Posted by Bob Lord
Oh, Thucky, you poor, pathetic, intellectually dishonest, little gnome.
In my last post, Thucky On Double Secret Probation, I called Thucky out for this statement in a comment:
You ought to be concerned, we now have three years without any increase in government revenues in the United States. All these tax increases have yielded nothing.
Because Thucky was speaking of tax increases, I figured his reference to government revenues was to tax receipts. And, because the tax increases were federal tax increases (many of the states have been reducing their tax rates), I figured the reference was to federal tax receipts. After all, if federal tax increases had the effect of increasing federal tax receipts, you would think they had yielded more than nothing.
Alas, Thucky was not referring to federal tax receipts, or even total federal, state and local tax receipts, but to actual revenues, including, as we'll see, a category of state revenue that by its nature fluctuates wildly from year to year.
When you drill down into the government revenue numbers upon which Thucky relies and make appropriate adjustments for the revenue numbers that not only are unrelated to tax policy but are random in the short-term, the result is the same: The picture Thucky painted is wildly misleading and dishonest.
The complete analysis follows after the jump.
So, here are the "points" Thucky made (or relied upon) in response to my post:
2011 total revenues $5.1 Trillion
2012 total revenues $4.9 Trillion
2013 total revenues $5.4 Trillion
[Reported by another commenter, but incorporated by Thucky into his analysis]
2007 Total Revenues $5.2 Trillion, adjusted for inflation, 5.84 trillion,adjusted for population 6.2 trillio
2013 Total Revenues $5.4 5.40 ,adjusted for population 5.4 trillion
Recently this blog highlighted Krugman excoriating a conservative columnist as being dishonest for not adjusting for inflation. Well, these numbers need to adjusted not just for inflation but also population. Here it is:
2007: 6.2 Trillion 2013 5.4 trillion; Just think of what the nation could do with that extra trillion dollars. Arizona's share would be 16 billion dollars. That's the price tag of overdoing this collectivist frenzy.
First off, notice the sleight of hand. We transitioned from a look at revenues over the past three years to a comparison between 2007 and 2013. Let's start off with the accuracy of Thucky's original comment, then move on to his 2007/2013 comparison.
On the surface, total revenue barely increased from 2011 to 2013, going from $5.1 Trillion to $5.4 Trillion. But here's what Thucky doesn't mention. The total revenue number includes a line item for earnings on state and local retirement funds. As you might have guessed, that figure bounces all over the place from year to year, depending on the real estate market, the stock market, and the bond market.
Here are the numbers for earnings on state and local retirement funds:
2011 - $480 Billion; 2012 - $107 Billion; and 2013 - $228 Billion
[Just to show how random these numbers are, note that we're dealing with fiscal years, which end on September 30th. Because the stock market took off after the end of the 2013 fiscal year, this number for the 2014 fiscal year (starting 10/1/2013) is already at $197 Billion.]
Now, look what happens to total government revenue numbers above if we leave out earnings on state and local retirement funds, since those are not connected to tax policy, and start with the actual numbers rather than the rounded numbers:
2011 adjusted total revenues $4.611 Trillion
2012 adjusted total revenues $4.760 Trillion
2013 adjusted total revenues $5.133 Trillion
Imagine that? A logical, steady increase from year-to-year, and a greater than 10% increase from 2011 to 2013.
But let's be fair to ole Thuck Breath and adjust for inflation and population growth. Here are the adjusted numbers:
2011 adjusted total revenues $4.830 Trillion
2012 adjusted total revenues $4.865 Trillion
2013 adjusted total revenues $5.133 Trillion
Sorry, Thuck, even after adjustment, there's still a 6% increase from 2011 to 2013.
So, did Thucky do this intentionally?
Only he knows for sure, but I suspect he did, and here's why: Using total government revenues to make his point that recent federal tax policy has not worked was not logical. The natural choice would be federal tax receipts. Why would you include state revenues in the comparison, when it's widely known that states have, overall, been reducing their tax rates. But here are the numbers if you make the comparison on federal income tax receipts alone:
2011 total federal tax receipts $1.272 Trillion
2012 total federal tax receipts $1.374 Trillion
2013 total federal tax receipts $1.589 Trillion
Wow! Even after you adjust the 2011 number for inflation and population growth, there's still a 20% increase in federal income tax receipts from 2011 to 2013.
But why did Thucky choose the 2011 to 2013 period for comparison? Why not go back to 2009, when Obama's term started. Well, if you made this comparison using the same database Thucky used for his numbers, here's what you'd see:
2009 total revenues $3.7 Trillion
2013 total revenues $5.4 Trillion
That 2009 number is not a typo. That's a 50% increase in total government revenue in 4 short years. How did that happen? Easy, the earnings on state and local retirement funds in 2009 were a negative $613 Billion, so half the increase in the total revenues was due to a wild swing in the retirement fund earnings figure. If Thucky compared 2009 to 2013 total government revenue, the random number for earnings and local retirement funds was working against the picture he wanted to paint. So he went to a different year, 2011, to make the comparison. [The 2010 figures couldn't get him to his desired result either]
What happens if we look at the same numbers over the course of George W. Bush's presidency? This may shock of few of you, but when you subject GW Bush's tax policies to the analysis Thucky applied to Obama's tax policies, it's kind of ugly.
2000 federal income tax receipts - $1.652 Trillion [inflation and population adjusted]
2008 federal income tax receipts $1.450 Trillion
That's about a 12% decrease over the term of Bush's presidency.
2000 total revenues $5.010 Trillion [inflation and population adjusted]
2008 total revenues $4.667 Trillion
Also a decrease. If you remove the numbers for earnings on state and local retirement funds, the decrease shrinks, but it's still a decrease.
Finally, let's return to Thucky's second "point," where he adjusts the 2007 total government revenue for inflation and population and compares the number to the 2013 number.
Why did Thucky use 2007 as the base year, rather than 2008, the last full year in the Bush presidency? Well, because using 2008 wouldn't get him the result he wanted. If we adjust the 2008 total government revenues of $4.667 Trillion for inflation and population growth to 2013, we get $5.250 Trillion. less than the $5.361 Trillion after five years of the supposedly suffocating oppressive Obama tax policy. In other words, using Thucky's methodology, total government revenue grew during the Obama presidency.
But Thucky knew that the bubble economy of the aughts peaked in 2007, so 2007 would be the perfect year to pick as the base year. After all, we experienced the second worst economic crash in the last century immediately following those 2007 numbers.
Even still, the gap Thucky presents between the 2007 adjusted total governmental revenue is woefully misleading. Even though corporate profits are higher now than they were in 2007, corporate income tax receipts are $100 Billion lower now than they were in 2007. This is because the enormous losses incurred by corporations during the crash are still being used to offset taxable income, thereby depressing tax corporate tax receipts. Moreover, earnings on state and local retirement funds were some $250 Billion higher in 2007 than in 2013. And the figure in 2013 for social security tax receipts is artificially depressed because of the tax holiday that lasted 3 months into the 2013 fiscal year.
The apples to apples comparison here would be federal income tax receipts, which were $1.163 Trillion for 2007 and $1.316 Trillion for 2013. If we adjust the 2007 figure for inflation and population growth, we get $1.354 Trillion, which means the decline in the inflation adjusted, population adjusted individual income tax receipts from the 2007 (a peak year) to 2013 (a mid-recovery year) is a whopping 2.8%.
Bottom line: Thucky's comments are a shining example of the misuse by conservative shills of statistics to perpetuate untruths. He manipulated data in an entirely deceitful way in order to support a statement that an intellectually honest presentation of the data would not support.
For that, he remains on double secret probation.