Pun Salad

There is something irresistibly appealing to certain politicians about the idea of giving more money to the IRS. Like the king in "Rumpelstiltskin," they thrust fistfuls of straw at the tax collection agency and demand that it be spun into gold. Also like the king, they do not care to look too closely at where exactly the gold is coming from, or at what eventual price.

In August, the Inflation Reduction Act allocated $80 billion in new funds to the IRS. A massive sum, but one carrying the weight of outsized political promises: Enough to hire 87,000 workers, increase the agency's enforcement budget by 69 percent, and surgically punish rich tax cheats yet somehow leave small businesses and everyone who earns less than $400,000 a year unmolested—all while raking in a hefty return in federal revenue by closing the "tax gap" created by evasion.

The Congressional Budget Office (CBO) did indeed estimate in 2021 that $80 billion in new spending under terms floated by President Joe Biden would bring in $204 billion in new revenue. A 250 percent return sounds like a pretty good deal, but $80 billion isn't the real price and $204 billion won't be the real return.

If the elites are prone to groupthink, blind spots and partisanship—so, dear reader, are you.

The folly of the populists is that they rebel against the real and imagined corruption of “the elites” and “the Establishment”—and then seek to replace them with a new elite that is usually worse. They dismiss the “so-called experts,” but lacking any genuine expertise of their own, they fill the vacuum by embracing crackpot notions and conspiracy theories.

After all, a belief in conspiracies is implicit in the populist worldview. The experts are not merely fallible, not merely self-dealing or even sometimes dishonest, they are actively and constantly lying to you. It’s all a big cover-up, and everyone is in on it. In this view, the universal rejection of an idea by the mainstream—by experts, by fact-checkers, by the media—is the greatest recommendation for it.

Like comparative advantage, Say’s Law is often misunderstood, and at times it is intentionally misrepresented by those who do not like its implications. Whether Say’s Law is coherent as a technical economic matter is, in fact, a lively issue, one that typically breaks down along tribal cleavages: Free-market types tend to be better disposed toward it, while capitalism-skeptical would-be social engineers reject it in part because it complicates their political ambition to follow a policy of “fine tuning” the economy, particularly through neo-Keynesian monkeying around with “aggregate demand.”

That kind of macroeconomic management is a tricky business: Our Federal Reserve is, for all of its many faults, one of the better central banks, and it has been generally effective in its responses to challenges such as the 2007-08 financial crisis (two cheers for the creature from Jekyll Island!). But even with its great expertise and genuine autonomy, it is a blunt instrument, one that is, for example, almost certainly about to push the country into a painful recession in order to counteract the current destructive inflation that is in part a result of earlier Fed intervention. Say’s Law implies that what really drives the economy is the supply side rather than the demand side—demand just sort of comes along for the ride.

What does it mean to claim that “supply creates its own demand”? What it doesn’t mean—though the misapprehension apparently is common—is that firms have the ability to simply exnihilate demand for their products into existence just by putting them on the market, possibly with the help of a crafty advertising campaign. If that were the case, there would be no failed products or failed companies, but products fail all the time: We Generation Xers remember the trauma of New Coke like it was our own D-Day. I’ll leave it to you younger readers to dig into the history of Clairol’s Touch of Yogurt Shampoo—and let’s just go ahead and meditate on the juxtaposition of “yogurt” with “shampoo” for a second here—for yourselves. (There are lots of examples: Business genius Ray Kroc thought McDonald’s needed a meatless burger to sell to Catholics during Lent—those were more observant times—and his first effort was the “Hula Burger,” which was a thick slice of pineapple and two slices of cheese on a hamburger bun.A local franchisee in Cincinnati had the better idea: the Filet-O-Fish, which even sounds Catholic.) Companies fail, too: In David Foster Wallace’s futurist novel Infinite Jest, Wayne Huizenga is still a Very Big Deal in the business world—but many of you readers will know his most famous endeavor, Blockbuster Video, only as a 1990s nostalgia totem.

Any moment now, the U.S. Department of Education is going to start transferring student loan debts from borrowers to taxpayers, helping the price gougers in higher education to avoid reform. Congress never approved this Biden bailout, but many congressional Democrats are acting as if it’s legal—and a gift to the downtrodden. A new report serves as a timely reminder on who’s most likely to benefit.

This week Sen. Elizabeth Warren (D., Mass.) is claiming on Twitter that Republicans are “doing everything they can to stop President Biden from cancelling student debt for the people who need it the most.”

This week Sen. Elizabeth Warren (D., Mass.) is claiming on Twitter that Republicans are “doing everything they can to stop President Biden from cancelling student debt for the people who need it the most.”

But borrowers with low incomes were already receiving help—with no penalties for the colleges that sold them overpriced degrees.

Polling of the national generic ballot is only so useful in deciphering how 435 distinct districts will break. We could see Democrats score Saddam Hussein margins of victory in indigo districts due to a left-wing Dobbs backlash and then fall short in one battleground after another as voters frustrated with inflation overwhelm the ardent but much smaller pro-choice contingent.

And since we’re vibing here, if you want the best of the best-case scenarios for the Republican Party, I recommend this Cohn piece on systemic polling error from last month if you missed it at the time. In theory, the polls this year might be systematically underestimating either party by overlooking an important contingent of voters when modeling the electorate. For instance, there could be a large group of casual young voters incensed at Dobbs who tend not to respond to polling surveys but fully intend to vote this fall. The polls would miss them, and therefore underestimate Democratic support.

But if you’ve followed elections during the Trump era, you know that’s not how it tends to go—at least when Trump is on the ballot. It’s Republicans, not Democrats, who tend to be lowballed in polling, probably because some meaningful number of MAGA voters has decided on principle not to answer the phone when some “fake news” liberal establishment pollster dials them up. The resulting oversight produced some garish discrepancies in 2020 between the polling and the results on Election Day, especially in states like Maine and South Carolina where Republicans who were cracked up to be in tight races ended up waltzing to victory. Cohn wonders whether history might be repeating this year. Other analysts are wondering the same thing.

If it happens again, America’s polling industry will have proved itself to be little better than, well, vibes. Bad news for writers. Great news for bloggers!