.

Robert C. "Bobby" Scott (D-Va.) actually said in his statement: (emphasis added)

“This bill adds more than $800 billion to the deficit over two-years – more than the cost of TARP and more than the cost of the Recovery Act. It costs about the same over two years as the 10 year cost of the Health Care Reform bill, which we paid for." …

But Bryan White finds his loophole in the second paragraph: (emphasis added)

“We cannot add more than $800 billion to the deficit through tax cuts and tell the American people with a straight face that they won’t have to sacrifice anything in the future to balance the federal budget. If we didn’t have the political will to end the Bush-era tax cuts tonight, we certainly won’t have the political will to do it two years from now during a presidential election.”

According to Bryan, it’s “tax cuts” only that adds $800 billion to the deficit, and not “the bill”, and since it’s only tax cuts, the $800 billion is incorrect and also less, not more than the cost of the TARP, ARRA and the HCR bills. Note (1) That it is the bill he says adds more to the deficit than TARP and the Recovery Act, and that IT (the bill) costs about the same as HCR; and that (2) Scott initially calls it “the bill” and then (in the second paragraph) refers to it as tax cuts. It appears Scott is using “the bill” (or “tax deal” as PolitiFact refers to it) interchangeably with tax cuts. He could be talking about either one or both. Maybe he just didn't want to get into all the detail, since even Bryan admits, 90% of it was tax cuts.  So PolitiFact writer/researcher Wes Hester chooses (or as Bryan would say, selects “with bias”) the FIRST description—bill—the beginning subject line for the statement--but Bryan thinks it should be the second paragraph “context” line, which is “tax cuts”. Further aggravating the rhetoric is PolitiFact referring to the bill (or tax cut) as “tax deal” in its title which Bryan uses to further his cause.

As a believer in the “Laffer” curve, I find it troubling that the tax cuts, as they were originally put in place in 2001 and 2003, failed to increase tax revenues, and job creation remained flat. So, while there may be some economic recovery, there will likely be no “payback” for this tax compromise. This means in terms of “offsets” to cost, the TARP and HCR contain more “offsetting” factors than the Tax Compromise, while the ARRA is about the same, i.e., it’s hard to tell.

So PolitiFact’s analysis is a reasonable one. The tax-cuts and/or tax-cut deal has very few offsets and already has a history of failing to increase revenue. It definitely cost more (even reduced by “outlays”) than the TARP when you consider the paybacks . It cost more than the HCR bill when you consider that the HCR bill had to be “paid for” (and I’ll grant the projected deficit increases from repealing it may be mere projections, even bogus). It probably cost less than the ARRA by about $75-100 billion. So Mostly True was a realistic ruling.

Bryan also comments that “Growth in the economy should result in more government revenue, reducing the deficit somewhat from the $741 billion figure.” And again, all the while he says that, he ignores PolitiFact’s findings of how TARP was reduced to $30 Billion through pay backs, and if we are to reduce for “additional economic growth” in the tax cuts, how is the stimulus likewise reduced? According to Factcheck.org, the Stimulus, or the “American Reinvestment and Recovery Act” did the following, citing the CBO:

CBO, Aug. 24: CBO estimates that ARRA’s policies had the following effects in the second quarter of calendar year 2010:

■ They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,

■ Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,(and)

■ Increased the number of people employed by between 1.4 million and 3.3 million

The Republicans have called the healthcare reform “job killing” as well. Since Bryan White wants to trash anything PolitiFact fact-checks, I'll use Factcheck.org again (even though they both agree): 

■ Independent, nonpartisan experts project only a "small" or "minimal" impact on jobs, even before taking likely job gains in the health care and insurance industries into account.

■ The House Republican leadership, in a report issued Jan. 6, badly misrepresents what the Congressional Budget Office has said about the law. In fact, CBO is among those saying the effect "will probably be small."

■ The GOP also cites a study projecting a 1.6 million job loss — but fails to mention that the study refers to a hypothetical employer mandate that is not part of the new law.

