In the last two hours, the AP released an article about the tax cuts which are expiring at the end of this year. The reporter, Stephen Olemacher (of whom I have never heard) says that more and more Democrats are coming out in favor of at least a temporary extension of the tax cuts for all income levels. Then he goes into reciting his talking points. Democrats, he says generally want to extend the tax cuts only for those who make under $250,000 if married or $200,000 if single. On the other hand, Republicans want to extend all tax cuts for everyone, a move that would cost the government $4 trillion over the next decade in lost tax revenues. Under the Democrats plan, the tax increase for next year would only be 38 billion dollars according to the article. So what is wrong with these numbers? Only this. If the cost of all of the tax increases is 4 trillion for ten years, and the cost of the tax increases that Obama wants to keep is 38 billion for one year, that means Obama's plan raises 380 billion over ten years. since the total for everyone, however, is 4 trillion, that means that there would still be an increase in the deficit of 3.6 trillion dollars just using these figures. The proper comparison is not between 4 trillion and 38 billion, it is between 4 trillion and 3.6 trillion.
Of course, all of these numbers are static; in other words, they assume that the tax increases or decreases have no effect on economic activity. The truth is often otherwise. Frequently, tax decreases in the past have led to revenue increases and vice versa. The real debate is whether it makes sense to suck billions of dollars out of the private economy and discourage investment with higher taxes or not. Of course, if the debate is presented honestly, the answer is patently clear. That is why the Democrats and their fellow travelers in the media never present the issue accurately.
I guess I answered my own question. It's bias at the AP. It is also stupidity.
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