Normally I would not post an email exchange on this or any blog without permission, but on another blog, after I pointed out how wrong Tamny is on fundamental assumptions of fiscal policy, Tamny made a baseless -- and bizarre -- charge that I had "stalked" and "harassed" him, even though my only communication with him of any sort had consisted of the email exchange above, nothing before, nothing since, and nothing else during the four day span of that exchange, which, as you can see, was a one-for-one, taking-turns exchange of emails (not repeated emails from me without response from him).
See his strange comment at http://www.capitalgainsandgames.com/blog/bruce-bartlett/1211/desperately-seeking-me#comment-4563 and my reply at http://www.capitalgainsandgames.com/blog/bruce-bartlett/1211/desperately-seeking-me#comment-4566
Additional notes:
- The yellow background for Tamny's emails was added by me for ease of following the exchange.
- In my second email, the first and second link (to Heritage) now go to updated pages on the Heritage website that contain updated versions of the charts to which I was linking, along with other charts. I believe the charts to which I linked were those showing long-term projections of deficits and of spending as a percent of GDP (using CBO numbers). And I believe my fourth link was to this particular document http://www.concordcoalition.org/act/fiscal-wake-tour/fiscal-wake-call
- I have replaced my email address with "[Brooks]".
From: [Brooks]
Sent: Fri 1/18/2008 12:38 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sent: Fri 1/18/2008 12:38 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
John,
Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
You write, "it should at least be remembered that as federal revenues have pretty consistently amounted to 18 percent of GDP irrespective of the tax rate, the policy answer for newly generous Republicans should not be one of shunning tax cuts."
Why not just state what you're implying, intentially or not: that tax cuts in general essentially pay for themselves -- and then some. (The "then some" part is because, assuming incremental GDP growth from a tax cut, revenues would have to more than break even to maintain even revenues as a percent of GDP.)
Perhaps you didn't state what you were implying because you didn't want to explicitly assert something with which just about every well-credentialled economist disagrees. Was that it?
Thanks,
Brooks (not David)
Brooks:
Good point/question. I guess my thinking there is that I did not want to say what's true; that tax cuts pay for themselves. I didn't because everyone says that.
I figured in pointing out the consistency of 18% that this might wake these people up to the truth that it's the size of the economy that matters. Marginal rate cuts grow it, so cut rates and get your 18% of a larger pie.
Thanks for reading my article, and have a great weekend.
John
From: [Brooks]
Sent: Fri 1/18/2008 3:53 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sent: Fri 1/18/2008 3:53 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
John,
Thanks for your reply. I hope you realize that my point was no nitpick, but rather extremely important in terms of choosing fiscal policy wisely and averting fiscal and economic disaster within a couple of decades.
Here's what's really important -- and there is consensus on this point among economists and other fiscal policy experts: under current tax rates and spending policies, we are on an unsustainable long-term fiscal course, due mostly (but not entirely) to projected Medicare costs over the next couple of decades, which is driven by both the retirement of baby boomers and medical inflation. Our debt-to-GDP and accompanying debt service burden will reck our economy and standard of living. We need to start reducing our long-term fiscal imbalance through spending cuts and/or (almost certainly "and") tax increases, and the longer we wait, the greater the ultimate pain will be.
Some suggested reading/video on our unfunded liabilities problem and related long-term fiscal imbalance:
And lest you or anyone else buy the pervasive "free lunch" myth that tax cuts "pay for themselves" (or better), see my collection of quotes from conservative economists on that question at http://logicizer.townhall.com/
If you wish to do your readers (and the nation) a service instead of contributing (inadvertently, I assume) to the problem, you really should educate your readers on the real economic threat we face and realistic, responsible fiscal policy options based on valid economic assumptions, not on popular myth nor cherry-picked, anecdotal evidence, presented as supposed support for some erroneous assumption regarding the relationship between tax rates and revenues. I don't mean to sound like a prick, but this is an important issue for our nation so I have to be frank.
Thanks,
Brooks
Brooks:
As much as I HATE government spending and would like government to return to its constitutional mandates (ie. doing very little), I don't worry about our ability to pay off these ridiculous unfunded liabilities.
If we were really in trouble, this would show up in the yields on long-term government debt. That the yields are low tells us that markets believe what I believe; that we'll pay for these silly programs with ease. The clear answer is to get taxes lower and truly grow the economy. If/when we do, these mandates will not look so burdensome.
