At a time when we need clarity in public policy debates, it is disheartening to hear misleading arguments that obscure rather than illuminate choices we face.
Sometimes misinformation stems from ignorance and occasionally from self-serving malice.
But often, well-meaning people trying to achieve an end in which they deeply believe and thus are knowingly willing to skate on thin ice in terms of their arguments.
Whatever the motivation, it does our society no good. Three examples arose in the past week.
The first comes from President Barack Obama.
In skirmishing about how to avoid the “fiscal cliff,” the president and his cohorts are warning that everyone’s taxes will go up by an average of $2,000 or more if no deal is reached.
This is true, but the “average” is terribly misleading in terms of the size of the personal income tax increase that will hit most families. It is quite skewed with a lot of households facing fairly small increases and a smaller number facing large ones.
Arithmetically, the “median” tax increase — the amount from which half are lower and half are higher — is much lower than the average or “mean” increase, and much more relevant.
Another consideration is that the temporary 2 percentage point decrease in Social Security taxes also will expire. For well over half of all households, this will cause a larger increases in taxes paid than reverting to the pre-2001 personal income tax rates. But the administration, in concert with leaders of both parties in the House and Senate, is silent on this.
The second example of a misleading argument in the news is the “food stamp challenge” in which public figures demonstrate the inadequacy of benefits by trying to live for a week or month on food they can purchase with the average benefit.
I am particularly torn on this one because the challenges are coming from organizations that I generally support and one to which I give an annual contribution. But these demonstrations can be misleading and the public should realize that.
The basic problem is the unstated assumption that benefits are too low because it is difficult to pay for all of one’s food with the “average” benefit.
However, anyone familiar with the program knows that it was never designed to pay a family’s entire food bill. From the start, the intent was to supplement resources a household already had, whether from earnings or from other transfer programs like Social Security, Supplemental Security Income or Temporary Assistance to Needy Families. And that intent has been reaffirmed in every subsequent legislative overhaul.
This also is a case where use of an “average” is misleading. Monthly benefit levels can vary from maximums like $668 for a family of four or $200 for one person down to $16 for some people. The program assumes that all recipients will have to spend 30 percent of their own “net monthly income.”
Really poor households get higher benefit levels, but these taper off for other households, still poor, but with higher income. As for Obama’s income tax example, the distribution of payments skews the average. A relatively small number of households get large monthly amounts and a larger number get lesser ones.
The third misleading argument centers on the issue of how much individual states “get back” in federal spending versus what they pay in taxes.
It is in the news recently because the election revived interest in the long-standing fact that “red” states that usually vote Republican tend to have levels of federal spending that exceed taxes paid while “blue” states, with Democratic majorities, tend to get less in federal outlays than taxes paid.
The implication is that Republicans in red states are hypocrites because their states are sucking on the public udder and skating on paying taxes even though they vote for candidates who bemoan crushing taxes and out-of-control spending.
There is a core of relevant information in this, just as there is for “average” taxes paid and “average” food stamp benefits. But again, much is misleading.
Take defense spending. North and South Dakota (red) both are net recipients while Minnesota (blue) sends away much more than it gets. North Dakota has Air Force bases at Grand Forks and Minot while South Dakota has Ellsworth AFB east of Rapid City. One could also consider Fort Bragg, North Carolina, or Fort Hood, Texas, both enormous installations in red states.
All these result in substantial federal outlays in the respective states. But does Ellsworth only protect South Dakota or Bragg only North Carolina? Of course not, they help protect the country as a whole.
As the Tax Foundation points out, some 75 percent of the differences in these ratios stems from differing levels of tax payments and only 25 percent from spending differences. The Dakotas do not have major corporations while Minnesota has Cargill, Medtronic, 3M and others. Hence much larger sums in corporate income taxes flow from Minnesota than from our neighbors to the west.
Yes, there is hypocrisy.
There are counties in southwest Minnesota and eastern South Dakota, near where I grew up with lots of corn and soybeans and aging populations. These counties get very large amounts per capita between crop subsidies and Social Security.
It is hard to find counties getting higher levels of government outlays relative to taxes paid and yet most of the citizenry are convinced the rest of the country is bleeding them dry.
But such cases don’t mean that raw state-by-state calculations of outlays versus taxes really adds much of value to public policy discussions.