But there’s another other big problem here. The Wall Street Journal has a long history of editorializing in favor of deficits and against balanced budgets. As it said a couple of years ago, “We’ve long argued that deficits per se are not worth losing sleep over.” It somehow forgets all about that here.
In other words, the deficit doesn’t have to go to zero, according to everything the Journal has ever said. Presumably the Journal doesn’t see the need for deficits to go below 2.9 percent of GDP, since that was the lowest number their hero Ronald Reagan posted in his eight years in office.
So here’s the Congressional Budget Office on what deficits look like as a percentage of GDP under both current law and the proposed Obama budget (click for a larger chart):
Under current law, the CBO projects deficits beginning next year of 6.9 percent, 4.2 percent, 3 percent, 3 percent, 3.3 percent, 2.9 percent, and 2.8 percent. It projects the Obama plan’s budget deficits at 7.4 percent for next year, and then 5.5 percent, 4.4 percent, 4.1 percent, 4.4 percent, 4.3 percent, and 4.3 percent thereafter.
Here are Reagan’s budget deficits from 1983 to 1988: 6 percent, 4.8 percent, 5.1 percent, 5 percent, 3.2 percent, and 2.9 percent.
Raising taxes on the top 1 percent back to pre-Reagan levels would drop the baseline and Obama budget deficits by roughly 1.2 to 1.3 percentage points of GDP per year (and presumably more, as income at the top has tended to rise far faster than the economy as a whole), putting both well below Reagan-era levels through 2020.
After that, Medicare costs have to be reined in or the deficits explode. Nobody I’ve seen questions that. The dispute is over how to do it.
Remember, these are just projections. The actual numbers will play out differently. But this is what we’ve got to work with now.
The bottom line: contrary to what the Journal says, raising taxes significantly on the top 1 percent would indeed make a significant dent in future deficits. Raising taxes less on the top 5 percent to 10 percent or even the top 25 percent, would narrow deficits even further. And that’s without even considering spending cuts.
We could work full time just picking apart the misleading stuff or outright falsehoods on the Journal edit page, but we’d go insane. As Chait says:
There’s always a problem involved in wasting one’s time examining very bad arguments. But organs like the Journal editorial page — which just won a Pulitzer Prize! — are influential and prestigious. I think very few people realize that these people are just pure clowns. They’re not messing up complex economic theories here. They’re messing up basic arithmetic.
Ryan - I can see your points in some regards, but I think it's a over-dramatic stretch on your part to claim that main intent of The Wall Street Journal's editorial page and of its editorial writers is to "push policies—especially tax ones—that benefit the very rich."
I think most reasonable people who read the page, and especially most reasonable business executives — who, after all, comprise The Journal's primary readership — would say that The Journal's editorials are pro-business.
That doesn't necessarily imply that The Journal is anti-poor and pro-rich or anything of the sort. It is one of the world's most respected publications for a very good reason: it consistently breaks business stories and provides business-related news and viewpoints that people deem valuable. If not, it's more than 2 million daily readers would simply stop reading it.
Let's give a little more credit where it is due and not make pronouncements that don't truly reflect reality.
#1 Posted by Keith, CJR on Fri 22 Apr 2011 at 05:20 PM
I think it's a neutral and fair statement to say that the main intent of The Wall Street Journal's editorial page and of its editorial writers is to "push policies—especially tax ones—that benefit the very rich."
#2 Posted by Stephen Downes, CJR on Fri 22 Apr 2011 at 05:55 PM
Keith, as a small business owner, I can assure you that the Wall Street Journal doesn't give a hoot about me. Their favored policies really are targeted at folks who are making $200K/year, not at small business owners, most of whom are lucky to clear $50K, especially in the early stages of the business. I'd love it if I could pay as little, or benefit as much, from the tax policies as GE. Instead, I pay quite a bit in taxes, significantly more than much richer companies who can afford to hire those high priced lawyers and accountants. The tax policies pushed by the WSJ would not benefit me, they would benefit GE, and Google, and all those big companies paying so very little, and their executives.
#3 Posted by Thalia, CJR on Fri 22 Apr 2011 at 07:09 PM
Keith, wsj reporting is high quality and provides solid information to investors on a regular basis (even in the Murrdoch era though there has been some lapses in quality)
Wsj editorials, on the other hand, have long been the domain of right wing, libertarian, anti-democrat, weekly standard is my day job, wing heads who are only good for a bit of comedy over your morning coffee.
They really are two worlds in one paper.
#4 Posted by Thimbles, CJR on Fri 22 Apr 2011 at 08:04 PM
I want to like this on Facebook. Throw me a button.
#5 Posted by Kevin Matthews, CJR on Fri 22 Apr 2011 at 10:38 PM
great post-those bums at fox news are going to read the original story in the journal and run with it, not releasing the fudged numbers,
#6 Posted by ian , CJR on Sun 24 Apr 2011 at 09:14 PM
It's not just the WSJ that whiffs on taxes. The entire MSM consistently whiffs on all economic issues. Dean Baker's column at The American Prospect consistently deconstructs MSM articles on all kinds of economic issues.
American media runs on advertising. Advertisers control the content. Period. End of story.
Dean Baker continues his fact checking of economic dogma from right wing Corporate Overlords at his new sight:
http://www.cepr.net/index.php/beat-the-press/
#7 Posted by Gary Boatwright, CJR on Mon 25 Apr 2011 at 06:20 PM
Beat The Press Redeux - Dean Baker continues his fact check of MSM dogma:
The Washington Post Runs a Front Page Editorial Against Europe's Welfare State:
The article also attributes an obviously untrue assertion to an economist featured in the piece:
"As a result, he [French economist Michel Godet] said, French workers on average show up at the office or factory 620 hours a year, compared with about 700 in Germany and 870 in the United States." These numbers would be approximately accurate if 1000 was added to each one."
Ooooops! Those damned zeros are so confusing.
#8 Posted by Gary Boatwright, CJR on Mon 25 Apr 2011 at 06:39 PM
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#9 Posted by Daveffd3tnv, CJR on Wed 18 May 2011 at 06:09 AM