Conversely, they will become burdensome if we raise taxes and reduce substantially the tax base that would otherwise pay them. So I hear you about the costs, but I say we're well positioned to cover them even if we shouldn't have incurred them in the first place.
JET
From: [Brooks]
Sent: Friday, January 18, 2008 4:55 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sent: Friday, January 18, 2008 4:55 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
No offense, John, but I'd encourage you to get your head out of the sand on this matter. Please -- for your own edification and more importantly for that of your readers -- read/view the links I provided regarding the unfunded liabilities and related projected long-term fiscal imbalance. Again, THERE IS NO DISAGREEMENT AMONG EXPERTS on this question. We are on an unsustainable fiscal course, and the longer we wait to make substantial fiscal adjustments, the greater the ultimate harm will be. I know it doesn't "feel good" to consider what I'm saying and to look into it enough to discover that I'm right, but I urge you to do so.
And to address a couple of points you made specifically:
- No, we can't simply grow our way out of this problem. That notion is specifically rejected in some of the links I provided (which are consistent with the consensus of experts).
- I'm sure you know that many factors affect bond yields and that the straight line you are trying to draw is an inappropriate oversimplification.
AGAIN, PLEASE CHECK OUT THOSE LINKS. Your reply indicates to me that you have not done so, nor looked into and considered the matter thoughtfully.
And again, I don't wish to offend. This is just too important an issue for me not to press this point and try to get you to offer more useful information and responsible opinion to your readers. Ultimately, of course, I can't force anyone to make a good-faith effort to look into and consider this matter objectively, but I'm doing my best. Read up on it, John. Listen to what the most credentialled and credible experts are saying. A lot of people just want to believe what they want to believe (what feels good), and with such people I largely waste my time, but I hope you're not such a person. Please check out those links.
Thanks,
Brooks
-----Original Message-----
From: Tamny, John
To: [Brooks]
Sent: Mon, 21 Jan 2008 10:06 am
Subject: RE: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
From: Tamny, John
To:
Sent: Mon, 21 Jan 2008 10:06 am
Subject: RE: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Brooks:
The experts think global warming will implode us. The “experts” have been saying long before you were alive that debt would crash England, the US, and all manner of other countries. The markets are my guide far more than “experts,” and the markets suggest something completely opposite of what you’re presuming.
JET
From: [Brooks]
Sent: Monday, January 21, 2008 11:55 AM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sent: Monday, January 21, 2008 11:55 AM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sorry, John, but I have to say that your global waming comment shows a lack of intellectual sophistication, not just because it sounds like you are one of those folks who emphatically reject the sceintific consensus (not 100%, but vast majority) views on global warming out of some combination of emotional bias and cherry-picked information that you've given an undeserved weight because it fits the conclusion you feel better reaching, but because it's such weak argumentation in our discussion of the question of the degree of revenue feedback effect from tax cuts. While I'm guessing, based on your reply, that I'm probably wasting my time -- because you are probably not the kind of person who wants to make a good-faith effort to think through the question rationally, but are instead simply committed to your assumptions and conclusion -- but let's think about this rationally:
First of all, have you read/viewed the info at the links I sent? I'm guessing not, at least not at all thoroughly (not that there's a ton there), and you haven't not despite the fact that that information challenges your assertions convincingly, but because it does -- you want to avoid information that casts doubt (and then some) on the assumptions and conclusions that make you feel good.
Now, since you probably haven't read/viewed the info, let me just tell you that it substantiates what I've been telling you: There is a strong consensus among well-credentialled economists of all political stripes that (1) cuts in tax rates on individual labor and investment (capital gains & dividends) income generally have a very substantial net NEGATIVE impact on revenues (net of incremental growth in the economy and tax base stimulated by the tax cuts), and (2) under current tax rates and spending policies (most notably entitlements eligibility and benefits), our nation is on a fiscal course that will devastate our economy and standard of living within a couple of decades.
