Words and Mind: Tax Cuts as Costs for Government

Tax cuts are often discussed in terms of budget impact with phrases like “paying for a tax cut” or as “costing money.” 

In a book I read years ago by a Microsoft engineer about projects development the phrase “idiot bit” was used. The context for that is that when a persons “flips your idiot bit” and you realize they’ve done or said something idiotic the conclusion that that person is not too sharp is a “sticky” conclusion. They may do half-a-dozen things that are insightful and highly innovative … but once you’ve internally labeled that person as “stupid” it takes a lot to reverse that conclusion. Now, anthropologically speaking, this might be in part due to the peculiarities of how perceptions of intelligence is socially valued within the Microsoft (and software) sub-culture … and perhaps as well that this sort of “sticky conclusion” might be generalizable to other sub-cultures and “sticky” conclusions centering around the things they value. 

Usage of the terminology like “paying for tax cuts” and “tax cuts costing money” is a red-flag which, for myself at least, flips a similar “sticky bit.” From a somewhat abstract accounting point of view there is a sort of peculiar logic to that sort of terminology. But usage of that term betrays a level of abstraction and a point of view about taxation and government spending which forgets that taxation is inherently a violence against person or family. Taxation is a necessary evil of government. But to think of less taxes as a “cost” on government is a reversal of what should be the normative point of view, that government and its spending itself is a cost which is paid for by taxes. 

For small government proponents, statements about tax cut as cost “flips” a sticky bit. This means that it is hard to escape categorizing the speaker as a person willfully riding down the road to serfdom and at best a socialist or fascist. 

Leave a Reply

Your email address will not be published. Required fields are marked *

19 comments

  1. Boonton says:

    Mark joins the club of those who have no credibility regarding debt and deficits. Just rhetorical games as they jockey to win the next election.

    From his analysis though, advocating tax cuts with no offsetting spending cuts is basically advocating a spending increase in the form of added interest spending. If spending is increasing the cost of gov’t then “small gov’t proponents” who don’t like talking about paying for tax cuts are wolves in sheep’s clothing and since he asserts that gov’t spending is all eventually paid for by taxes then he is a liar who is actually advocating higher taxes.

  2. Mark says:

    Boonton,
    I am not a liar and you (likely) know it. Seeing that I’ve advocated in the past a Constitutional amendment forbidden the federal and state government from actuarial services, i.e., providing insurance and retirement … on what basis do you not think that I do not advocate huge spending cuts? I’ve written in the past that SS should be mean-tested now and phased out.

    I would agree as a counter “sticky bit” that Democrats often do, and quite likely are correct, to long remember (in a negative way) those who propose tax decreases without spending cuts. It’s just that doesn’t describe me at all.

  3. Economics crank will think that people he already thinks are idiots are idiots if they use a certain perfectly understandable way of talking about the deficit. Shocking.

  4. Do you similarly consider anyone who’s ever used the phrase “opportunity cost” an idiot, fascist, or socialist?

  5. Boonton says:

    Actually that was ‘at best a socialist or fascist’. Makes you wonder what his worse case scenario is. As for Mark’s credibility regarding debt and deficits, this post sums it up. He falls square in line with the talking points of those who have zero credibility and square in line with the enablement of not temporary deficits during a recession but neverending deficits.

  6. Mark says:

    Boonton,

    He falls square in line with the talking points of those who have zero credibility and square in line with the enablement of not temporary deficits during a recession but neverending deficits.

    How is that?

  7. Mark says:

    JA,
    I don’t think the term ‘opportunity cost’ evidences the same confusion over where the money comes from and for what sorts of things it should be put to use. And I never called those people who confuse term cost idiots.

    Regarding your first comment, which labels me a “economics crank” … uhm, (a) why are personal insults your first rhetorical opening and (b) you’ve never actually one thing at all with substance over my objection to today’s economic theory, which puts you in the unenviable position of being unable to render a reply to a simple objection of a “crank”. Shocking is one word for it.

  8. Boonton says:

    How is that?

    The last time the Republican party was given power over the WH and Congress they passed massive spending on an optional war in Iraq, passed an open ended entitlement with no source of funding and passed a medium term tax cut again with no offsetting spending cuts (but specifically made it a tax cut that expired so to limit its long term deficit contribution). Now maybe this would be worth forgetting about if it was 150 years ago…..like the Democratic party and slavery but we aren’t even two freeking years since. With a handful of exceptions, it’s even the same cast of characters making almost the same policy arguments.

    Regarding your first comment, which labels me a “economics crank” … uhm, (a) why are personal insults your first rhetorical opening….

    Actually I don’t view this as a personal insult. You either profess crank economics theories or you don’t. If someone kept arguing that JFK was assassinated as part of a UFO coverup I’d say he has crank theories on JFK. To argue that we can’t say this because its a ‘personal insult’ is little more than intellectual affirmative action.

