As the Heritage Foundation’s fingers lose their collective grip on the last rung of the ladder of credibility, William Beach, who authored their analysis of the Ryan budget proposal, takes aim at Paul Krugman, who has arguably been the biggest — but hardly the only — thorn in his side.  Beach’s open letter is, regrettably, as pathetic as their recent budget analysis and subsequent hide-and-seek shenanigans with the unemployment rate.  While I disagree with much of what Beach has written, I think it might be instructive to put that disagreement aside and look instead at another facet of this debate.

For those who are just tuning in:

Heritage’s original analysis of the Ryan budget proposal had the unemployment rate falling to a near-record-low of 2.8 percent by 2021.  This, of course, raised some eyebrows.  Among the first to question this projection was Krugman.  We at TBP made some quick Obama/Ryan comparisons here.  (Personally, I find it hard to believe that anyone from Heritage actually looked at — scrutinized — their output and questioned whether a 2.8 percent unemployment rate — without inflation, mind you — is attainable.  Garbage in, garbage out, is what I’m saying.  But I digress.)

Within 24 hours, Heritage had disappeared the analysis that contained the 2.8 percent unemployment rate and replaced it with one that called for a higher rate.  We covered that here.  Some, myself included, wondered how Heritage managed to rejigger their numbers so that only the unemployment rate changed.  A friend at one of the Fed’s regional banks wondered the same thing, and the widely respected Macroeconomic Advisers — who wrote the most blistering critique of Heritage that I’ve seen — put it this way (footnotes removed):

In any event, the update goes on to say “while the adjustment has an impact on the unemployment rate in the model, the overall results elsewhere in the model do not change significantly. Of course it can’t be the case that no other variables changed. In particular, for a given population, if the unemployment rate rises for whatever reason, either household employment must be lower and/or the labor force participation rate must be higher. Is it really the case that in a general equilibrium model such large changes in labor force participation, household employment, and the NAIRU have no other significant impacts? We doubt it. To us, these machinations call into serious question this part of the exercise.

NationalJournal reported that Nigel Gault – an economist at IHS Global Insight, whose model Heritage used — was incredulous about the output:

An economist at IHS Global Insight, whose model Heritage employed in the analysis, seemed skeptical of the low unemployment projections on Tuesday.

Nigel Gault, Global Insight’s chief U.S. economist, noted that in any economic model, forecasters make assumptions about labor supply, capital spending and other details that can affect the projections.

“I’m not quite sure what assumption… would deliver 2.8 percent unemployment,” Gault said in an interview, adding: “We might assume different parameters.”

Menzie Chinn also weighed in several times on the Heritage analysis.  As did Brad DeLong.  As did Mike (MISH) Shedlock.  And Calculated Risk (CR).  And Bonddad.

I am still looking for economists/bloggers who – having thoroughly examined the Heritage analysis – have given it their blessing.  And, to be clear, that’s not, “Yeah, it’s the conservative/Tea Party position so I’m all for it.”  I’m looking for, “Yeah, I have examined these numbers with a fine-tooth comb and they work.”

So, to recap:  The Heritage analysis has been found wanting by Krugman, DeLong, Chinn, Shedlock, CR, Bonddad, Macroeconomic Advisers (among others), and seriously questioned by IHS Global Insight, whose model Heritage used.  Apologies to any econ blogger I may have missed who’s weighed in on this.

Yet Heritage, instead of addressing the concerns of its various critics, chooses to go after only Krugman.  Why?  My guess is that, given Krugman’s liberal leanings, the path of least resistance for Heritage is to simply point at him — to the exclusion of all others — cry “liberal with an agenda,” take their ball and go home.  Simply put, Krugman’s the low-hanging fruit.  After all, Macroeconomic Advisers’ critique is much more thorough, detailed, and scathing than Krugman’s (“We believe that the main result — that aggressive deficit reduction immediately raises GDP at unchanged interest rates — was generated by manipulating a model that would not otherwise produce this result, and that the basis for this manipulation is not supported either theoretically or empirically. Other features of the results — while perhaps unintended — seem highly problematic to us and seriously undermine the credibility of the overall conclusions.”); why not take them on?  Because this exercise is simply not about the facts, the data, or arguing on the merits (or lack thereof) – it is about labeling one’s opponent an ideologue and hoping that’s good enough to discredit him and end the argument.

