$1,400 * 200 million does not = $2,000.
Newt Gingrich tweets:
If Senate Republicans fail to bring up the $2000 payment as a clean vote they run a real risk of losing the two seats in Georgia. This is an 80% issue. People get it. Billions for the banks, billions for big companies, but we can’t find $2000 for everyday Americans.
If the proposal before the Senate really were to give $2,000 to everyday Americans, no one would be raising an objection because $2,000 divided by, say, 200 million everyday eligible Americans is way, way below 1 penny each.
But it’s an extra $1,400 per “everyday American.” (They will already get $600 and the new bill raises that number by $1,400 to $2,000.) With over 200 million Americans qualifying, that’s about $300 billion.
So if we were to rewrite Newt’s tweet honestly and accurately, it would read something like:
If Senate Republicans fail to bring up the $2,000 payment as a clean vote they run a real risk of losing the two seats in Georgia. This is an 80% issue. People get it. Billions for the banks, billions for big companies, but we can’t find $300 billion for everyday Americans.
Sounds a little different, doesn’t it?
Newt’s tweet also shows the difference between those of us who want to have gridlock and divided government in order to restrain government and people who want divided government simply because they want the Republicans to be the majority party in the Senate.
Many of us want gridlock because we fear what a Democratic House of Representatives, a Democratic Senate, and a Democratic president will do. One of the main things many of us fear is that they will spend hundreds of billions of dollars more than if the Republicans won the Senate and restrained the Democrats’ spending. But if Mitch McConnell caves so that the feds spend an extra $300 billion and the Republicans win in Georgia, they will have nullified a huge part of the reason for having the Republicans win in Georgia.
UPDATE: In an earlier version I claimed that the $2,000 would be on top of the $600 already approved. That was incorrect. See this WaPo article for the details.
READER COMMENTS
Mark Barbieri
Jan 2 2021 at 6:43pm
I would have preferred to see a compromise on a $2,000 figure, but the money would be voluntary and would be in the form of a loan to be repaid by the borrower in future taxes. Add in a provision to allow people to forgo payback in years where their taxable income was below a low threshold. People who need the money now would get the money now. The people who got it would (mostly) be the ones that paid it back rather than future taxpayers.
David Henderson
Jan 2 2021 at 11:47pm
That’s a way better proposal.
Garrett
Jan 4 2021 at 4:36pm
Would there be an interest rate on the loan? If so, a rate below 2% would be a no brainer to get since inflation is expected to be 2% on average
Peter Gerdes
Jan 3 2021 at 6:36am
Sounds exactly the same to me. As I expect it would to most numerically literate readers who know roughly how many Americans there are or who simply remember the rough order of magnitude of the last proposal.
Newt’s tweet (whether you agree or not) was perfectly clear that it meant a payment of $2,000 to each American. Personally I’ve got no problem with direct cash transfers as they are one of the few things the government can do competently and with relatively little overhead.
David Henderson
Jan 3 2021 at 9:44am
You wrote:
I believe you.
You wrote:
That’s true too. So it’s possible that I mistitled the post. Newt is probably playing on most Americans’ innumeracy.
Here’s a suggestion: Next time you have a large gathering of people around you (and it might be while in this time of COVID), hand out a piece of paper and pen to each, tell them not to talk to anyone, and have them write down the U.S. population. Tell them not to write their name so that’s there’s no shaming. My prediction: If you have 20 or more people, the median answer will be really close to the actual and the highest answer will differ from the lowest by at least one order of magnitude. I’ve done this about 50 times with at least 20 military officers at a time.
Alan Goldhammer
Jan 3 2021 at 8:54am
you could flip the party labels and make the same persuasive argument. The tax ‘reform’ legislation passed at the beginning of President Trump’s administration is a concrete example of this. Why should we fear Democratic control of government any more than Republican control? Would not a true Libertarian fear both?
David Henderson
Jan 3 2021 at 9:30am
You wrote:
Not only could you but also I have.
You wrote:
That’s not a good example. That was a very good bill.
You wrote:
I’m not sure about the answer to your first question: I can see it all 3 ways: fear it more, fear it less, or fear it the same. The counterfactuals are really hards.
In answer to your second question, absolutely. The Bush II years were awful in that respect: No Child Left Behind, USA PATRIOT Act, formation of the Department of Homeland Security, war on Iraq, and prescription drug benefit, to name 5. I’ve said in another forum that of the 4 presidents in the 21st century (Clinton was president for 19.5 days of the century, admittedly), Bush II was the worst.
The reason I focused on domination by Democrats is that that’s the issue before us. There’s no danger that Nancy Pelosi and 6 other members of the House of Representatives, along with Joe Biden, are suddenly going to become Republicans.
