Tuesday, November 25, 2014

Congress plans to add $450B to the deficit, mostly with tax cuts for corporations

Congressional negotiators were considering a package of tax breaks Tuesday that would add as much as $450 billion to the federal budget deficit over the next decade, wiping out most of the revenue gains President Obama won from Republicans just two years ago.

The package could grow even larger if Democrats succeed in persuading Republicans to tack on additional items sought by the White House: Permanent expansion of the child tax credit and a popular tax break for working families, which together could boost the cost by nearly $100 billion.

Read the rest here.


rabidgandhi said...

This is a case study in third-rate reporting by the reliably misleading Washington Post.

John (and Lori Montgomery) are right to complain about corporate tax cuts, but there are some vital reporting errors here.

As typical in the media, Big Scary Numbers are given without any context, leaving readers susceptible to whatever agenda the columnist is pushing. Most readers can't distinguish between millions and billions in the context of a $3 trillion annual federal budget. A cheap example of this is that John's headline reads "$450 M" instead of "$450 B"; but this is a universal axiom even beyond this common error.

So let's put things into perspective. The debate is about $450B in tax cuts over 10 years. That's 1% of the federal budget in corporate welfare. Meanwhile, the scary $100 billion in "popular" (scare word!) Child tax Credit/Earned Income Tax Credit represents 0.2% of the budget. (And it should be kept in mind that given the recent trend by corporations to offshoring and capital flight [Hi Jeff Immelt!], their tax breaks are unlikely to be spent into the US economy, unlike tax breaks for the lower income brackets.) So essentially, we are granting a pretty significant subsidy to Obama's and Boehner's favourite corporations/contributors, and rejecting a programme for single parents that would cost 1/5 as much. But you don't get that from the article, because all it does is throw out Really Big Numbers.

With this type of hack reporting, columnists can advocate for any government programmes to be cut, even useful ones. All they have to do is throw a million or a billion out there, and everyone will get out the budget scissors, regardless of the actual impact of the expenditure.

John (Ad Orientem) said...

Good catch on the typo. Thanks!