Stay tuned.

Category: Current Affairs, Economy, Politics, Really, really bad calls, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

56 Responses to “Strawman Alert”

  1. Bob A says:

    why Krugman?

    because of his visibility and because he continues to speak out while others roll over or bend over or whatever you wanna call it.

    ” it is about labeling one’s opponent an ideologue and hoping that’s good enough to discredit him and end the argument.”


  2. MikeG says:

    Why go after Krugman?
    Because the Heritage Foundation are a rhetoric and propaganda shop, adept at winning arguments and pushing a sales pitch, but pathetic at producing factual analysis with predictive power.

  3. Petey Wheatstraw says:

    My analysis of the report was that it was 100% pure, unadulterated bullshit. Of course, I had to use a shovel to reach that conclusion, as a calculator and actuarial charts were not sufficient tool for the task at hand.

    Seriously, is there ANY politically driven data that holds water? Are we trying to determine which of the parties is the greater liar? Example: unemployment is under 10%. Right.

  4. OK Avenger says:

    Remember, it’s not a lie if YOU believe it. -G. Costanza

  5. mathman says:

    It’s all propaganda folks – they’re just trying to hide the fact that capitalism has killed democracy and the entire system is going to collapse one way (financially) or another (environmentally) and sooner than most would think.

  6. louis says:

    Maybe greenspan wrote it.

  7. hammerandtong2001 says:


    How terrible of all those yammering against the poor Krugman to not recogonie his Princeton-ion genius.

    The financial calamity brewing in the United Staes and elsewhere — particularly Western Europe — has its root and foundation in the simple fact that the implicated governments, made whole at taxpayer expense the wayward trades of insolevent banking institutions, saddling their respective populaces with debts requiring “generational” repayment. Hense, Iceland’s recent vote.

    Brave Iceland.

    The calamity carrying on is destructive to the soul of you and your neighbors. Thier hopes and dreams for the children’s betterment — now dashed — has sown seeds of bitterness since time began.

    The forest for the trees.

    At the storied houses on Wall Street, they pay average bonuses of $400,000.00 per year. AVERAGE.

    The food stamp program enrollment in the United States has reached an all time high– surpassing in nominal terms the numbers reached during the height of what they called “The Great Depression”.

    So where does this lead?

    No where good —

    And of all the things of which we can be sure, of all the “black sawns” flying thier courses above, of the babies that are born today…there will be an answer…

    And most likely that answer will be found…

    …in Arms.



  8. VennData says:

    hammer …yawns whens the GOP lies, wants to impeach when a Democrat does…. It’s called having a different set of metrics for each side. That’s how they frame the debate. Spin.

    And they are desperate …as Obama has re-iterated – once again … for the umpteenth time – he wants to raise taxes on the people who can afford it to where they were under the Clinton boom years (that the Heritage Foundation so hated.) Call them rich, call them lucky, call them whatever, but their rates need to go up. NEED to go up.

    So… if you make $250,001, you rates go up on the last 1$. OK? that would be an extra two cents. The lower rates remain,

    …and the GOP was going to hold up your continued rate cut to keep the rates high for the rich. Facts.

    The Heritage Foundation, the intellectual nerve center of the Bush administration, what more do you need to know?

  9. Invictus,

    it’s nice, and all, to call out “the Heritage Foundation” (one, in my opinion should wonder ~whose ‘Hertitage’ they’ve been vested to protect..), but, really, could “We” get to some more *Interesting matters?

    “*Governing” Corporations, Federal, State, and ‘Local’, have huge holes in their ‘Pension Programs’–focusing, here, on the ‘Defined Benefit’-variety–How did they come to Pass?

    Interesting matters–Who has been ‘Managing’ them? What were they Buying? How were they(the ‘Managers’) Paid?

    if that’s, the above, not, crystal, clear, I could delinate..but, really, Who/What/Why (?) was ‘Managing’ these “Trusts”?

  10. plantseeds says:

    “Because this exercise is simply not about the facts, the data, or arguing on the merits (or lack thereof) – it is about labeling one’s opponent an ideologue and hoping that’s good enough to discredit him and end the argument.”
    In other words..politics as usual.
    Ironic that Invictus writes this as if he’s never done it.

    Invictus: Am curious as to where you think I have.

  11. JimRino says:

    The Heritage Foundation are the Birther’s of Economics.

    I’d say “What ever happened to the Republican Party?”, but, I afraid someone here will tell me they have always been the manure pile builders of Economic Research.

  12. JimRino says:

    Light at the end of the Tunnel?
    Is the Republican Party finally going to move away from the criminally insane?

  13. pekoe says:

    When you pay other people to say what you cannot say yourself with any credibility, what do you call that? Oh yeah. The Heritage Foundation.

  14. ilsm says:

    Capitalism, nothing like what Smith supposed, does not exist in the US.

    Economics is not based on knowledge or choices.

    The US is run by ideologs and propagandists selling the ideologies.

    “Arrogant lips are unsuited to a fool– how much worse lying lips to a ruler” – Proverbs 17:7


    “Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.” – Mark Twain

  15. OK Avenger says:

    Hi: My name is Ben and I’m a Republican.

  16. SANETT says:

    Kind of like that acronym in real estate appraisal: MAI — made as instructed.

  17. SCTTD says:

    Invictus I am DEEPLY disappointed. BR should ban this issue from the blog.

    Instead of wasting blog time on the clearly lacking Heritage analysis, we should be doing our own and/or engaging a debate of the pros and cons of the Ryan and other plans. Time is running out. the true strawman here is that a debate of the Heritage analysis even matters.

    This entire discussion is a waste of precious what time we have left to solve this on our own terms. It is my estimation that we are within 3 years of the bond market calling bullshit on the US failure to budget.

    I’ll go first. Cutting spending GROWTH to 2% max fixes many ills. If we can’t live on current +2% we are in huge trouble. Cutting taxes? As much as it pains me to say this as a fiscal conservative who has NEVER voted for a tax, that makes very little sense at this juncture. Finally, the time has come for a flat tax. FOR CORPORATIONS. We the people will have to force this one to happen. Congress loves the current campaign contribution for tax credit/provision system.


    BR: TBP blog frequently focuses on data analysis, flawed cognitive processes, and how we make poor decisions based on that (There were only 1432 posts on the topic, so you may have missed it).

    If you care to start a budget deficit blog, feel free. But telling me what is and isn’t ripe for discussion is a total nonstarter

  18. Andy T says:

    What Hoffer said at 8:50PM….

    Invictus…remove yourself from the tress and view the forest. Who really gives a rat’s ass about some right leaning think tank and what they projected about the UE rate in 2021. C’mon man! Really?

    How ’bout you weigh in on the Ryan Budget? What do you think? Do you think we need to cut spending or not? If so, what? How much?

    Do you think we need to raise taxes on people? If so, whom? To what affect?

    Invictus: Apparently Ryan cared about what Heritage would have to say about his plan — he asked them to run the numbers.
    Yes, I think we need to cut spending. I would start with defense, see what we could squeeze out there, and then move on.
    Yes, I think we need to raise taxes on people — and close most of the loopholes both corporations and people exploit. As to rates, I recall the economy did fairly well under the Clinton tax scheme, so we could try that for starters.

  19. Andy T says:

    I SECOND what SCTTD said at 9.55pm.

  20. wojmax says:

    Budgets do not last beyond 2 years. There is always a ‘better idea’ in the next congress.
    After 10 years, we still have a budget GAP? Puh-lease.

  21. RW says:

    Those who protest that the Ryan deficit reduction plan (and presumably the Obama budget proposal) should be the center of attention have a point but since the Ryan plan is solely predicated upon the Heritage analysis and the Obama budget is predicated upon multiple analyses including CBO there is simply no way to do that: The Ryan proposal rises or falls on the Heritage analysis and the Obama budget does not; if the Heritage analysis is flawed, and apparently it is not only flawed but utter horse manure, then it logically follows that this is also the case for the Ryan proposal.

  22. DL says:

    Yes, Invictus, stop being so hung up on this 2.8% unemployment figure.

    Just cut to the chase and tell us where you think the top marginal tax rate should go….

    … and how high it should go for ordinary J6P’s who earn a mere $100K/year.

  23. plantseeds says:

    Invictus – to be fair I can’t say for sure that you have. More or less hyperbole on my part. I applaud you if you have not. Atypical of someone who always seems to be working a political angle of some sort. Something i’m sure you don’t deny.

  24. smedleyb says:

    What if the only strawman in all of this was the “debt crisis” itself, manufactured by the right-wing to destroy the last vestiges of American Socialism?

    The economy is expanding, jobs are coming back, stock prices are up, mini-golf scores are down, and the federal coffers will be overflowing with cash-money in short order.

    I say do nothing about the bullshit debt crisis and watch deficit spending shrink to about 2% of GDP in two years.

    On the other hand, slash military spending, bump the top marginal rate to 40%, force GE and others to pay their fucking taxes, tweak — not privatize — SS and medicare/medicaid, and we’ll have a surplus in just a few short years.

    But good luck getting the tea baggers to shed 1 carrier group, let alone all 11 of them, or to raise the tax on the super rich, a group to which the vast majority of them do not belong — at least yet, in their minds.

  25. Ridge Runner says:

    “Simply put, Krugman’s the low-hanging fruit. ”

    Indeed. Having sold out to his ideological commitments, he’s definitely easy pickings.

  26. James says:

    >> if the Heritage analysis is flawed, and apparently it is not only flawed but utter horse manure, then it logically follows that this is also the case for the Ryan proposal.

    Actually, no such conclusion follows, though in fact the Ryan proposal is deeply flawed.

    However, the focus here on the Heritage analysis eludes me, other than to score points.

    Moreover, the chief value of the Ryan proposal, perhaps more than anything, is to launch a great public debate on our fiscal state.

    On that subject, it’s instructive to read the CBO’s just released analysis of the administration’s FY 2012 budget:

    An Analysis of the President’s Budgetary Proposals for Fiscal Year 2012

    Obviously, the CBO has some differences with some of the administration’s numbers.

  27. RW says:

    “Actually, no such conclusion follows, though in fact the Ryan proposal is deeply flawed.”

    No other conclusion is possible and the Ryan proposal is, eo ipso, not merely ‘deeply flawed’ but fantasy; a debate over fantasy can be amusing, particularly over beers, but when a nation’s economic health depends on the outcome it may make more sense to focus on realty.

    “Obviously, the CBO has some differences with some of the administration’s numbers.”

    Why, yes it does, by they are obviously trivial: If you see some that at not by all means list them.

    Needless to add, Ryan’s proposal was never submitted to CBO or any other credible analytic agency so there is not much to discuss there other than to speculate on the motivations of those who continue to defend it.

  28. Andy T says:

    It may be earlier in this thread, but I’m sensing that the political hackery isn’t “playing in Peoria” anymore…

    Barry, it may be time to retire Invictus. He’s obviously a “thinker,” but the blatant partisanship is getting a bit thick.

