MY OH MY, WE DO HAVE A BETTER PRESS CORPS. Having already offered up an example of the press corps at its worst, let me now turn to how it looks at its best. Last week saw the release of data showing federal tax revenues far exceeding estimates. True to form, the Bush administration credited its tax cuts, arguing that they spurred the economy, generated massive growth, and proved Supply-Side Economics. Arthur Laffer lives!
Given the press corps' usual facility with economic data, the coverage went roughly as expected: Some numbers explaining the increase in revenue, some quotes from administration officials crowing over the news, some quotes from some other folks tempering their joy, and a meaningless rundown of clashes over tax cuts. The Wall Street Journal, however, let Greg Ip and Deborah Solomon actually report out the story, which is how they created that rarest of all things: A newspaper article that takes the news and helps you understand it.
Ip and Solomon found that growth had not, in fact, exceeded government estimates, which means that the revenues exceeding estimates couldn't have come from the growth, or else the numbers would have surprised no one. Rather, the increase in Treasury receipts came because inequality increased beyond estimates. Digging into the numbers, they report that "[t]he share of national income going to corporations and the wealthiest individuals, already large, has expanded, while the share going to typical wage earners has shrunk. Because corporations and the wealthy generally pay income tax at higher rates than does the typical wage earner, that shift benefits the federal Treasury." Put another way, the federal income tax is progressive. When rich people make more money, they pay relatively more of it into the Treasury than do middle-class folks enjoying the same windfall. Because the economy is becoming ever-more unequal and growth is really only helping corporations and the very rich, the Treasury got more cash while the middle class benefited less from the growth than would be expected. I wonder if the Bush administration plans to crow about that?
On a related note, Michael Kinsley just underwent brain surgery. In his charming and humorous article on how he reacted to the news, he mused that "my first words coming out of surgery are so important. They have got to tell the world�and convince myself�that I am all there." In a postscript to the piece, Time informs us that the surgery went fine, and Kinsley�s first words were "Well, of course, when you cut taxes, government revenues go up. Why couldn't I see that before?" The man's a legend in his own time.