Zeke5123
Jan 3 2021 at 9:43am
I have some complaints about tax reform but I’m curious what your complaint is — what do you take issue with?
robc
Jan 3 2021 at 10:13am
One of the best parts of the tax reform was the significant raising of the standard deduction, to eliminate itemizing for a large number of people (I still itemized last year [2019 taxes], I went about $400 over the standard deduction — I don’t think I will be this year[2020 taxes]). It was a very good step towards tax simplification, even if it didn’t go far enough.
Zeke5123
Jan 3 2021 at 10:40am
Agreed on that aspect.
my problem with reform is more on the international side (eg think GILTI is terrible) and opportunity zones.
Alan Goldhammer
Jan 4 2021 at 8:18am
The tax legislation preserved the carried interest loophole that is a complete travesty (and one that President Trump ‘promised’ to get rid of). Furthermore, it only marginally simplified the tax code and did not get rid of more tax preferences. There is no reason at all to preserve all the various preferences that only provide benefits to targeted individuals and corporations. The real estate preferences have been quite problematic for years now (do you ever wonder why hotel buildings are constantly flipped after a decade or so? It’s all a result of the loss of depreciation credits).
The corporate tax continues to raise less revenue as a percentage of the total government income. It should either be zeroed out or reduced to a very low level and a VAT should be implemented which makes it far easier to do tax collection and cannot be gamed. The VAT also can function as a consumption tax.
Most individuals should not even have to spend hours doing their tax returns each year. The IRS pretty much knows how much the vast majority of Americans make each year (in our case it is Social Security, pension and investment income). All that should be necessary is to check to make sure the numbers are accurate. It takes most Dutch citizens about 10 minutes to do their yearly tax filings.
I would be happy to move to a two bracket flat tax and eliminate all tax preferences including those for charitable and mortgage interest deductions.
JFA
Jan 3 2021 at 9:13am
I, like Alan, am confused about the reasoning here, as well. Seems like spending has not been controlled during Trump and McConnell’s time at the helm, and while I don’t think the government has been uber-competent in the past, I have found that there has been a marked decline in competence (and increase in likely corruption and blatant nepotism) in the federal government over the past 4 years. And while appeals to democratic norms are squishy, the Republican party has certainly veered away from (at least) cosmetic support to outright abhorrence of those norms.
Todd Ramsey
Jan 3 2021 at 10:36am
Not strictly on topic, but here’s a modest proposal I have read elsewhere (Arnold Kling)?
A national law forbidding the written use of the words million, billion, and trillion. Instead, require the numbers be written out: 1,000,000; 1,000,000,000; and 1,000,000,000,000 . So the general public can’t put their heads in the sand about the staggering amounts bandied about.
Andre
Jan 3 2021 at 10:46am
Yes, in a bill costing over $6,500 per tax filer, asking that $2,000 come back to the taxpayer in the form of direct payments – instead of just $600 – is clearly out of bounds.
Currently, under $90b stands to go to taxpayers directly, and more than $810b will get funneled to other causes of all sorts – some of them helpful, others just pork.
Pedantry > context, it seems.
David Henderson
Jan 3 2021 at 10:55am
You’re talking about the substance of the bill. Do you agree with me that it’s a bad bill, and is bad mainly due to the provisions that you mention?
My post is about Newt’s cynical way of describing the $2,000 per person. It will appeal to the innumerate. Read my response to Peter Gerdes above.
Jon Murphy
Jan 3 2021 at 11:09am
Or it will be picked up, translated, and reported by the innumerate. A reporter may not understand the difference, and in an effort to summarize or simplify for the reader, he will misstate and misinform. And it will be entirely by accident.
As an aside, this problem of reporters incorrectly “translating” what they’re reporting on for their readers is part of the reason there is so much misinformation out there about COVID and various responses to it.
Andre
Jan 3 2021 at 3:40pm
I don’t know the bill’s provisions, but I am generally against the entire enterprise of telling people they cannot work, then throwing them crumbs, all while spending enormous amounts of these same taxpayers’ future earnings; largely on things that won’t benefit them. Based on previous posts, I think we may be aligned in that regard.
I don’t think that most people believe that giving almost all taxpayers $2,000 each would only cost a grand total of $2,000 (or the difference between $2k and $600).
Americans are largely innumerate; they’re not that innumerate.
john hare
Jan 4 2021 at 4:14am
I think you might be surprised at how many are that innumerate, or even more so. During the bail outs a dozen year back I heard many times the complaint that “They should have given each taxpayer a million dollars”. Several of the times I tried to argue the point and explain the math I couldn’t get through. I don’t think one should dismiss the sheer number of people that don’t want to hear it.
