Aug 12, 2011 at 1:06 pm
Someone asked me for a list of the usual canards you hear from people who just want to work your last good nerve at the family barbeque, along with the best responses to them. Once I got started, it was hard to stop, so this is a very long post. But that’s only because there’s so much nonsense going around these days.
This being summertime, we’re all spending a lot of time with our families, and sometimes that brother-in-law just starts hitting you with Fox talking points. Don’t throw your hot dog at him—throw back these witty retorts. (Of course, I’m not referring to my brothers-in-law—Jim, Andy…this isn’t about you…I mean not directly…I mean maybe a little…but not much…).
Cutting spending creates jobs: Start with flipping this on him: “It’s the other way round, of course.”
With consumers strapped by the weak job market, corporations sitting on piles of cash reserves (and thus not investing in job-creating endeavors), to cut back on government spending would only mean more job losses. Point out that states are cutting their budgets leading cities and towns to lay people off month-after-month.
Use this example, fresh in the minds of others in the backyard: when the FAA was shut down for almost two weeks, 4,000 federal workers were furloughed but another 70,000 private transportation and construction workers were also laid off of projects that were doing for the agency.
End with: “Cutting spending cuts jobs.” Have another hot dog.
The budget deficit is our big problem: Ask him why. What is it doing that’s hurting the economy? Is it crowding out private borrowing? Can’t be that—interest rates are low and firms have all the cash they need to invest if they wanted to do so.
If he goes to the “uncertainty” place—employers won’t hire because they’re too worried about the national debt—just look aghast and say, “Wait a minute—you’re telling me that an employer who needs a new worker in order to meet demand for her goods or services won’t hire that worker because of the budget deficit? The employer would leave profit on the table because the debt-to-GDP ratio is too high?!?”
Then just shake your head in disbelief while reaching for another slice of watermelon.
Of course, he might then go here:
The federal budget is like a family budget and we’ve all gotta tighten our belts: Agree with him that sure, given the loss of our home values and the cutbacks in our hours and paychecks, we have to tighten our belts, but then hit him with: that’s exactly why the federal government has to loosen its belt!
It’s the only game in town—states, like families, have to balance their budgets, but the feds can and must run deficits—loosen their belt—in order to offset the belt tightening going on everywhere else.
Tell him that the recession is like a boat taking on water, and there’s only one guy in the boat with a bucket to bail, but it’s a big bucket and can keep the boat from sinking. When you incorrectly think of the federal budget like the family budget, you threaten to take away the big guy’s bucket and scuttle the ship.
Moreover, once families get back on track and can loosen their belts a bit, that’s when the federal gov’t has to tighten, i.e., to pay down the deficit it built up in the downturn…(as a little coda to your argument here, point out how GW Bush got that completely backwards—inheriting a budget surplus and turning it into a deficit during an economic expansion!).
Gov’t can’t do anything about jobs; gov’t doesn’t create jobs: Point out that, in fact, 22 million people work for the government, and before he chokes on his hamburger explaining how they’re all lazy do-nothings, remind him that the largest group— 14 million— are local jobs…has he been over to the public school lately, or had his trash picked up, and seen a cop on the beat? Because that’s what we’re talking about here.
And that’s just in good times. When we hit a recession, we need government spending to temporarily step up to the plate and create jobs like we did in the Recovery Act. (Again, cue incredulity and guffaws.)
But it’s true…don’t cite statistics…cite anecdotes…there’s a LED factory in North Carolina that expanded thanks the Recovery Act, a window manufacturer in Philly, an airport security equipment provider in MA. All these e.g.’s come from a series I wrote for the Huffington Post awhile back called “Recovery Act in Action.” So do a little homework on this one— I actually think you’ll be surprised to read about some of this stuff.
But have some chips first.
Public spending crowds out private spending: You’re more likely to hear this one if you bro-in-law read the WSJ, but it’s just a variant on gov’t doesn’t create jobs, deficits are always bad, etc.
Very simple to straighten him out on this one. If borrowing by the gov’t was competing with, or “crowding out,” borrowing from businesses and households, that would lead to higher interest rates, as the competition among borrowers for scarce loanable funds would bid up the price of loans, i.e., the interest rate.
But interest rates are very low, and firms are sitting on lots of cash…in other words the supply of loanable funds remains high relative to the demand. Tell your brother in law that you’ll worry about this one when the unemployment rate is back down to 5%, and that could be awhile.
There’s too much regulation—that’s what’s holding back job growth: This is a very common nerve-worker.