ok, now if you're with me so far, that means that almost all the experts -- the people with the expertise and resources for appropriate, professional analysis, and who have conducted such analyses -- say you are clearly wrong. Now, credibility is not just a function of level of expertise but also of sincerity (a used car salesman may be an expert on the car he's trying to sell, but that doesn't make him credible when he's trying to sell it to you), and I'm aware that folks who vocally challenge the scientific consensus on global warming claim that all those pointy-headed college professor types have a political bias or agenda that casts doubt (or more) on their sincerity, but in the case of the consensus on the two points above (#1 and #2), there is no question of such bias or agenda -- the consensus view on point #1 includes many economists who SUPPORTED the Bush tax cuts and who SUPPORT making them permanent, and in fact includes Bush's own current and former top economists (as you'd know if you bothered to read the info I sent). They obviously have no incentive to falsely claim that tax cuts have a negative impact on revenues -- to the contrary, they have the opposite incentive -- but they have reached the same conclusion as the other economists on this point. On point #2, the consensus again includes economists from across the political spectrum, spanning, for example, economists from the Heritage Foundation and the Brookings Institution (again, something you'd know if you read/viewed my info).
ok, hopefully your still with me. Now, regarding both points #1 and #2, we have a situation -- actually questions involving two enormously important policy matters with huge consequences for our nation -- in which there is strong consensus among top experts, including many who have no reason to be biased or insincere, that your assumptions are just flat out wrong, and needless to say, the combination of your two erroneous assumptions is very dangerous for America. You reply -- using a lame example -- is an assertion that experts are not always right?? And, based on that obviously true but not very meaningful or useful observation, you make the apparent nonsensical leap to the conclusion that therefore the expert consensus on these two points is essentially worthless and should simply be discarded?? And you base this weird logic, in the case of #2, on some way, way, way oversimplified view of what you think some market indicators (yields on long-term government debt) are saying about #2?? Are you kidding me? Here's my suggestion so that you can be straight with your readers and so you'll save me some time: Just say "I believe what I want to believe, period, and I'm not going to let any sort of rational thought get in the way."
First of all, have you read/viewed the info at the links I sent? I'm guessing not, at least not at all thoroughly (not that there's a ton there), and you haven't not despite the fact that that information challenges your assertions convincingly, but because it does -- you want to avoid information that casts doubt (and then some) on the assumptions and conclusions that make you feel good.
Now, since you probably haven't read/viewed the info, let me just tell you that it substantiates what I've been telling you: There is a strong consensus among well-credentialled economists of all political stripes that (1) cuts in tax rates on individual labor and investment (capital gains & dividends) income generally have a very substantial net NEGATIVE impact on revenues (net of incremental growth in the economy and tax base stimulated by the tax cuts), and (2) under current tax rates and spending policies (most notably entitlements eligibility and benefits), our nation is on a fiscal course that will devastate our economy and standard of living within a couple of decades.
ok, now if you're with me so far, that means that almost all the experts -- the people with the expertise and resources for appropriate, professional analysis, and who have conducted such analyses -- say you are clearly wrong. Now, credibility is not just a function of level of expertise but also of sincerity (a used car salesman may be an expert on the car he's trying to sell, but that doesn't make him credible when he's trying to sell it to you), and I'm aware that folks who vocally challenge the scientific consensus on global warming claim that all those pointy-headed college professor types have a political bias or agenda that casts doubt (or more) on their sincerity, but in the case of the consensus on the two points above (#1 and #2), there is no question of such bias or agenda -- the consensus view on point #1 includes many economists who SUPPORTED the Bush tax cuts and who SUPPORT making them permanent, and in fact includes Bush's own current and former top economists (as you'd know if you bothered to read the info I sent). They obviously have no incentive to falsely claim that tax cuts have a negative impact on revenues -- to the contrary, they have the opposite incentive -- but they have reached the same conclusion as the other economists on this point. On point #2, the consensus again includes economists from across the political spectrum, spanning, for example, economists from the Heritage Foundation and the Brookings Institution (again, something you'd know if you read/viewed my info).
ok, hopefully your still with me. Now, regarding both points #1 and #2, we have a situation -- actually questions involving two enormously important policy matters with huge consequences for our nation -- in which there is strong consensus among top experts, including many who have no reason to be biased or insincere, that your assumptions are just flat out wrong, and needless to say, the combination of your two erroneous assumptions is very dangerous for America. You reply -- using a lame example -- is an assertion that experts are not always right?? And, based on that obviously true but not very meaningful or useful observation, you make the apparent nonsensical leap to the conclusion that therefore the expert consensus on these two points is essentially worthless and should simply be discarded?? And you base this weird logic, in the case of #2, on some way, way, way oversimplified view of what you think some market indicators (yields on long-term government debt) are saying about #2?? Are you kidding me? Here's my suggestion so that you can be straight with your readers and so you'll save me some time: Just say "I believe what I want to believe, period, and I'm not going to let any sort of rational thought get in the way."