■ The same study cited by the GOP also predicts an offsetting gain of 890,000 jobs in hospitals, doctors’ offices and insurance companies — a factor not mentioned by the House leadership.

There’s little doubt that the new law will likely lead to somewhat fewer low-wage jobs. That’s mainly because of the law’s requirement that, generally, firms with more than 50 workers pay a penalty if they fail to provide health coverage for their workers. One leading health care expert, John Sheils of The Lewin Group, puts the loss at between 150,000 and 300,000 jobs, at or near the minimum wage. And Sheils says that relatively small loss would be partly offset by gains in the health care industry.

What is meant by “Temporary Extension of Certain Expiring Provisions”? Bryan claimed some in PolitiFact’s CBO report link were “report[ed] as tax cuts of one type or another and some of the descriptions are ambiguous, such as ‘Temporary Extension of Certain Expiring Provisions.’”

So, what are these “Temporary Extension(s)”? Here’s a few.   Many sound unambiguously like business tax credits:

Biodiesel and renewable diesel. The bill extends through 2011 the $1.00 per gallon production tax credit for biodiesel, as well as the small agri-biodiesel producer credit of 10 cents per gallon. The bill also extends through 2011 the $1.00 per gallon production tax credit for diesel fuel created from biomass.

Refined Coal. The bill extends through 2011 the placed-in-service deadline for qualifying refined coal facilities.

Extension of energy-efficient new homes credit. The bill extends through 2011 the credit for manufacturers of energy-efficient residential homes.

Alternative fuels credit. The bill extends through 2011 the $0.50 per gallon alternative fuel tax credit. The bill does not extend this credit any liquid fuel derived from a pulp or paper manufacturing process (i.e., black liquor).

Extension of special rule for sales of electric transmission property. The bill extends through 2011 the present law deferral of gain on sales of transmission property by vertically integrated electric utilities to FERC-approved independent transmission companies.

Extension of special rule for marginal wells. The bill extends through 2011 the suspension on the taxable income limit for purposes of depleting a marginal oil or gas well.

Section 1603. The bill extends for one year the start-of-construction deadline for the cash grant in lieu of tax credit program, established in Section 1603 of the American Recovery and Reinvestment Act.

Ethanol. The bill extends through 2011 the per-gallon tax credits and outlay payments for ethanol. The bill also extends through 2011 the existing 14.27 cents per liter (54 cents per gallon) tariff on imported ethanol and the related 5.99 cents per liter (22.67 cents per gallon) tariff on ethyl tertiary-butyl ether (ETBE).

Energy-efficient appliances. The bill extends through 2011 and modifies standards for the Section 45M credit for US-based manufacture of energy-efficient clothes washers, dishwashers and refrigerators.

Energy-efficient existing homes. The bill extends the credit under Section 25C of the Code for energy-efficient improvements to existing homes, reinstating the credit as it existed before passage of the American Recovery and Reinvestment Act. Standards for property eligible under 25C are updated to reflect improvements in energy efficiency.

Alternative vehicle refueling property. The bill extends through 2011 the 30% investment tax credit for alternative vehicle refueling property.

The amount of money represented by these “expirations” is almost nil compared to the rest of the bill, however.

Bryan White’s conclusions:

I hold that it's quite possible and even likely that the journalists were led innocently into error by their ideological bias. Though simple ineptitude offers another highly plausible explanation. Getting two out of three wrong shouldn't count as "Mostly True," and Scott may well have been wrong on all three in terms of his "tax cuts" language.

Narrowly interpreting a quote and taking an even narrower view of its complete context by ignoring significant information is leading oneself intentionally into error through self-professed ideological bias. Bryan White’s Sublime Bloviations might be better off calling itself “Fact checking like Fox News.”

Note: I am working on re-doing my critique matrix so I’m not displaying it this time. But if I were grading Bryan, he’d get the full complement of Five Pepé LePews.

Really stinky!