  9. Mark says:

    Boonton,

    The last time the Republican party was given power over the WH and Congress they passed massive spending on an optional war in Iraq, passed an open ended entitlement with no source of funding and passed a medium term tax cut again with no offsetting spending cuts (but specifically made it a tax cut that expired so to limit its long term deficit contribution). Now maybe this would be worth forgetting about if it was 150 years ago…..like the Democratic party and slavery but we aren’t even two freeking years since. With a handful of exceptions, it’s even the same cast of characters making almost the same policy arguments.

    Uhm, I am not a Republican in Congress. On the one hand we are talking about my positions regarding taxes and spending, which have none of the flaws to which you are assigning to me. On the other hand, there is the GOP in Congresss and in the past … which is, as noted, not me.

    I am for big tax cuts. I am for bigger yet spending cuts. Casting aspersions that I am a tax cut and spend conservative has no basis.

    Actually I don’t view this as a personal insult. You either profess crank economics theories or you don’t.

    OK. But I don’t profess crank economic theories. You can’t say it without the ability to support your assertion. I can call you boogernose, but if you (a) don’t have obvious boogers in your nose or (b) I can’t see you at all … that is just an unsupported ad hominem which is, as I pointed out, all too often a default response by JA.

  10. I don’t think the term ‘opportunity cost’ evidences the same confusion over where the money comes from and for what sorts of things it should be put to use.

    Do you think that those who talk about the “cost” of tax cuts are confused? It’s immediately obvious what they mean by it.

    And I never called those people who confuse term cost idiots.

    My fault, the transition from idiot bit to sticky bit got lost between the time I read it and the time I responded.

    Regarding your first comment, which labels me a “economics crank” … uhm, (a) why are personal insults your first rhetorical opening

    It’s a weakness of mine. I’ve been especially frustrated of late on this blog because I’ve felt like carefully explaining my positions was fruitless because you didn’t seem to be making an honest attempt to understand.. or if it was an honest attempt, your characterization made it clear you didn’t at all understand. I apologize and I’ll try to stop it.

    (I was also going for humor, because the idea of some guy with crank economic theories is criticizing people with legitimate ones for using a term that is completely understandable is funny, frankly. It’d be like a creationist talking about how a “sticky bit” gets flipped for him whenever an evolutionary biologist refers to “natural selection” on the grounds that nature has no will and therefore makes no selections.)

    and (b) you’ve never actually one thing at all with substance over my objection to today’s economic theory, which puts you in the unenviable position of being unable to render a reply to a simple objection of a “crank”. Shocking is one word for it.

    That’s not true. I’ve responded many times to various stances of yours — about the efficacy of stimulus, the problem of the tragedy of the commons, the use of regulations and incentives, the need for counterbalances where power inequalities exist, etc. etc. I’ve also pointed out that your position is a minority one among economists and is almost exclusively espoused publicly by people explicitly paid to push right-wing ideas, whether they’re op-ed columnists with no legitimate expertise or members of right-wing “think tanks” or, usually, both.

    (Boonton, I should add, has made the excellent point that your views are used only in the political realm and that when private corporations need to understand or predict economic realities, they exclusively turn to Keynesians, because making/saving money is their concern rather than influencing gullible voters.)

    I mean it’s been almost half a century since NIXON admitted “we are all Keynesians now.”

  11. Boonton says:

    I actually don’t think you’ve yet really articulated any economic theory, crank or not. Too much picking and choosing talking points and too little overall thinking about a real model.

  12. Mark says:

    Boonton,
    I have articulated a position, if not a theory. I’ve contended that the actual economy is non-linear and not near equilibrium and that the models used are linear and the simplifications to used to make their relations linear assume near equilibrium conditions. This is why their models are so poor at doing actual predictions.

    JA,

    (Boonton, I should add, has made the excellent point that your views are used only in the political realm and that when private corporations need to understand or predict economic realities, they exclusively turn to Keynesians, because making/saving money is their concern rather than influencing gullible voters.)

    In aboriginal times when you were sick it still made sense to seek out a medicine man. But that does not mean his models are very good, in fact they were very very bad.

    I was also going for humor, because the idea of some guy with crank economic theories is criticizing people with legitimate ones for using a term that is completely understandable is funny, frankly.

    See my remark above regarding legitimate. Yes, M-Men were “legitimate” but so what?

    It’s a weakness of mine. I’ve been especially frustrated of late on this blog because I’ve felt like carefully explaining my positions was fruitless because you didn’t seem to be making an honest attempt to understand.. or if it was an honest attempt, your characterization made it clear you didn’t at all understand. I apologize and I’ll try to stop it.

    Hmm. This is a shared perception.

    I should also point out that the “idiot bit” paradigm noted at Microsoft is not necessarily particularly useful or a good practice. In fact it may not. I was just observing that personally I found myself doing the same thing in the context of “cost” as tax cut when speakers did that.

    If you look at this post, which I tagged for linking in the morning … you’ll see a problem for the Keynesian stimulus model.

