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27 February 2002

Our current howler (part I): Veiled criticism

Synopsis: In Afghanistan, women are dropping the burqa. At home, some are putting it on.

Hill Negotiators Reach Tax Cut Deal
Glenn Kessler, The Washington Post, 5/27/01

Congress Passes Tax Cut, With Rebates This Summer
Richard Stevenson, The New York Times, 5/27/01

Some Relief Comes This Year, Most Much Later
Kathy Kristof, The Los Angeles Times, 5/27/01

Tax law will mean refunds, rate changes
Thomas Fogarty, USA Today, 5/29/01

Snags likely on tax-cut rebates
Jonathan Weisman, USA Today, 5/29/01

Congress passes tax cuts
Jill Zuckman, The Chicago Tribune, 5/27/01


On Monday morning, it happened again. "I didn’t realize what I was getting into," Andrew Sullivan marveled on his eponymous dotcom. "I’ve now had several new emails from professional and academic economists bemoaning the sad decline of Paul Krugman from first-class economist to third-class partisan ranter." The Brainy Brit was flushed with surprise. But you knew that Sullivan wasn’t kidding around, because he quickly produced one such e-mail. "Here’s yet another," the Brawling Brit said. We bring you the crucial critique:

ANDREWSULLIVAN.COM (2/25/02): Here at Northwestern, and when I used to teach at William and Mary, Krugman was perceived among us as being a brilliant international economist, and skilled at insightful commentary that made complex economic issues clear to non-economists. His books and articles were useful in undergraduate teaching for precisely those reasons.

In the past 18 months I’ve noticed among my colleagues a significant decline in his reputation, even among politically "big-L liberal" economists, because he is increasingly perceived as grinding political polemics instead of offering enlightening and insightful commentary on economic issues. Many of us, regardless of political stripe, are increasingly embarrassed by him and his writing. I get the sense that this is the case even among my colleagues who themselves get money calls, although we’ve not explicitly discussed it.

For me it really kicked in last year with the California electricity situation, because my research is in electricity deregulation. Practically everything he asserted about the economics of the situation was wrong, and his articulation of it was tinged with political rhetoric. To tie this in with Posner’s recent comments about public intellectuals, it’s one thing for Krugman to talk about areas of economics that are beyond his expertise, but it’s another entirely to do so for politically polemic reasons. Of course, you’ve helped lay bare the irony of his electricity commentary.

The only reason most people I know still read him is to ridicule him, or to lament how the mighty hath fallen.

By now, we can almost recite the tale in our sleep. Krugman was just so good at one time, before he began all that bashing of Bush. Now we just shake his head at his blunders. Ye gods, how the mighty have fallen.

The morality tale is becoming familiar, and so are its noxious trappings. First point: Sullivan’s alleged "economist" goes unnamed again. There’s no way to assess his or her professional caliber—or to know if he or she exists. Amazing, isn’t it? Is there anywhere else in the western world where anonymous comments are so highly prized? In Afghanistan, some women are dumping the burqa. Over at Andrew Sullivan’s swamp, "economists" are pulling it on.

But a second point surely needs to be made about this new alleged e-mail. This latest attack is so hopelessly vague that there is no way to judge if it’s accurate. Sullivan’s knock-kneed "economist" makes a lonely confession. His or her despair over Krugman’s work "really kicked in last year with the California electricity situation," he or she writes, "because my research is in electricity deregulation." And guess what he or she said after that? "Practically everything [Krugman] asserted about the economics of the situation was wrong," he or she lamented, "and his articulation of it was tinged with political rhetoric." But does anyone know what this "prof" thinks was specifically wrong with Krugman’s critique? He or she forgot to say. Weird, isn’t it? We get vague assertions, from behind a veil. Everything the western world painfully learned to despise is actively peddled by Sullivan.