Again, ask him what he’s talking about. Much of the time, these guys are just repeating talking points and don’t have specifics. But if he does have some, the following is almost surely true: either they (the regulations he’s citing) have been around forever and thus can’t explain the current, cyclical problem, or they haven’t kicked in yet.
Health care reform is the primary example of the latter, and I’d recommend the same disbelieving approach used earlier.
“OK, wait a minute…let me get this straight…I’m an employer and for some reason more people want to buy my stuff so I need to hire a new worker. But because of a rule that’s going to kick in over two years, that btw won’t affect me if I’m a small business (<50), I’m not going to hire that worker. I’ll just leave the profit on the table.”
“An employer who thinks like that would be out of business in about a week.”
Of course, you risk annoying your sister by ripping into her husband with such an airtight argument, but chances are she agrees with you.
US Taxes are too high: I’ve avoided links in this post because I want you to be able to shoot back without firing up your smart phone. But read this and you’ll get the international skinny on this canard. Relative to our competitors around the globe our tax take is low…very low…26th out of 28 countries. And right now, the federal gov’t is collecting less revenues as a share of the economy than we have since “Grams was a girl” (the 1950s, that is).
Note I said our tax “take” is low, not our rates. If he’s a WSJ reader, your bro-in-law may complain about our high tax rates compared to other countries. First, our income tax rates are generally lower, but it’s true the US rate on corporations is higher here than in other advanced economies. There are, however, so many loopholes that the average rate that firms actually pay puts us around the middle of the pack.
So go ahead and bond with him about the need to simplify the tax code and get rid of all those loopholes.
You should also point out that taxes under President Obama are even lower than under GW Bush (he’s kept the Bush rates and added a bunch of other stuff, like the payroll tax holiday). Meanwhile, under Clinton, taxes were considerably higher than they’ve been since, yet the economy generated over 20 million jobs in those years versus about six million in the Bush years. Middle-class incomes— after-tax!—rose faster in the Clinton years!
Look around at your parents and sibs and again, with great incredulity, put it to them this way, “You tell me— how do you think all this tax cutting has worked out? Do you feel a lot better about the economy since W lowered all those tax rates and Obama kept them in place? Do you remember the Clinton years as much worse for your wallets??!!”
Then go ahead…have another hot dog.
We can’t afford Medicare, Social Security: This is a toxic one, because even libs are getting squishy on it. But it’s flat out wrong.
Start out with a counterpunch: we can’t afford TO LOSE Social Security and Medicare.
Peruse the group— and ask them: “Do you feel more secure or less secure about your retirement, cuz if it’s “less” then you want these programs to be strong and healthy. Social Security will soon be the only guaranteed pension on the block, and Medicare provides guaranteed health security, and by the way, does so at a better price than private sector alternatives.”
Score for you…but bro-in-law punches back: sure, they’re great, but you’re missing my point: we can’t afford them anymore!
“Says who?” you say. When people say we can’t afford something in this context, what they’re really saying is I’d rather pay for X than Y. This is the fundamental concept of “opportunity costs,” one of the most important concepts in economics, as it incorporates the reality of scarcity, which is what makes economics tick.
Here’s a great example: we could fully cover the shortfall in Social Security, by using the revenue we’d get from the expiration of the highend Bush tax cuts. Not even all the cuts, just the highend ones.
Paying for Medicare is a bigger challenge, but here, the problem isn’t Medicare, it’s health care, meaning cost growth across the whole system, private and public, is too high. And, like I said, and this is an important arguing point, it’s considerable worse on the private side.
Point out that Medicare does a better job of controlling costs because it has less overhead, doesn’t need to gouge profits out of sick people or spend a lot of money hiring people whose job it is to get between you and the care you seek.
Note that every other country has some sort of universal coverage that goes considerably further than Medicare, covering everyone for about half of what we spend as share of our economy. And they do so while generating health outcomes that are at least as good, if not better, than ours.
Ask your brother-in-law whether he’s saying that France can take care of its people better than America! Get pissed off about this!
Finish with a flourish, asserting that there’s no alternative— we either figure out how to pay for the health care we need, or we end up the only advanced economy in the world who has continuously failed to do so. And you happen to believe in an America that guarantees health security for retirees, like Grams over there.
By now, you’re stuffed to the brim, your bro-in-law is in full retreat, your sister is smugly pleased, and Grams really liked the way you stood up for the old folks.
This entry was posted on Friday, August 12th, 2011 at 1:06 pm and is filed under Deficits, Debt and Taxes, Economic Growth, Health Care, Jobs, New Posts, Social Security. You can follow any responses to this entry through the RSS 2.0 feed.
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