  13. Boonton says:

    I have articulated a position, if not a theory. I’ve contended that the actual economy is non-linear and not near equilibrium and that the models used are linear and the simplifications to used to make their relations linear assume near equilibrium conditions. This is why their models are so poor at doing actual predictions.

    OK but doing ‘actual predictions’ is not primarily what economists are interested in and not the primary purpose of models. The Ricardian idea of free trade, for example, does make some testable predictions but its primary purpose is a method of rigerous, logical thinking about international trade and evaluating policies. While your non-linear criticism is probably true in cases where, say, an economist predicts the implication of lifting sugar quotas on imports from South American countries, it’s not the primary purpose that economics is used for.

    In aboriginal times when you were sick it still made sense to seek out a medicine man. But that does not mean his models are very good, in fact they were very very bad.

    True but by asserting the medicine man’s models are bad you immediately imply the existence of other models (bad is a relative term here, the model is bad relative to some other model which is better). You should be able to clearly demonstrate why one model is better than the one you’re declaring bad.

    If you look at this post, which I tagged for linking in the morning … you’ll see a problem for the Keynesian stimulus model.

    Actually I’m not really seeing the problem. By trying to compute the jobs created *from* census jobs (i.e. census worker takes a job, he moves into an apartment complex, apartment complex hires 1/10th of a super to maintain the apartments) is a bit like asking how much water that drains from the Hudson River into the Atlantic ends up as rain in Sweden. That’s hardly a very easy estimate to make (especially if your only datapoints are, say, annual rainfall in Sweden and the annual flow rate of the Hudson river).

  14. Mark says:

    Boonton,

    By trying to compute the jobs created *from* census jobs (i.e. census worker takes a job, he moves into an apartment complex, apartment complex hires 1/10th of a super to maintain the apartments) is a bit like asking how much water that drains from the Hudson River into the Atlantic ends up as rain in Sweden. That’s hardly a very easy estimate to make (especially if your only datapoints are, say, annual rainfall in Sweden and the annual flow rate of the Hudson river).

    Why wouldn’t an measured uptick in employment be measurable? It didn’t occur.

    True but by asserting the medicine man’s models are bad you immediately imply the existence of other models

    So … if we both lived 1200 years ago in this land, to object that the Medicine Man’s ideas of how medicine works are flawed only can be done by me if I can point to a better theory of disease. I disagree. I can express dissatisfaction with a theory without having a better one. The problem arises when the Medicine man suggests that we all cut off our legs to appease the spirits in the midst of an epidemic.

  15. Mark,

    Yeah, you make the same argument about global warming. In the past, experts have been wrong, therefore it makes sense to assume they’re wrong now. It’s a bad argument. It makes sense to be skeptical, of course, but if we have to make a bet (and we do) then it’s much riskier to go with your own favorite theory instead of the experts’. It just makes no sense unless you are somehow uniquely qualified to make that decision. And are you, Mark? I don’t get why you place such a high value on your own intuition here.

    As for your link, I don’t think the Keynesians claim that temporary census jobs instantaneously create other jobs. But that’s really beside the point. You can’t just cherry-pick blogs and articles that support your point of view and demand that they be answered. You’re like the woman who goes to her neighbor and demands that he admit vaccines cause autism because look at all these articles she dug up by professionals insisting that it’s true. Obviously you can find arguments for all sides of any argument. Wading through them yourself as a biased layperson is almost guaranteed to fail at getting the truth.

  16. Mark says:

    JA,
    See the link today talking about economics by David Collander.

    I’m not just saying “in the past experts have been wrong.” I’m saying that what these experts are trying to do is a lot harder than they think, and that nobody has been successful at doing it in any regime, why do you think they are successful?

  17. I’m not saying they can predict the markets or prevent busts with 100% reliability or anything like that (although they did reduce them drastically since the first 150 years of America.) I just don’t think the question of whether stimulus works is such a hard question. I think it’s mostly settled by now.

  18. Mark says:

    JA,

    I just don’t think the question of whether stimulus works is such a hard question. I think it’s mostly settled by now.

    Then why did it fail this time? Why did they fail to predict it at all? Remember the graphs of employment “with and without stimulus.” Settled indeed.

  19. Boonton says:

    I can express dissatisfaction with a theory without having a better one. The problem arises when the Medicine man suggests that we all cut off our legs to appease the spirits in the midst of an epidemic.

    Yes we can express dissatisfaction with a theory. In that case we are actually creating a hypothetical ‘better’ theory and asserting our wish to have that theory. But that’s not the same as having a better theory. Einstein’s theory that we can’t go faster than light ‘sucks’ in the sense that it makes space travel ala Star Trek or Star Wars impossible. It would be nice if some other model had a way for us to do that. Hence ‘dissatisfaction’…but that doesn’t produce a better theory and one might not in fact exist (that is if our only interest is finding a way to make sci-fi space travel workable).