But it’s easy to see why Sullivan’s latest "economist" is avoiding the mistake made on Friday. On Friday, Sullivan passed on a specific critique—one which was utterly ludicrous. On that day, Krugman had written about last summer’s "famous rebate checks;" he said "those outlays were included only grudgingly, and with a catch: they really weren’t rebates. Instead, they were merely advances on future tax cuts." As we noted in Monday’s HOWLER, this observation had already been made by a wide range of economics writers (see THE DAILY HOWLER, 2/25/02). It was about as controversial as a bowl of warm stew, but Sullivan’s "economist" battered it hard. That’s right, kids; on Friday, Sully was handed a lemon. On Monday, he knew enough to stay vague.

But where are standards, boys and girls? Indeed, as pseudo-conservatives consolidate power, do you see a certain pattern emerging? Matt Drudge channels bogus spin—and the press corps recites it, without any checking. Andrew Sullivan quotes Krugman accusers—and throws a big burqa right over their heads. Why, if we didn’t know any better, dear readers, we’d almost want to yell anti-American! Funny—maybe it isn’t just imports from mysterious Islamic lands who despise our American values.

Next: Where were standards when Bernie Goldberg chatted on two TV programs?

We know what they did last summer: Let’s review last summer’s "rebate checks," so you’ll know what Krugman referred to.

In May 2001, Congress passed the Bush tax cuts, including a change in the lowest, 15 percent tax rate. (We’ll talk about married couples filing jointly.) Instead of paying 15 percent on the first $12,000 of income, couples would now pay only 10 percent. This would cut taxes owed on this income from $1800 to $1200, saving these couples $600. The change was widely bruited as being "retroactive to January 1."

But Congress wanted cash in people’s hands right away—so they sent these couples a check for that $600 last summer. But this was not a "rebate" on taxes from the year 2000, as some major papers’ journalists wrote (including Robert Pierre in the Washington Post, 5/28/01). In effect, this money was an advance on the taxes owed for 2001. Attention, married folk! If you received a check for $600 last summer, how much do you have to render this April 15 on your first $12,000 of income? Ugh. You have to render $1800—the $1200 you owe at the new ten percent rate, plus the $600 you were "advanced" when you got that check. There was nothing dishonest, evil or wrong with this "advanced payment" procedure; in 2001, married couples’ taxes were in fact cut on the first $12,000 of income. (They will pay $1200 net; a year ago, they paid $1800.) But the regimen involving those "rebate checks" was misunderstood by a good many people. Many people thought they were getting a cut in the 15 percent tax rate and a check for $600. That was false. (James Taranto misconstrues this point in today’s opinionjournal.com. This conundrum has been widely bruited for the past six months, generally playing to massive confusion.) As we saw on Monday, many economics writers have said that use of the term "rebate/refund" helped create a web of confusion. Krugman was only one of many to note this widespread kerflubbery.

But after Krugman’s column appeared, the Treasury Department got busy. On Friday, Treasury sent out a letter denying that last summer’s checks were about to be "snatched away," a phrase Krugman used in his column. Krugman was "totally incorrect," Treasury said. Bullroar. To make a long story short, here’s the sentence Treasury used to say that Krugman was all wet: "The bill created a new 10 percent bracket that did not go into effect until January 1, 2002." With torture, that statement can be defended as technically accurate, but it does not reflect the widespread understanding that existed last summer. For example, here was John Godfrey in the Washington Times the day after the tax cuts were passed:

JOHN GODFREY, Washington Times, 5/27/01: The bill would immediately create a new 10 percent bracket on the first $6,000 of a person’s taxable income. The new bracket, effective retroactively to Jan. 1, 2001, would mean $300 a year in savings for anyone earning more than $13,000 after deductions and exemptions.

Godfrey omitted the numbers for married couples, but he said the new 10 percent tax rate was retroactive. But let’s try to be fully ecumenical:

GLENN KESSLER, Washington Post, 5/27/01: The 15 percent bracket is not changed, but the bill establishes a new 10 percent bracket on the first $6,000 of taxable income for singles and $12,000 for couples. These would take effect retroactively.

RICHARD STEVENSON, New York Times, 5/27/01: The bill immediately creates a new bottom tax rate of 10 percent that applies to the first $6,000 of taxable income for single people and $12,000 for married couples filing jointly. The change is retroactive to the first of the year, and it is this part of the tax cut that will lead to the mailing of rebate checks in the coming months.

