Biden, CNN, and credibility

US President Joe Biden. (AFP)
US President Joe Biden. (AFP)

Summary

  • Can the president stage a political comeback by breaking his tax pledge?

News consumers keep reading that CNN wants to return to fact-based journalism and that President Joe Biden claims he only wants to tax businesses and rich people. Washington’s story of the week affords a chance to evaluate both claims.

“Republicans argue Manchin and Schumer’s energy, health care deal will raise taxes, citing nonpartisan data" is the headline on a CNN story. If nonpartisan data show tax increases, then it’s not merely a Republican argument, is it? In fact it’s not an argument at all, since not even Democrats are claiming that the bill doesn’t raise any taxes.

Also, calling Congress’s official tax scorekeepers at the Joint Committee on Taxation “nonpartisan" is being kind. A more accurate headline might have read: “Staff composed of conventional Beltway economists finds Manchin-Schumer bill would break Biden tax pledge."

The faults of CNN’s headline writers notwithstanding, CNN’s Tami Luhby and Daniella Diaz do a reasonable job in laying out the facts:

Americans of all incomes would see their federal taxes rise under the climate and health care package that was negotiated last week between Senate Majority Leader Chuck Schumer and moderate Democratic Sen. Joe Manchin, according to data from the nonpartisan Joint Committee on Taxation released Saturday by Republicans on the Senate Finance Committee.

However, the analysis takes into account the indirect effect of the bill’s provision to impose a 15% minimum tax on certain corporations. Economists assume companies would then pass along part of their tax increase to employees by reducing their after-tax wages and job opportunities. Also, shareholders would take a hit since the value of their stock holdings, including those held in pensions and mutual funds, would likely decline.

The minimum tax measure is expected to raise $313 billion over a decade, according to the JCT.

Republicans are pointing to the report as proof that the package, which Democrats hope to push through the evenly divided Senate through the reconciliation process so they wouldn’t need any GOP votes, would violate the pledge by President Joe Biden and congressional Democrats not to raise taxes on those earning less than $400,000.

The CNN reporters then quote a left-leaning think tanker claiming that the president promised not to raise taxes directly on people making less than $400,000. But does anyone remember Joe Biden disclosing that he would indirectly tax everybody? The CNN gang then resumes reporting the news from Washington:

Federal taxes would increase by $16.7 billion on American taxpayers earning less than $200,000 next year, according to the JCT. And those making between $200,000 and $500,000 would see their levy jump by $14.1 billion. Those with incomes above half-a-million dollars would be hit with a $23.5 billion increase.

By 2031, when the new energy credits and subsidies are set to provide an even greater benefit to higher-income Americans, those earning below $400,000 are projected to pay as much as two-thirds of the additional tax revenue collected that year, according to the Republicans on the Senate Finance Committee.

This dispatch seems to represent real improvement at CNN, while perhaps confirming that the president is an untrustworthy career swamp dweller.

But CNN still has some work to do, and part of the task involves developing the ability to evaluate sources. The network’s Matt Egan tweets today:

In new analysis obtained by @CNN, Moody’s Analytics finds the Manchin & Schumer-backed Inflation Reduction Act will “nudge the economy and inflation in the right direction, while meaningfully addressing climate change and reducing the government’s budget deficits."

One might have hoped that Mr. Egan learned his lesson after last summer, when a headline over one of his stories announced: “Biden’s sweeping agenda is unlikely to cause high inflation, Moody’s Analytics says."

Oops. What would we do without Moody’s Analytics and its chief expert, Mark Zandi? Mr. Egan reported last summer:

Zandi, like the White House and top Federal Reserve officials, has argued that inflation is largely going to cool off as the economy reopens.

To be fair, Mr. Egan was not alone in consulting such expert opinion. In March of 2021 Jim Puzzanghera wrote in the Boston Globe:

The combination of the $1.9 trillion COVID relief package and the lifting of more coronavirus restrictions is set to deliver a jolt to the already fast-growing US economy, potentially summoning the return of a long-absent economic phenomenon: inflation.

Not the sky-high inflation of the 1970s and ‘80s, which led to federal wage and price controls, double-digit mortgage rates, and a presidential initiative that featured campaign-style buttons imploring Americans to “Whip Inflation Now." Economists agree those days are not coming back anytime soon, if ever.

In fact, the problem in recent decades has been that inflation — the general rise in prices for everything over time — has been stubbornly low. That’s almost certainly about to change as the nation emerges from the pandemic with pent-up demand and money to spend, as most Americans soon will receive $1,400 direct payments from the relief bill, along with additional aid.

But economists said an increase in inflation isn’t necessarily a bad thing. Moderate inflation is actually good for the economy, leading to increased pay for workers among other benefits — as long as it doesn’t spiral out of control.

“We’ve had undesirably low inflation for 25 years. I say bring on the inflation, please," said Mark Zandi, chief economist at Moody’s Analytics, an economics research and consulting firm. “There might be some immediate sense of, ‘What’s this? I haven’t seen this before.’ But I think we’ll get used to it pretty fast if employers say now you’re going to get a 3 percent wage increase."

After too many quarters of declining real wages, U.S. workers don’t want to get used to inflation. And they don’t want a tax increase, even if it’s inflicted indirectly. Bring on the real increases in after-tax income, please!

***

After Fire and Broken Glass, Courage
Stephen Watsonreports for the Buffalo News:

An anti-abortion clinic in Eggertsville that was targeted in a suspected firebombing in early June announced it would reopen to patients as soon as this week and it plans to expand to provide telehealth and other services at the site.

CompassCare executives made the announcements on Monday during a news conference at the crisis pregnancy center... CEO Jim Harden said the organization likely has spent more than $400,000 on repairs to the damaged structure, equipment and furnishing as well as enhanced security for the building...

The words “Jane was here" were written on the side of the building. Jane’s Revenge, branded as “an abortion terrorist group" by CompassCare, later took credit for setting the fire, as it has for other fires around the country.

Amherst police and federal authorities continue to investigate the incident. Harden read a statement from town police at Monday’s news conference stating they are “working diligently" with the FBI to solve the case.

Harden said he remains frustrated with the pace of the investigation.

***

A Better Strategy for Signing Free Agents?
On Twitter Mark Simon quarrels a bit with Friday’s column urging the Biden administration to try to recruit Chinese billionaire Jack Ma to emigrate to the United States. Given that the Chinese Communist Party has been increasingly hostile to Mr. Ma in particular and entrepreneurs in general, Team Biden enjoys an opportunity to lure tech talent to the U.S.

Mr. Simon suggests a variation on the theme:

While I agree... we need job creators, established China business elites maybe not best bet. Few operate outside the CCP system and that doesn’t translate well in an open market.

Immigrants seeking a better life are our lifeblood.

That last line is certainly true. Let’s hope the president will finally prioritize the creation of more legal pathways for ambitious billionaires and non-billionaires to come create companies in the U.S.

This story has been published from a wire agency feed without modifications to the text

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