Data-Driven Policy?

It isn’t breaking news to note that ideology drives American politics today.  Much of the electorate seemingly doesn’t want to be confused by the facts — they know what they believe.  For example….

A consistent Republican political theme is that government is inherently wasteful.  There is, of course, a fair amount data to support the idea (for example).  Unfortunately, and for Republicans especially, all waste does not appear to be created equal. 

According to this report from the Associated Press, “[a]s much as $60 billion in U.S. funds has been lost to waste and fraud in Iraq and Afghanistan over the past decade through lax oversight of contractors, poor planning and corruption, an independent panel investigating U.S. wartime spending estimates.”  Moreover, that figure could grow by the time the final report to Congress of the Commission on Wartime Contracting.  Whatever one’s politics are and whatever one thinks about the wars in Iraq and Afghanistan, it is shocking to me that so little has been made of this problem, especially in light of the debt ceiling debate and the expressed need by Congress (and especially the Republicans) to cut government spending dramatically.

Once the Commission’s report is issued, let’s hope that aggressive action is taken to deal with the problem.  But I’m not holding my breath.  For whatever reason, concern for waste in government generally is not applied to the Pentagon.

On the other hand, a consistent Democratic meme relates to the death of the middle class and the growing divide between the “haves” and the “have-nots.”  The Atlantic recently published an extended discussion (more here and here) of the problem.  As Gregg Easterbrook points out, Elizabeth Warren, newly named as special advisor to President Barack Obama for consumer protection, says we are witnessing the “death of the middle class.”  Timothy Noah, recently laid-off himself, believes the rich are running away with the country. This new Census Bureau report, showing a nearly 5 percent decline in middle-class household income, received extensive press coverage, with news stories suggesting that “average people” are getting crushed.

Easterbrook argues that the Census numbers are deceptive:  “Federal income tax rates for the middle class were cut in 2001 and again in 2003. Because of the cuts, in 2000, 29 percent of American households paid no federal income taxes; today, 44 percent pay none. The result is that slightly lower middle-class incomes are being taxed less — and all that matters to the individual is buying power.”  Accordingly, “[a]fter-tax and adjusting for consumer prices, middle class household income is about the same today as a decade ago. That’s not fabulous — but it’s also not the emergency being claimed” (emphasis in original).  Moreover, “[a] generation ago, about 30 percent of Americans lived in a household where at least one member was drawing federal benefits — now 48 percent do.”  Thus, “when middle-class tax cuts, very low inflation, declining real-dollar prices in sectors such as food and electronics, and most of all rising government benefits are taken into account, most middle-class Americans are slightly better off than a decade ago.”

The always engaging Political Calculations has also published some interesting data which appears to dispute the premise of the dispute without requiring that one parse the data the way Easterbrook does (see below).

Source:  Political Calculations

As summarized by PC:

In looking at the chart, you can easily see that the cumulative distribution curves for adjusted gross incomes from $1 through $75,000 are within very close proximity to one another for all years shown on the chart. So much so that these curves essentially overlap each other.

And when you look at households with adjusted gross incomes above $200,000, you can see that this portion of each year’s cumulative distribution curve runs nearly parallel with all the others. This indicates that there has been very little change in the number of households counted as having incomes above this level.

But the income range that saw the greatest change from year to year for each year from 1996 through 2009 is that for households with adjusted gross incomes between $75,000 and $200,000.

Apparently the data doesn’t support the meme, at least not as fully as some would have us believe (although I would want to dig further before making a definitive statement about it).  Wouldn’t it be nice if policy were actually driven by data instead of pre-conceived ideology?  As the expression goes, people are entitled to their own opinions but not their own facts.

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