KATHY KRISTOF, Los Angeles Times, 5/27/01: Congress opted for a two-tiered approach. A new 10 percent tax rate, applied to the first $6,000 to $12,000 earned by all taxpayers, goes into effect retroactively to the beginning of the year. Maximum benefit: $300 for singles, $600 for married couples and $500 for single parents.

The new ten percent tax rate was also described as "retroactive" by the Boston Globe, the Charlotte Observer, the Dallas Morning News, the Miami Herald, the Minneapolis Star-Tribune, the New Orleans Times-Picayune, the Philly Inquirer, the San Francisco Chronicle, the St. Petersburg Times, and by the Bloomberg, Cox, and Hungarian News Services. Only USA Today’s Thomas Fogarty dissented. At the same paper, though, Jonathan Weisman went retro:

THOMAS FOGARTY, USA Today, 5/28/01: For 2001, a half point will be shaved off the existing rates of 28 percent, 31 percent, 36 percent and 39.6 percent. In 2002, a new 10 percent rate will be carved out of the existing 15 percent tax bracket.

JONATHAN WEISMAN, USA Today, 5/29/01: The rebate checks reflect the tax bill’s new 10 percent tax in 2001—down from 15 percent last year—on the first $6,000 of income for individuals and $12,000 for married couples.

Meanwhile, at the Chicago Tribune, Jill Zuckman seemed to split the difference:

JILL ZUCKMAN Chicago Tribune, 5/27/01: Income tax rates will begin to drop as of July 1 and will continue to drop gradually over the next five years. The top 39.6 percent rate will drop to 35 percent; the 36 percent rate will drop to 33 percent; 31 percent will fall to 28 percent; and 28 percent will become 25 percent. The 15 percent rate will remain, but a new 10 percent rate will be created to apply to the first $6,000 of taxable income for a single filer and $12,000 for married couples filing jointly.

By the way, where did journalists get the idea that the ten percent tax rate was "retroactive?" Maybe they got it from the White House, where Andrew Card said, "The President said help would be on the way, and help is on the way. This tax relief package will provide tax relief over the course of the next 10 years and is retroactive to January 1st of this year at the 10-percent tax rate level. And Americans have been overpaying their government for a long time and now they’re about to get a refund." They were also about to get bollixed.

At any rate, that was the White House on June 26, 2001. Last Friday, Treasury said something totally different, to slam Krugman. But are you really surprised that such chaos exists? Dear readers, we ask again: Where are standards?

 

The Daily update (2/27/02)

Where in the world are Andrew Sullivan’s "economists?" An alert reader told us that Sullivan’s anonymous "economists" may be lurking beneath thick veils at www.trendmacro.com. If you check the site out, you will indeed find Grade A prime Krugman-bashing. Obviously, we have no idea if we’ve found Sully’s men. But we were amused by a change of perspective we found on this Krug-crunching site.

After the Treasury Department began bashing Krugman, TRENDMACRO lit into the Timesman. On Monday morning, the website linked to Treasury’s letter, and exulted over the brilliant attack. "Isn’t it wonderful when the victims of a media hatchet attack actually defend themselves?" the site asked. "With this and Enron, this is definitely two strikes for Paul Krugman."

But what had TRENDMACRO said last Friday, when Krugman’s column first appeared? This item—which appeared early Friday morning—linked to Krugman’s piece:

TRENDMACRO.COM: The good news is that Paul Krugman is back to being an economist. The bad news is that he’s a recovery skeptic, and the thought that he agrees with us fills us with self-doubt and self-loathing. He also raises interesting issues about the illusory nature of the $300 tax rebate checks everyone got last year. Worth reading, believe it or not.

The illusory nature of the tax rebate checks? At TRENDMACRO, Krugman’s column sounded great Friday morning; a few days later, the Timesman was damned. But then, as his critics have often said—Krugman was so good at one time, before he began all this bashing.