Politicians misuse statistics, make ‘snapshot’ analyses: Employment numbers, Trump election

 

Gordon L. Weil

If you think you can’t do numbers, beware. This column is about numbers.

But it reveals that you are not alone; many people, including some we rely on, can’t do numbers either.

We attach great importance to conclusions supported by numbers. Whether it’s about elections or employment, if there’s a number involved, we may often accept it as reliable and authoritative and not merely a matter of opinion.  That can be a mistake.

Take last week’s unemployment report.  The media stressed that the number of new jobs created in April was well below the economic forecast.  One outlet even congratulated itself for having foreseen that “April was not going to be a jobs boom, but instead, a jobs bust.”   An estimated 266,000 new jobs is “a bust?”

Conventional wisdom began to question if the economic recovery was slipping or the stimulus was a flop.  Optimism could swing to pessimism based on a solitary number that supposedly reported that fewer new jobs were created than had been forecast.

The media reported that the employment numbers fell below the expectations of “most economists.”  Obviously, that was not true, given the hundreds of thousands of economists, most of whom weren’t asked.  Who chose the economists whose opinions were used?  Are they qualified? Biased? 

Even if they were objective, does averaging the opinions of a relative handful of economists produce a gold standard jobs forecast?

Then, there’s the monthly report on new jobs and the unemployment rate.  It is produced by the Bureau of Labor Statistics, a federal government agency that enjoys a good reputation for being competent and staying out of politics.

The BLS does not count each individual.  It uses surveys that, nine times out of ten, will be accurate within a range of possible results. Could this be the tenth time? And the width of the range in the BLS surveys could be larger than either the change in the number of jobs or the monthly variation in the unemployment rate.

Political leaders and the public don’t know exactly just how many jobs were created or how good the base forecast was. Because the same process is used every month, perhaps the best we do is make an educated guess that some jobs were created, but fewer than in the previous month. 

The employment results could raise questions about any new jobs legislation. National policy may change as a result of one month’s rough statistical finding, which flies in the face of all those “help wanted” signs we are seeing.  We are reading too much into the numbers.

If he really believes that he won the presidential election, Donald Trump is a victim of reading too little into the numbers he gets.  The numbers here are individually counted votes, not the result of a survey.  But they don’t seem logical to him, so he assumes they must result from massive cheating.

Trump received more popular votes than any other candidate for president ever, except for Joe Biden, who now sits in the White House.  Trump must find it hard to accept that the huge voter turnout helped Republican congressional candidates, but not him.

Mainly because of the coronavirus, states allowed for increased absentee voting. Trump believes that Biden’s huge vote is out of line and cannot be believed, and that absentee voting created the conditions for cheating on his behalf.  He also supports a few more fanciful causes to dispute the result.

That’s Trump’s logic, despite the fact that all the independent reviews show that there was no cheating that could have changed the result.  Republican election officials certified Biden’s votes.

The increased number of voters can readily be explained. The total population and the number of people of voting age increases with each election.  This time, with opinions sharply divided, it looks like more young people and women chose to participate. 

Believing only the numbers that support your expectation and ignoring those that don’t is called “confirmation bias.”  Most charitably, that’s what has happened to Trump.  He believed in the inevitability of his reelection and accepts only results favorable to him.

If only Trump’s results make sense, Biden must have cheated. That reasoning is enough and no evidence is needed.  None was produced.

Even if Trump is sincere, though misguided, his selective use of numbers endangers the democratic system of popular control by his prolonged attempt to undermine confidence in it.

The problems with excessive focus on numbers occurs almost continuously. Polls appear daily and are subject to instant interpretation. We can then jump to conclusions based on questionable “snapshot” data.

One daily national survey recently headlined that more Whites, Hispanics and suburbanites disapprove of Biden than when he took office.  It did not highlight that the same survey showed those groups also increased their approval of him.  The real news was that undecided people were making up their minds and that his overall national backing grew.

It’s not only polls. The New York Times revealed that the CDC had just found that there was less than a 10 percent chance of getting Covid-19 outdoors, when the data showed it to be far less likely.  The government agency used an excessively conservative number to protect itself from criticism that might later arise from any possible error.

Even though roughly true, the numbers were presented in a way that protected a government agency at the expense of giving useful information to the public.

Numbers can help in understanding what’s happening and when.  They can identify trends, though not on a daily basis as some polls do.  But, if accepted uncritically, they can provide a false sense of certainty.

Public attitudes and activities are influenced by actions, events and biases.  Numbers can be helpful in getting at the truth, but they are not the only thing that counts.

 

 

 

 

Biden’s tax increase on wealthy, corporations won’t depress economy, will create jobs

Gordon L. Weil

If President Biden raises taxes on the wealthiest people, will you lose your job?  Or pay more taxes even if you are not wealthy?

Opponents of tax increases on the top one percent sometimes make it sound like the rich don’t mind paying taxes, but worry that if the federal government raises their taxes, they will have less to invest in creating new jobs.  Using that hammer, they bang the loudest political gong: “Jobs, jobs, jobs.”

This claim may sound reasonable.  If my taxes increase, no matter how low they might have been, I will have less money to invest.  With less capital flowing into the economy, there will be less need for labor to do the work.

The problem with this seemingly logical assertion is that it has no basis in fact.  Beware of economic models that forecast negative effects from taxation; their assumptions are set to produce the results their sponsors want. They may forecast an economic cost, but they fail to explain how public needs would be met without tax revenues.

Besides, how can Americans be sure that untaxed income will be invested in job-creating activities?  In passing the Covid-19 stimulus bills, Congress had to ban corporations from using the money they received to buy their own stock, thus raising its price.  Corporations had done that with previous stimulus laws without creating new jobs.

Another use of non-taxed gains has been to raise the pay of top executives. The result is the widening income gap between the wealthiest and the average working person.

The claim about harming jobs is false because tax dollars mainly fund purchases in the private economy, which creates jobs. If the government takes in less, as it did in the last administration, it should spend less.  Deficits grew and the federal workforce increased under President Trump.

As for spending, payments for Social Security mostly go to people who then spend almost all of what they receive on consumer purchases. Retail sales are by far the largest driver of American economic health.

Defense spending is a large part of the budget.  Members of Congress fight for military bases and construction in their states and districts as much for the jobs they support, putting spending money in people’s pockets, as for the weapons and bases needed.

In fact, the major role of the federal government as a customer in the national marketplace is one reason why presidents try to take the credit for a strong economy.

The wealthiest people and the largest corporations may also claim that they are already subject to tax rates among the highest in the world.  They argue that it simply would not be fair to undercut them in direct competition with others.

This claim is false. The U.S. corporate rate is less than in all other leading free-market countries, except the U.K.  If Biden gets what he seeks, the combined rate of state and local taxes would still be less than it was under President Obama.

The supposed impacts of higher rates may not matter.  Biden proposes raising the rate on capital gains, though not to the level under Obama. The New York Times reported: “Investors care more about economic data and corporate profits than an increase in the capital gains tax. It has usually been this way.”

Biden moves the country closer to asking if there is any good reason to tax workers’ incomes at a higher rate than investors’ gains. In Maine and other states, the capital gains rate is the same as the same top regular income tax rate. The federal capital gains rate is much lower.

Complaints about tax increases gloss over the difference between the formal rates and what the wealthy and big corporations really pay.  Welcome to the rich and fertile land of loopholes.

While the rates enacted by Congress get much media attention, the little-known exceptions in the law or those authorized to be developed by the IRS result in those rates being much lower in practice.

In his first speech to Congress, Biden said, "A recent study shows that 55 of the nation's biggest corporations paid zero in federal income tax last year.”  

Wealthy individuals may do the same.  In 2020, ABC News reported, “The tax-avoidance strategies that President Donald Trump capitalized on to shrink his tax bill to essentially zero is surprisingly common among major real estate developers and other uber-wealthy Americans.”

Biden speaks of the non-payers coming up with their “fair share.”  How much is that?  Whatever it means, a “fair share” is likely to be something more than zero.  However, their political contributions and lobbying can get the non-payers loopholes that nullify any tax rate.

Add to all of this the almost total elimination of the inheritance tax.  One of its purposes was to collect some taxes from the wealthy that had benefitted from loopholes.

In the end, somebody has to pay for necessary government spending. If some get tax breaks, others have to pick up the cost. Tax policy is not really about jobs; it’s really about who pays.

