They say the darndest things

John Edward, a resident of Chelmsford who earned his master’s degree at UMass Lowell and who teaches economics at Bentley University and UMass Lowell, contributes the following column.

One reason I started writing columns was to respond to things I read in the newspapers. Informed people will come to different conclusions regarding public policy issues. However, we too frequently encounter misinformation in letters to the editor.

This column is dedicated to correcting misinformation. I surveyed letters published in the Lowell Sun during August 2011. Some people really do say the darndest things.

On August 16th a writer from Chelmsford joined many others in complaining about the federal deficit. He had a solution: “Duplication of jobs in Washington that could be eliminated . . . would probably make up half the deficit.”

The budget deficit in Washington is $1.6 trillion. Half of that would be $800 billion. What if there was so much duplication that we could get rid of half of federal jobs?

According to the United States Census Bureau, total Federal Government Civilian Employment was 2.8 million in 2009. If we fired 1.4 million public servants and assumed that would cut the payroll in half, we could eliminate $90 billion in spending per year. Even if we eliminated all federal jobs, including the 1.6 million serving in the uniformed military, we still do not get anywhere close to cutting the deficit in half.

On the 30th, a letter from Dracut claimed, “… half of all taxpayers don’t earn enough to pay any taxes.” The author is probably referring to a projection by the Tax Policy Center that 46 percent of filers would not owe any federal income tax this year. That number is unusually high right now because of economic stimulus programs that target the people most likely to spend – low-income taxpayers. Many of the people not paying federal income taxes are on social security.

However, some wealthier people, including some very wealthy people, pay little or nothing because of generous credits and deductions. According to the Internal Revenue Service, 1,470 income tax filers who paid no taxes in 2009 had incomes over a million dollars. Over a half million taxpayers with adjusted gross incomes more than $200,000 paid an effective tax rate less than 15 percent.

Moreover, the federal income tax is just one component of our national tax structure. Most everyone that works, including people in poverty, pay very regressive payroll taxes. We pay sales taxes, excises taxes, and various state and local taxes that are also regressive. Think about it. Do you know anyone who pays no taxes?

A letter writer, no town indicated, complained on August 8, “Billions in stimulus programs have left us with nothing to show but more debt.” According to the Congressional Budget Office (CBO), the impact was far from nothing.

Using the midpoint of the CBO estimates, due to the stimulus programs Gross Domestic Product (GDP) grew by 1.6 percent more than it would have without the spending. The unemployment rate was a percentage point lower. Two million more people had jobs.

The CBO report also had an interesting analysis of which forms of stimulus had the greatest impact. Again, using their midpoint estimates, they reported the following multipliers. The higher the multiplier the more we have to show for the stimulus.

• Federal government purchases 1.75
• State and local infrastructure spending 1.75
• Unemployment benefits 1.45
• Tax cuts for low and middle income 1.05
• Tax cuts for high income 0.40

As for the debt, the CBO estimate is that the stimulus spending will add $825 billion over a decade. Citizens for Tax Justice has estimated that making the Bush tax cuts permanent would add $4.5 trillion to the national debt over a decade.

On the 14th, an online letter writer from Chelmsford was upset because “The Department of Education’s discretionary budget is $69.9 billion, none of which is spent on establishing schools, creating or controlling curriculum, paying teachers, writing text-books, or educating children.” My initial reaction was to consider how upset others would be if the federal government did write textbooks.

The Department of Education’s budget represents only 11 percent of national spending on education. The vast majority of money for teacher salaries, building projects, and educating children comes from state and local coffers. However, the Department of Education certainly does offer supplemental funds.

For example, they spend money on a Teacher Incentive Fund that “rewards educators who take on tough jobs and show results in high-need schools.” They also support a Troops-to-Teachers program. Many prospective students would not be able to afford college tuition without Department of Education funded Pell Grants. Many prospective educators would not become teachers, or have a decent facility to teach in, without the money invested by the department.

A Billerica writer wants to “remove all social services for illegal immigrants.” Many have written to oppose the Commonwealth of Massachusetts losing money by offering in-state tuition to illegal immigrants.

A study conducted by the Massachusetts Taxpayers Foundation, and endorsed by the Federal Reserve Bank of Boston, found the state would actually make money with in-state tuition rates for the children of “illegal immigrants.” According to a Harvard Law analysis: “every empirical study of illegals’ economic impact demonstrates [undocumented workers] actually contribute more to public coffers in taxes than they cost in social services.”