TMC
Jan 5 2021 at 12:13pm
“Pedantry > context, it seems.”
I agree with this. It’s obvious, even to a reporter (low bar), what is being said.
And there will always be those who misinterpret a speaker’s message, often on purpose.
Given Newt was the last person to balance the budget, I’d give him the tiny amount of leeway required on this.
TMC
Jan 5 2021 at 3:04pm
Please don’t take the claim of ‘Pedantry’ as meaning there was any ill intent. I don’t mean to imply that. You’ve certainly earned the benefit of the doubt on that.
Niko Davor
Jan 5 2021 at 12:42pm
This isn’t “innumeracy”. Gingrich surely understands the simple numbers here. Gingrich is simply using manipulative rhetoric on purpose to persuade listeners.
Henderson’s preferred choice of words, “$300 billion for everyday Americans.” is more neutral phrasing that I would expect of an honest non-partisan analyst or researcher. Gingrich’s choice of words, “$2000 for everyday Americans.” is biased phrasing designed to persuade the listener. It’s not a lie. It’s merely biased phrasing.
This also strikes me as every day bias that is the norm for all partisan political figures, rather than particularly egregious biased language.
This is absurd. $300 billion strikes me as a very tiny concession relative to the Green New Deal and the Medicare For All Plans that Kamala Harris has promoted and the Democratic Party is serious about. Or even the Student Debt Forgiveness Proposals that leading Democrats are seriously pushing have estimated price tags of $1.6 trillion. Also, the $300B payout is at least evenly distributed among Americans, rather than targeted at benefitting those who’ve taken large student loans.
David Henderson
Jan 5 2021 at 2:47pm
You wrote:
Good point.
You wrote:
If we take those numbers at face value and assume that the probability of passage is 0 with a Rep Senate and 1 with a Dem Senate, then you’re absolutely right. My model, though, is more a mix of median voter and median Senator. But I admit that my model is a little vague. One picky point: the $300B payout isn’t evenly distributed among Americans: it goes disproportionately to lower-income Americans. That’s not a criticism, by the way. And I agree with you that that’s WAY better than bailing out people with student loans.
One final point. The more that Republicans vote for big spending increases, the less effective they will be at stopping big Democratic spending increases. So the $300B is almost certainly an underestimate of the cost of the bill.
Niko Davor
Jan 5 2021 at 8:26pm
Reliable polls are saying that the Republicans will probably lose the Senate for opposing the $2000 COVID checks: https://www.nationalreview.com/news/this-pollster-thinks-gop-opposition-to-2000-covid-checks-may-cost-them-georgia/
It seems that you are expecting Republicans to take on very unpopular positions of austerity and basically forfeit elections, which seems an unrealistic expectation for a career politician.
I would expect a rational pundit to accept the reality of political compromise and voter preferences, and to choose the lesser of two evils in a two-way race, and promote candidates accordingly. You don’t seem to be doing this.
Many Republicans have shown some genuine attempts at pushing austerity or endorsing big spending only under pressure to do so. Many Democrats are leading the charge towards more lavish spending. Republican politicians definitely aren’t saints, but on the issue of austerity, they are clearly the lesser of two evils.
I’m glad you agree that student loan forgiveness is WAY worse… I’m surprised you also don’t say that the Green New Deal and Medicare For All is way worse. The big counter argument is the Green New Deal would never pass or would get watered down. But Democratic politicians like Ms Harris are leading the charge on those fronts, they aren’t reluctantly compromising when poll results tell them that they have no viable alternative.
David Henderson
Jan 5 2021 at 11:06pm
You wrote:
I’m not sure why you’re surprised. With all I’ve written, I would have thought that you would understand that I think it’s way worse. I was simply responding to your comparison of student loan bailouts and $2,000 payments to people.
Niko Davor
Jan 7 2021 at 12:40am
I’ve read a lot of your writing.
I’m sure you think The Green New Deal co-sponsored by vice-president-elect Harris is bad; even ridiculous or outrageous. But would you encourage people to vote for Republicans that would try to stop that and push policy in a more fiscally reasonable direction? I’m not sure what you would do.
To me, Republicans reluctantly supporting a relatively small bad idea as a politically necessary compromise is much better than Democrats enthusiastically championing relatively large terrible ideas like The Green New Deal or Harris’ Universal Health Care or tuition loan forgiveness. You don’t seem to be drawing the same conclusion and I’m trying to understand why.
David Henderson
Jan 7 2021 at 2:04pm
Niko,
You asked:
If they would, then yes.
Comments are closed.