URLs du Jour


  • I got into a "discussion" on Facebook with a guy who posited a cause-and-effect relationship between the tax rates of the Eisenhower era (91% top marginal rate, 50% corporate rate) and the allegedly-healthy middle class and general economic prosperity.

    We didn't get much into substance, and I could tell the guy was someone who'd automatically disdain sources like Kevin D. Williamson at National Review. But, dear reader, I assume you are OK with it, so check out Bernie Sanders’s — and the Left’s — Fake Fiscal History of 1950s America. For people—like Bernie—who hold the era up as an example of an "economy that works for everyone":

    Start with the taxes. In real terms, Americans paid almost exactly the same taxes in the 1950s as they pay today. Federal taxes from 1950-1960 averaged 16.8 percent of GDP; this year, federal taxes are projected to amount to almost exactly the same: 16.7 percent of GDP. There were some very high statutory (that’s how political types say “on paper”) income-tax rates in those years — 91 percent at one point — but practically nobody paid those rates. In fact, in spite of the claims you hear from Senator Sanders et al., wealthy Americans pay remarkably similar tax rates today to what they paid in the past. If you dig into the Congressional Budget Office numbers, you’ll see that the effective total federal tax rate for the top quintile and the top 1 percent have not moved very much over the years.

    When the famous/infamous Reagan tax bill was passed, the top 1 percent were paying about 27 percent of their income in federal taxes, according to the CBO, and in 2016 they paid quite bit more, about 33 percent. The 1-percenters have been paying a federal tax rate in the high 20s to middle 30s since for a long time, even as tax legislation has changed. What has changed more significantly is that the lower-earning half of U.S. households have been taken off the income-tax rolls almost entirely, though they still pay a relatively heavy payroll tax. It is no great surprise, then, that the wealthy pay most of the federal taxes in gross terms and pay much higher tax rates, as the CBO reports: Households in the top income quintile pay about twice the tax rate as those in the middle; those in the top 1 percent pay even more.

    KDW goes on to note that the guns/butter ratio for Federal spending was also much higher in the 1950s.

  • In a Reason article written before Mike Bloomberg dropped out of the race, Eric Boehm has some advice: Losers Bloomberg and Steyer Spent Millions. Stop Freaking Out About Money in Politics. (And, actually, make that hundreds of millions.)

    It's fashionable for Democrats—and, if polls are to be believed, many Republicans too—to believe that something must be done about the supposedly intolerable influence of money in American politics.

    Indeed, there is a lot of money in American politics, as the ongoing Democratic primary (and every election in recent memory) makes clear. But after Super Tuesday, it seems clear that candidates cannot buy their way into the White House.

    Former Vice President Joe Biden, who appears to have been the big winner on Tuesday, had fundraising issues during the primary campaign. He was outspent not only by Bloomberg and Steyer, but by Sen. Bernie Sanders (I–Vt.). Biden won Tuesday's primaries in Minnesota and Massachusetts while spending hardly any money in either place.

    "We believe in old-fashioned democracy: one person, one vote, not billionaires buying elections," Sanders said at a rally in mid-February.

    Well, good news for Sanders. Billionaires aren't buying this election.

    As Fidelity continues to tell me, however: Past performance is no guarantee of future results. If the GEICO ad geniuses turned their talents to political commercials, the results could be different.

    But until then…

  • At AEI, James Pethokoukis—thank goodness for copy-and-paste—baits and switches: Wealth inequality in America has skyrocketed — unless it hasn’t. And it might not have.

    One of the supposedly indisputable economic facts about “Late Capitalism” America is soaring wealth inequality. By some calculations, the wealth share of the top one percent has grown by about 10 percentage points — from around 30 percent to 40 percent — over the past three decades. That’s a big jump.

    Now by “wealth,” inequality researchers typically mean marketable wealth, or the value of all assets owned by households, net of debt. But there’s a weird quirk with that definition, one that may cause wealth inequality to be vastly overstated. The issue is explored in a fascinating preliminary paper with a spoiler in the title, “Social Security and Trends in Inequality” by University of Pennsylvania researchers Sylvain Catherine, Max Miller, and Natasha Sarin. From that paper (bold by me):

    Recent influential work finds large increases in inequality in the U.S., based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. Wealth inequality has not increased in the last three decades when Social Security is accounted for. When discounted at the risk-free rate, real Social Security wealth increased substantially from $5.6 trillion in 1989 to just over $42.0 trillion in 2016. When we adjust for systematic risk coming from the covariance of Social Security returns with the market portfolio, this increase remains sizable, growing from over $4.6 trillion in 1989 to $34.0 trillion in 2016. Consequently, by 2016, Social Security wealth represented 58% of the wealth of the bottom 90% of the wealth distribution. Redistribution through programs like Social Security increases the progressivity of the economy, and it is important that our estimates of wealth concentration reflect this.

    Interesting! I've never been persuaded by the folks who beat "inequality" like a drum. I doubt (however) they'll stop beating it even if/when more careful accounting makes it significantly less of a "problem".

  • Megan McArdle… well, you should read her no matter what, because she's a refreshing voice of sanity on any topic. But here she is on the crisis du jour: Coronavirus and government responsibility on testing.

    It’s not yet clear how serious coronavirus is. It is difficult to calculate fatality rates for a novel virus when many people who are infected may be asymptomatic. For the same reason, it’s challenging to know exactly how fast the virus spreads. That’s also why the precise effect of strong public health measures, such as hand-washing campaigns and school closures, cannot be predicted — whether they can slow it enough to keep the load on the health system manageable and give researchers time to develop a vaccine.

    Two things, however, are abundantly clear. First, the virus is potentially serious enough that you should wash your hands. A lot. Grab a handrail as you went down the stairs? Wash your hands. Returning home from the grocery store? Wash your hands. About to pull a chip from the chip bowl? Wash your hands first. Happen to be strolling past a bathroom but don’t need to go? Make a quick pit stop anyway to wash your hands.

    [Yeah, OK, Mom!]

    It’s also obvious, however, that the federal government will have to do more than tell everyone to wash their hands, or even get out of its own way and let hospitals test for coronavirus. For example, Congress and President Trump should jointly announce that the federal government will pick up 100 percent of the costs of testing and treatment.

    Sounds eminently sensible.

  • And the Google LFOD alert rang for this article from a local radio station: Here Are the 5 Most-Watched Videos Featuring New Hampshire. Here's number five, rough language ahead: