Tag Archives: economy

Which way out of the recession?

This New York Times article today explains how states can respond to the recession by either raising taxes or cutting spending. They pick Maryland and Kansas as exemplars of each respective strategy. They assert that there is great confusion as to how well each strategy works. Kansas Governor Sam Brownback apparently did some of his own data analysis:

Gov. Sam Brownback of Kansas, who sought the Republican nomination for president four years ago, said he was persuaded that his state needed to cut its income taxes and taxes on small businesses significantly when he studied data from the Internal Revenue Service that showed that Kansas was losing residents to states with lower taxes.

Another interesting quote:

The effects of state taxes are hotly debated. This spring, when the George W. Bush Institute held a conference in New York on how to promote economic growth, panelist after panelist asserted that cutting state taxes would jolt the economy; Governor Brownback told the conference that his small-business tax cuts would be “like shooting adrenaline into the heart of growing the economy.”

But the Institute on Taxation and Economic Policy, a nonprofit research organization in Washington associated with Citizens for Tax Justice, which advocates a more progressive tax code, issued a report this year that found that the states with high income tax rates had outperformed those with no income tax over the past decade when it came to economic growth per capita and median family income.

The choices made by Kansas and Maryland could provide something of a real-time test of the prevailing political theories of taxing and spending — though it could be years before the results are in.

Rich folk in Congress, political scientists in the news

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Two big articles on economic disparities between members of Congress and their constituents appeared on December 27th, one in the New York Times and one in the Washington Post. (Not sure if there is anything behind the coincidence).

The Times article is more about how members of Congress (MC’s) have been relatively sheltered from the economic downturn. It includes a brief discussion of whether MC’s use their insider connections to benefit in the stock market, including a reference to a paper by Jens Hainmueller and Andrew Eggers:

While the housing collapse nationwide has hurt many Americans, lawmakers still find the real estate sector the most popular place to park their money, statistics from the Center of Responsive Politics show, and members of Congress continue to profit from their investments there. Perhaps the most tantalizing but hotly debated factor in the rising wealth of Congress is lawmakers’ performance in the stock markets — and the question of whether they are using their access to confidential information to enrich themselves.

In a study completed this year, Mr. Ziobrowski at Georgia State and his colleagues found that House members saw the stocks they owned outperform the market by 6 percent a year. Their research from several years ago found that senators did even better, at 12 percent above average. The researchers attributed the performance to a “significant information advantage” that lawmakers hold by virtue of their positions and the fact they are not bound by insider-trading law.

However, a separate study last year by researchers at Yale and the Massachusetts Institute of Technology found that the portfolios of lawmakers actually performed somewhat worse than average investors. It found that members did do better when investing in companies in their home districts or associated with campaign donors — suggesting that they benefited from their political connections — but still not as well as the average investor.

The Post article is more about the absolute level of wealth of MC’s versus their constituents, and includes a quote from Duke political scientist Nicholas Carnes:

A representative’s occupation before being elected influences how liberal or conservative he or she is in voting, according to an analysis of more than 50 years of congressional votes by Duke University professor Nick Carnes.

In order from most conservative to most liberal: farm owners; businesspeople such as bankers or insurance executives; private-sector professionals such as doctors, engineers and architects; lawyers; service-based professionals such as teachers and social workers; politicians; and blue-collar workers, according to the analysis, which is being published in Legislative Studies Quarterly.

Carnes said that while party affiliation is the strongest determinant of voting records, “the differences between legislators of different occupational backgrounds are pretty striking. People tend to bring the worldview that comes with their occupation with them into office,” he said.

The Post article has almost 5,000 comments; the Times article about 250, as of this writing.

Has the Occupy movement made inequality more salient? (continued)

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Apropos of my earlier post, Larry Bartels has written a blog post on Bill Moyers web site (linked to on the Monkey Cage) asking whether the Occupy movement has made inequality salient in public opinion. The short answer: nope. Here’s the key table, but it’s definitely worth reading the whole post.

Of course, maybe people don’t connect their own concerns about inequality with specific policy programs. They might care about inequality more because of OWS, but not see the link to the Bush tax cuts.

In fact, this is what Bartels himself argued in his paper Homer Gets a Tax Cut, right?

Update: It turns out Pew found a 19 point jump in the percent of respondents who see a conflict between rich and poor, between 2009 and 2011. See here and here. Main graph reproduced below.

Unfortunately there doesn’t seem to be many questions like this asked over time, so it’s not clear how much this can be credited to the Occupy protests.

How can voters both approve of Obama’s agenda but disapprove of his performance?

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Washington Post blogger Greg Sargent has been hitting this point relentlessly in the past weeks, as a string of polls seems to be showing the same thing: voters strongly disapprove both of Obama and his handling of the economy, but they say they like his ideas for fixing the economy. The New York Times editorial board has noticed, too.

So what’s going on? There are a couple of reasons why we might explain this “disconnect”:

-Questions about approval, whether of the person or the policy domain (economy, war, etc) do not elicit attitudes about policy choices. Instead, they only elicit attitudes about affect and what political scientists call “valence”–that is, if the economy seems to be performing well in terms of results, voters approve.

-Voters don’t believe Obama can succeed in getting these policies passed.

-Voters don’t give politicians any credit for proposing solutions, since this is “cheap talk.” They only update their attitudes based on what’s actually been done.

-Voters would express support for any proposed solution that would purportedly create jobs.

In general I actually think it is wrong to see this as a “disconnect,” because there does not seem to be much evidence that voters take policy considerations into account when judging politicians (and institutions; i.e. political trust seems to be driven more by party and valence performance than any real thinking about how institutions work). This is to be expected, since it’s hard enough for us to follow the end result of policy than it is to adjudicate among alternatives and make predictions.

In digging up the Greg Sargent posts, I noticed that I missed a “digest” type post where he links to this New Republic piece by Jonathan Chait, asking this very question. John Sides of the Monkey Cage is quoted with some other thoughts.

More on the credit rating

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Joshua Tucker at the Monkey Cage asks a somewhat related question about the downgrade–how many political scientists does S+P have on staff?

Also, after my last post I had a thought–perhaps I missed the point, and what S+P is really saying something like, “the US system must really be messed up if it lets a minority of fanatics use the threat of default as a bargaining chip.” Indeed that explanation might explain why most elites have apparently not bothered to question whether S+P was right in their evaluation of our system, since it might sound pleasing to liberal elites.

Washington Post blogger Greg Sargent has a post from yesterday that makes this very point, with a quote from an S+P official to back it up. Here’s Sargent’s excerpt of a Politico story:

A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.

Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.

“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”

Somehow that seems even more ridiculous to me than the idea that the downgrade was a blanket judgment of our entire political system.

Bizarrely, I think I’m more in agreement with this person–if only in the headline, and not in the substance. I must be missing something really obvious.