In the 1840s and 50s the anti-immigration zealots were called the Know Nothing Party. Today, it seems many are not aware that, as former Federal Reserve Chairman Alan Greenspan testified to Congress: “There is little doubt that unauthorized, that is, illegal, immigration has made a significant contribution to the growth of our economy.”

Finally, the August 6 edition had another letter from Chelmsford that made ridiculous claims, attributed to Steve Forbes, including “we [the United States] had more oil than the entire Mideast [the Middle East].” On the 10th the paper ran a great letter by Corey Sciuto of Lowell that shot down the claims and even took Forbes off the hook. It turns out the source was just a chain email making its way around the internet.

The question is why the Lowell Sun would print the original letter in the first place. Darned if I know.

6 Responses to They say the darndest things

  1. C R Krieger says:

    A lot of these are good points.  I do sympathize with voters who think something is wrong, but are still groping for the facts.  I am not sure the two main parties are going to help.  It is up to the MSM and the blogs—and Wikipedia.

    I was confused by the “the state would actually make money with in-state tuition rates for the children of ‘illegal immigrants.'”  Recently it was asserted that state universities are working to get more out of state students, often at the expense of instate students, because they need the money, I am not sure why we say the state would actually make money here.  Maybe it is in the long run, assuming the student remains in the state.

    For sure we need to find some rational solution to the problem of some 10 million queue jumpers from South of the Border and Ireland, but I have not seen a solution yet.  And, the numbers for taxes cited interests me.  Is that what they actually pay or what they would pay if they were not on the black market (grey economy)?

    There is a lot that we just don’t really know about this, because it is hard to know stuff.  And a lot of it seems to be along the lines of if you believe Keynesian economics or not.  Where you fall could result in big swings in policy decisions.

    Regards  —  Cliff

  2. Publius says:

    The problem is that there is net outflow to illegals out of the U.S. Treasury. Under the Additional Child tax Credit. It cost the The USA $4.2 billion last year. A couple of links:

    http://www.treasury.gov/tigta/auditreports/2011reports/201141061fr.pdf
    http://cis.org/child-tax-credits-2011

    I think this disproves that notion that illegals contribute more in taxes that they consume. The fact that that the Harvard Law study said “every empirical study” suggests a certain amount of hubris. Apparently not every study

  3. John Edward says:

    First, regarding the Treasury Audit, they, and the $4.2 billion reported, were only looking at one particular outflow. It is not net of inflows. The report does help answer why it would be true, and is true, that illegal immigrants would pay more in taxes than they receive in benefits. Even though they are illegal they get Tax ID numbers and pay taxes. They pay taxes because they are afraid of getting in trouble if they do not (getting caught if you will) and also because many of them have their own sense of patriotic/citizen duty. Yes they do file for some benefits, but often do not, again because they are afraid to. Bottom line: when you look at ALL inflows and outflows they pay more than they get back.
    As for tuition, the analysis was kept simple. Yes the state will lose some money with in-state tuition for the children of illegal immigrants because those already going will pay less. But it is more than made up for with the increased tuition of those who will only attend because of the accessible tuition rate. In the long run the benefits are even greater when you consider the increased income, increased production, and increased tax revenue from the income and production. When you consider the multi-generational impact the benefit to our economy is greater still.

  4. Michael Luciano says:

    The Lowell Sun has one of the most mendacious Op-Ed pages I’ve ever seen. They’ll print anything, regardless of how fact free the submissions are. I’ve always wondered if this is because of a lack of letter writers or because most of those letters line up with the ideology of the editorial board. John, you must be a masochist to put yourself through that. I quit reading the Op-Eds months ago. Although sometimes I cheat a little to see if Peter Lucas is still churning out the same Barack Obama/Deval Patrick hit piece that I swear he writes every week.

  5. Lowell Resident says:

    It continues. The Lowell Sun really is ridiculous.

    http://www.lowellsun.com/letters/ci_18974338

    The problem with this letter goes well beyond the actual facts that are purported in its content. The source of the statistics cited in this piece are never once cited. I couldnt get away with that it in grade school and yet the local newspaper of record has no problem publishing these statistics verbatim and unchecked.

    Further, if the emphasis of the letter was opinion, it would be somewhat better, but its clear that the writer wanted to “inform” people of these statistics more so than share his opinion. That makes its awfully close to “news” disgused as editiorial. In most cases, we worry about the opposite, when editiorializing creeps into news. Only in second-rate publications like the Sun could we actually see the problem of the editorial page becoming a no holds barred haven for unverified, uncited, and usually untrue news.