Wednesday, November 9, 2011

Whitesnake Maule's Again

I spent a couple posts last week debunking Beale's Law (see here and here). On Monday, another tax professor jumped onto the factual manipulation bandwagon. This time, left-wing blogger James Maule put himself in the spotlight. [To demonstrate the echo chamber effect, Linda Beale promptly cheered Maule's post.]

As I said last Friday:
When it comes to data manipulation for political purposes, the right and the left are engaged in a long-running tug of war. They both abuse statistics* and economic common sense to influence public opinion in the short term. It's great sport for incumbent politicians, blogging left-wing academics and Washington lobbyists. Not so great for the country in the long run.

* Okay, I should have said "facts, statistics and economic common sense."
Why am I calling out Maule for factual manipulation?

On Monday, Maule linked to this report on the latest political volley between Senate Democrats and Republicans. Maule fumed over Republican opposition to a $60 billion infrastructure proposal from Team Obama. He then scolded Republicans for a proposal to allocate $40 billion to infrastructure spending from "unspent funding for other domestic programs." In Maule's view, the Republican proposal was a non-starter because it "included provisions intended to make the nation’s air quality worse than it is, under the pretext that less regulation means better lives for, oh wait, more money for those already with plenty of it."

According to Maule:

[1] Team Obama's infrastructure proposal ($60 billion) kills two birds with one stone. It begins to address our massive deficit in infrastructure spending. And it pumps needed federal outlays into the economy, where they will support construction jobs.

[2] Republicans oppose the $60 billion spending measure for several reasons. First, it is "funded" with a surcharge on millionaires. ("Boo hoo for the wealthy," says Maule.) Second, it is too large of a government commitment. Senate Republicans have given us a middle finger, telling us that we don't deserve quality highways and bridges. (Probably a fat middle finger, swaddled in expensive rings.)

[3] Harry Reid correctly identified that the Republicans intend "to do everything they can to drag down this economy."

[4] Democrats properly rejected the $40 billion spending measure, because Republicans were just using it as a vehicle to further undermine our nation's impossibly toxic air quality. (I know that I cannot run outside on the trails of northern California without several gas masks and tanks of oxygen.)

[5] Republican partisan politics, as obvious from the above reprimand, are reprehensible. Democratic partisan politics, as obvious from the Harry Reid quote, are a necessary counterweight against those damned partisan Republicans.

Let's review how Maule's key points hold up against a dash of facts and a pinch of logic.

[1] Maule is correct that we need more long-term investment in public infrastructure. However, as I've previously discussed, infrastructure is not a holy grail of short-term job creation. Meaningful infrastructure projects require several years of development. Neither the Democratic proposal ($60 billion) nor the Republican proposal ($40 billion) would have an immediate stimulative impact on the construction industry.

The Department of Transportation has a $70 billion annual budget (rough numbers). States and municipalities spend many billions more on transport infrastructure annually. Public utilities spend many billions more on energy infrastructure annually. We don't need to spend money on infrastructure just for the sake of spending money. We should be focused on developing high-quality infrastructure using the slack in the labor market to get the highest "bang for the buck" on construction expenditures.

[2] Maule wants to increase taxes on the "wealthy," so no surprise that he favors the Democratic proposal ($60 billion in spending "funded" by a surcharge on millionaires). However, if we're going to increase taxes on the wealthy, why not use those revenues to address the existing budget deficit? The Republican proposal was also "funded" by "unused" outlays to other programs. Both sides are engaging, to some extent, in accounting gimmicks. But the Republican proposal is more fiscally responsible (although gimmicky).

Maule accuses the Republicans of espousing that we "don't deserve quality highways and bridges." He completely ignores the $40 billion Republican proposal. Or perhaps Maule believes the $20 billion difference between two measures would provide us with "quality highways and bridges."

[3] Maule criticizes Republican allegations that Democrats were pursuing a tactical agenda focused on 2012 elections. He praises Harry Reid for comments that Republicans are attempting to damage the economy.

How much more biased can someone possibly get? Let me be clear. The political left and the political right are both playing this game with an eye towards 2012. If the Democrats were serious about infrastructure spending, they could have worked with Republicans on the $40 billion measure.

[4] In point [1], Maule argues that the $60 billion Democratic proposal could address our under-investment in infrastructure and provide stimulus the construction industry. He criticizes Republicans for arguing that $60 billion is "too big" a number. Then he criticizes Republicans for a $40 billion spending measure (presumably "too small" for Maule).

But if infrastructure spending is good for the economy, shouldn't the Democrats be working with the Republicans on a bipartisan $40 billion package? Why should they resist all spending just because they want to spend a higher number? Maule reminds me of schoolkids on the playground. Apparently, if the Democrats don't get their way, they should pack up their toys and go home.

Maule gripes about the regulatory conditions affixed to the Republican bill. I'm highly confident that he hasn't perused the actual bill (S.1786). The Republicans were mainly trying to streamline the regulatory process applicable to the very same infrastructure projects that are funded by the bill.

[5] Yes, partisan politics are obnoxious. As a political independent, nothing is more frustrating than empty posturing over budgetary gimmicks and class warfare tax policies. However, the political left has no monopoly on virtue. When you start quoting Harry Reid, you confirm that you are a card-carrying cheerleader for Team Obama.

What's with the title of this post? I realized that I've spent the past several posts debunking Linda Beale and James Maule. My friends on the political left are probably thinking, "here he goes again." So I dedicate this one to you:
Here I go again on my own
Going down the only road I've ever known
Like a drifter, I was born to walk alone
And I've made up my mind
I ain't wasting no more time


  1. We all intuitively understand that we can't have our cake and eat it too. Therefore, we all intuitively understand the opportunity cost concept.

    What people do not intuitively understand is the value of millions and millions of consumers considering the opportunity costs of their spending decisions. Therefore, people do not intuitively understand the value of the invisible hand.

    If people understood the value of the invisible hand then they would understand the value of allowing taxpayers to directly allocate their individual taxes among the various government organizations. Allowing taxpayers to directly allocate their taxes would force them to consider the opportunity costs of their tax allocation decisions.

    The problem with this line of thinking is that economists who should understand the value of the invisible hand seem to have trouble understanding the value of pragmatarianism.

    A month ago I got a ticket...*ouch*...but my online traffic school shared a bunch of interesting statistics on the value of public transportation. Great...public transportation is valuable...but so is public education...and public healthcare...and...errr...well...what isn't a valuable public good?

    The problem is that it's just impossible to truly know exactly how "valuable" a public good is without forcing taxpayers to consider the opportunity costs of that public good. Why wouldn't we want the supply of public goods to reflect the demand for public goods? The "fatal conceit" is for planners to believe that they have enough information to guarantee the best possible use of limited public funds.

    If you get a chance you might appreciate some of the statistics on public transportation...The Opportunity Costs of Public Transportation.

  2. Xero,

    Thanks for the comment. Nobody could accuse you of going "off message"!

  3. Knox...heh, well...technically my message is "off message". The two main messages are government spending is good (Team Keynes) and government spending is bad (Team Hayek).

    For example...over on the Krugman-in-Wonderland blog...check out the comments on the professor's entry on Opportunity Cost for thee, but not for me. My comment was the only one with a message of reasonable compromise.

    When two opposing sides are so well entrenched and so certain of their respective positions...then it doesn't seem likely that either side will be able or willing to see the value of pragmatarianism. It's not like this is a new debate maybe some might recognize the value of just tasting the pudding rather than standing around debating how it tastes.