In a message dated 1/21/2008 1:07:57 PM Eastern Standard Time, jtamny@realclearmarkets.com writes:
Brooks:
Understand first off that this is what I do for a living. Does that make me all-knowing? Far from it, but at least it will hopefully clarify for you the certain truth that the stuff from Heritage and the Concord Coalition was in no way new or some kind of revelation to me. Rest assured that I’ve been writing about unfunded liabilities for years and am very familiar with the arguments.
Secondly, you should do two things to wrap your own hands about something you’re very certain about. For one, you should ask yourself if you as an individual would eagerly lend money at the lowest interest rate in the world to someone certain to go bankrupt. Once you answer that question, then ask why it is investors price US debt at the LOWEST rates in the world despite a looming calamity that you and the “experts” are sure is on the way. Have you ever asked yourself why it is you and the experts (and to end one line of your thinking right away – NOT all experts share your view, don’t be ridiculous) are so smart and the infinite inputs that comprise the marketplace are so stupid? Think about that. Do you really know more than the markets?
If your answer to the above is yes, I’ve got a HUGE moneymaking opportunity for you. Rather than send out rude e-mails, put your money where your mouth is. Short the US 30 year, and I mean REALLY short it. This way since you’re so right you’ll be a billionaire in no time. Simple as that. Until then, this is a waste of time because rather than engage in thoughtful discussion, you instead call into question the thinking of others while insulting them. I’m sure you can find someone else to insult (let’s end our exchange now), but in the mean time, go make yourself a lot of money shorting US debt. You’re certain about what’s ahead, the markets disagree, so this is where profits exist. Best wishes.
JET
From: [Brooks]
Sent: Monday, January 21, 2008 2:04 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Sent: Monday, January 21, 2008 2:04 PM
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)
Questions for you to ponder, even though you won't:
1) One important definition of "validity" in use of a measurement to draw a conclusion is that the measurement is truly measuring what the conclusion assumes it is measuring. You point to "yields on long-term government debt" and assert that they strongly support the assertion that "we'll pay for these silly [entitlement] programs with ease", and I presume you mean without sharp, monstrous tax increases, which would by no means necessarily work anyway (could kill the goose that lays the golden eggs, so to speak). You draw a line from your observation directly to your conclusion without considering other plausible explanations for those yields and other interpretations for what they mean vis a vis this question, interpretations that call into question that straight line you so conveniently draw (convenient to what you feel good believing, that is. Unlike you, this is NOT what I do for a living, but my advantage here over you is objectivity, rationality, and a good-faith effort to arrive at valid conclusions, and as a result of that advantage, I am able, as just an intelligent, rational layperson actually taking a moment to think this through a bit, to offer just a few reasons (all independent of one another) why that line you're drawing is not as quick and simple as you seem to think it is:
- Perhaps markets expect that at some point we'll severely cut projected entitlement spending, rather than "paying for it with ease" as is, something that every expert would laugh at you for saying.
- Perhaps markets expect that we'll raise taxes very substantially to cover this projected tsunami of spending (on entitlements as currently structured plus discretionary spending as projected).
- Perhaps markets expect some combination of the two above.
- Perhaps the attractiveness of alternative investments is low (or lower than previously).
- Perhaps the global pool of investment capital has expanded.
- Perhaps to some extent there is some irrationality -- e.g., the bigger fool theory -- and an expectation to sell before the market adjusts to a rational level.
I'm sure there are much, much more, but the point is that you are taking your observation of yields and holding it out as the be-all-end-all proof of your assertion that we'll be able to pay for everything "with ease" on our current course, even almost every expert would find that assertion obviously ridiculous. And although obviously no one can predict long-term growth rates with anything close to certainty, we are talking probabilistically here, and the expert consensus is that it is certainly NOT highly likely or even more likely than not that we can "grow our way out of the problem".
As for the "tax cuts increase revenues" baloney, I've given you plenty of reason to think that claim is false (expert consensus), and you've got nothing to support the belief that it's true, yet you persist with that belief. I guess that's the definition of irrationality...or insanity, but I assume the former. You just want to stick with the belief that feels good, period. Hey everyone, FREE LUNCH !! WE CAN HAVE OUR CAKE AND EAT IT, TOO !!