 

Three ways to restore Supreme Court balance without ‘packing’

 

Gordon L. Weil

Note to readers.  Posts on this site are also available by email from Substack.  Just enter "Weil's Notes from a Corner of the Country" on substack.com  and you will be able to sign up for regular emails.

“It ain’t broke, so don’t fix it.”

That version of the old saying is what most Republicans and some Democrats think about the Supreme Court and the proposal to increase the number of justices on the Court.

Most Democrats in Congress believe it is broken and that former GOP Senate Leader Mitch McConnell did it.  He led the Republicans to block many of President Obama’s federal court nominees plus changing the rules to ease confirmation of President Trump’s Supreme Court and other judicial choices.

They charge that McConnell packed the Supreme Court with conservatives and now is the time to rebalance it with their own packing. Congress has the power to add new justices to reduce the influence of the relatively young conservative newcomers who may enjoy decades on the bench.

In 1937, Democratic President Franklin D. Roosevelt was faced with a majority of conservative holdovers who sometimes thwarted his recovery moves.  After his stunning re-election victory in 1936, he proposed adding more justices.  The Court majority then shifted, making packing unnecessary.  “A switch in time that saved nine” was the quip of the day.

Roosevelt’s proposal had met some opposition, and he ignored history. John Marshall, perhaps the most influential Supreme Court justice ever, was a Federalist holdover for decades after his party fell into oblivion.  But presidents of the party in power did not propose Court packing.

The problem today is that the Court needs to be fixed.  Unlike the Marshall or Roosevelt situations, the Court majority was not the result of the natural course of history. It is the result of the obvious finagling by an excessively partisan McConnell.

President Biden is naming a commission to suggest a fix. Adding justices is a possibility, but the obvious concern is that increasing the size of the Court could be proposed after every presidential election.  Besides, Congress probably wouldn’t approve an increase.

The current Court, with six conservatives and three liberals, is likely to continue unchanged.  Justice Stephen Breyer, a liberal, is being urged to retire so Biden can appoint his replacement.  Otherwise, as when Justice Ginsburg died with Trump in office, a liberal might later be replaced by a conservative.

Even though the current balance cannot readily be altered, reasonable changes may be possible. They could reduce the threat of partisan wars spreading further into the Court.

The first reform could come in the Supreme Court itself.  In many decisions, it must interpret the law and settle on just what Congress intended.  Conservatives can decide what liberals meant.   That’s really legislating when it determines how the law will be applied and rules out other approaches.

Why do that?  Congress is just across the street and open for business.  The Court could decide on its interpretation of congressional intent, but delay the effective date of its decision for six months. During that period, Congress would be on formal notice either to amend the law, resolving the issue, or to do nothing and let the decision stand.

In that way, decisions might be taken from the hands of an unelected holdover Court and given to a current Congress.  Under the Constitution, Congress itself has the power to control the Court’s jurisdiction, so it might itself be able to adopt this requirement.

Another reform, this time in Senate rules, could prevent McConnell-type moves. Judicial nominations could be required to allow for a minimum of 60 days review, including committee hearings and investigation of nominees, with a decision by the full Senate after no less than 90 days.

Because federal judges receive lifetime appointments, they deserve careful review before taking office.  Senate confirmation may be as much about their proven competence to make decisions often affecting all Americans as their political philosophy

Finally, as previously suggested in this column, the president and Congress could agree on making temporary appointments to the Supreme Court, just has always been done for lower federal courts.

A new slot on the Court would be created and filled by the usual lifetime appointee.  The Court would be enlarged only until one of the original justices ended their service.  At that point, the temporary slot would disappear and the justice in the temporary position would take the permanent seat.

With both Congress and the presidency now under Democratic control, this might be a more acceptable approach for skeptical Democratic senators, such as West Virginia’s Joe Manchin and Arizona’s Krysten Sinema, than is enlarging the Court.   It could set a precedent for a time when there is a split in control between the Senate and the White House.

To his credit, Chief Justice John Roberts seems intent on keeping the Supreme Court from being reduced to a partisan forum.  That is a worthy goal, and the Court, Congress and Biden’s commission need to take that same long view and protect the Court’s independence.