"Correlation == causation IF and ONLY IF it breaks the conservatives' way."
Copyright 2010 Centauri's law!
Here is the context, via Krugman.
ERTA was the Reagan tax cut. TEFRA was the first of Reagan's tax increases - sales, excise, and payroll tax increases, disproportionately hitting lower and middle class taxpayers, as Krugman's commenters point out. Krugman goes to some pains to disclaim cause and effect, re: ERTA, TEFRA and jobs, instead blaming the job changes on Federal Reserve policy. Still, a couple of striking coincidences.
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* In comments (2:45 p.m.) at Delong's blog.
Lots of sharp commentary at both Delong's and Krugman's blogs.
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3 comments:
That's what's great about macroeconomics (even the liberal sort of Krugman, etc): you can spin the data about anyway you choose to! Correlation = causation, when needed for ideological purposes.
As with the drop after TEFRA. A liberal says it's due to Raygun's kicking taxes back up. Yet a conservative might claim it's a delayed reaction from the earlier tax cuts, or Reagan's trickle down policies in general. And the tax cuts would have to be a bit more itemized, really: if I recall correctly, Reagan tax slashes on the wealthy/capital gains were not really ...rectified. Ie he may have kicked taxes back up, but that was via payroll taxes, not by hiking the capital gains tax back up.
That said, I don't the macro-econ. or aggregation works like the academic-bean counters want it to work. It may show something--say with analysis of Great Depression--but there are so many other factors--like war, stock market, energy, the temperature of the First Lady's ass, so forth.
Speaking of Econ, I'm working on an upcoming post about the "Great Moderation."
The net effect of Reagan's tax plan changes was to reduce taxes on the wealthy, and raise them on the lower and middle classes.
That, and give us the biggest deficits ever, until Shrub II, of course.
Barak seems like a cold damned fish, but I betcha Michelle's the hottest first lady since . . . ever!
Cheers!
JzB
The net effect of Reagan's tax plan changes was to reduce taxes on the wealthy, and raise them on the lower and middle classes.
Yes, that was my point, jzb. The chart only shows "tax cut" and "tax raise", but in reality the tax raise hit the lower and middle classes mainly (thus sort of establishing my point that.... aggregated data often can be deceptive, if not meaningless). RR didn't kick taxes back up on the wealthy much--it was like a record slash from like 70 % to 30% on upper brackets was it not, plus capital gains. Bush II helped out again with his estate tax slash of 2002 or so, right. Even the Demos, Clinton and BHO, have not brought the upper brackets back to 70s rates.
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