Have fun in your feel-good dreamworld. In a way, I envy you. Must be nice to be able to avoid unpleasant conclusions (and perhaps even be rewarded for it by others) by simply dismissing contradictory evidence despite its strength. As long as the erroneous conclusions don't lead to decisions that harm one's self, I guess that capacity for / tendency toward self-delusion is an emotional plus. Good for you. Now go back to your regularly scheduled affirmations and forget all about the bad man who challenged your feel-good beliefs. There, there.
In a message dated 1/21/2008 3:21:46 PM Eastern Standard Time, jtamny@realclearmarkets.com writes:
No, I’m doing nothing but saying that if the “experts” shared your view, then yields would be high and you wouldn’t have to so vainly try and prove something that evidently you’ve failed to prove to others.
If it makes you feel better though, no doubt the markets expect any number of scenarios including variations of what you put below such that the unfunded question is not the calamitious one your expertise brings you to believe it is. To note one, “- Perhaps the global pool of investment capital has expanded.”, true or not true, if it is and if it explains why the markets mock what you’re certain about, it doesn’t change the reality that you might seriously overrate this subject matter.
Whatever you do, once you’ve made your billions, buy yourself a copy of Dale Carnegie’s book on winning friends and influencing people, then luxuriate in your certain retirement with a study of “expert” predictions past. Even if ALL the experts shared your views (begging the question once again of why you’re insulting my person and time with these e-mails), there’s lots of history showing the folly of “expert” opinion.
Anyway, PLEASE erase my e-mail and stop harassing me. Since I’m so wrong you’ve surely got a whole group of “right” people eager to know what you believe. Count me as not one of them, and please stop e-mailing me.
From: [Brooks]
Sent: Monday, January 21, 2008 [time not recorded]
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)]
"Harassing"??? Grow up. Takes two to tango. All I've done is reply one-for-one to each of your emails. If I had not gotten a reply, I would not have written again. Again, grow up and learn to deal with reality in a rational way.
Sent: Monday, January 21, 2008 [time not recorded]
To: Tamny, John
Subject: Re: "Disagreeing with David Brooks on Taxes" (RCM 1/18)]
"Harassing"??? Grow up. Takes two to tango. All I've done is reply one-for-one to each of your emails. If I had not gotten a reply, I would not have written again. Again, grow up and learn to deal with reality in a rational way.
As for you arguments below, they amount to straw men -- pretending my argument, and yours, were things they were not -- and non sequiturs, although in fairness to you, it may be inadvertent; you may simply be fundamentally confused. But it is possible that you're not so confused, but realize that you can't defend the statements you actually made or refute mine, and are deliberately mixing up concepts/arguments/assumptions, etc. just so that you can reply (for your own odd satisfaction, I guess) with some ostensible argument.
Rather than trying to deconstruct and explain your straw men and non sequiturs, let me just say this: If a large part of the reason for those yields is that the markets assume that we will fundamentally change course on fiscal policy via very substantial cuts in projected entitltement spending (via reductions in benefits and eligibility, and perhaps some changes to our healthcare system to reduce projected medical inflation) and/or very substantial tax rate increases, then that market assumption is predicated on the assumption that rational, responsible people like me who are urging rational analysis and responsible policies will prevail over irrational, feel-good, head-in-the-sand, "don't worry, be happy" folks like you who say basically "Don't worry, everything will be ok on our policy current course, and anyway, if we need more revenue to cover all that projected spending, we can just keep cutting taxes until we have enough -- problem solved!"
Grow up. Or at least recognize your lack of rationality and/or maturity and ask anyone who would give you a forum to express your irrational beliefs and advocate irresponsible policies to please take that forum away from you before you influence others with such garbage.
Rather than trying to deconstruct and explain your straw men and non sequiturs, let me just say this: If a large part of the reason for those yields is that the markets assume that we will fundamentally change course on fiscal policy via very substantial cuts in projected entitltement spending (via reductions in benefits and eligibility, and perhaps some changes to our healthcare system to reduce projected medical inflation) and/or very substantial tax rate increases, then that market assumption is predicated on the assumption that rational, responsible people like me who are urging rational analysis and responsible policies will prevail over irrational, feel-good, head-in-the-sand, "don't worry, be happy" folks like you who say basically "Don't worry, everything will be ok on our policy current course, and anyway, if we need more revenue to cover all that projected spending, we can just keep cutting taxes until we have enough -- problem solved!"
Grow up. Or at least recognize your lack of rationality and/or maturity and ask anyone who would give you a forum to express your irrational beliefs and advocate irresponsible policies to please take that forum away from you before you influence others with such garbage.