  29. Greg0658 says:

    tired myself too :-) :-( :-|
    “I’m not quite sure what assumption… would deliver 2.8 percent unemployment, ” Gault said

    how about: a) world war b) civil war c) those Obama* Death Panels has the unemployed hiding in the trees and going off the paperwork grid

    *coda – D,R,T politicals doing the lobby money work

    ps – oh and best wishes Blago – take ‘em on (for the good ole boys back here) – TRADE them horses – x2

  30. frodo1314 says:

    Ok – so what is the alternative to the Ryan plan then? Until I see one, this is the best one out there.

  31. gd says:

    Defense by counterattack is standard right-wing behavior. The usual liberal response is indignant protest, and all the fuzzy-brained public remembers is a sputtering liberal trying to defend themselves. It’s been a keystone of their behavior since I started paying attention to Lee Atwater, and I’d guess before that.

  32. Kort says:

    The low hanging fruit is scrutinizing 1 piece of date (unemployment rate) in the year 2020 or whatever and ignoring meaningful discussion about anything else.

    Invictus: When one piece of data is such an outlier that it calls the entire analysis into question, the appropriate response is to go back to Square One. When doing so results in just that one piece of data (the unemployment rate) changing while every other data point remains exactly the same, there really is nothing else to have a meaningful discussion about. I’m sorry, but I just can’t envision how a model could possibly work that way.

  33. Liquidity Trader says:

    Nothing like a good fact based discussion to bring the wingers out of the closet !

  34. Tarkus says:

    It’s as if the guys who said Iraq oil would pay for the war found new jobs at HF.

    Maybe they can pay some Harvard dude to support their calcs… :D

  35. Chad says:

    Liquidity Trader hits it on the head. People are angry because Invictus took 15 minutes of his time to utterly discredit an organization that works to influence policy and public opinion? And, in this case this organization used out right lies. Yes, Invictus is the “idiot.” How dare he challenge belief and faith with facts.

  36. dougc says:

    Another iteration of voodoo economics, maybe David Stockman did the math; remember Rosy scenario. Ryan plan and supply side are based upon a popular premise, if you reduce taxes everything will be alright. Of course they say they are going to cut spending, so did Reagan. Once they are in power the spending will vastly exceed revenue.

  37. econimonium says:

    What I notice is that anyone that criticized Invictus hasn’t produced any numbers. Funny that huh? My favorite comment is frodo1314 (who should have fallen into the lava with the ring by the thought process that produced this gem) “Ok – so what is the alternative to the Ryan plan then? Until I see one, this is the best one out there.”

    So here’s what you do frodo, you take the Obama plan (which is an alternate so you failed the first step by not mentioning it) and you contrast it WITH THE MATH with the Ryan plan. Then you discuss what sort of future you’d like to build because, you know, it costs money. Then you wonder aloud if, when a voucher system hits, people get angry and start voting differently, if it would ever survive long or if we would just kill it and go back to the old system anyhow. Or, wonder aloud still, if anyone who voted for such a thing would survive the next election with what the polls ACTUALLY say people want.

    But it would appear also, that this is just a partisan hack statement, once again. Sooooo go for it all of you backing the Ryan plan! Make me wrong by taking the numbers and making them work against the Obama plan and its numbers! Go for it! I DARE you!

  38. wunsacon says:

    Andy, if Invictus didn’t debunk the junk numbers from shameless partisans and instead followed your suggestion to float their own policy ideas, then some of those who now criticize Invictus would probably criticize his policy suggestions and suggest we look at the yet-to-be-junked numbers from the shameless partisans.

  39. OK Avenger says:

    Here’s my proposal. Back up from where we screwed up. Let ALL the Bush tax cuts and go back to the MTRs during the Clinton years. Get ground troops out of Central Asia and the Middle East. Downsize the National Security Apparatus back to pre-2000 levels. Revisit Medicare Part D. That would get us close.

  40. wunsacon says:

    >> Moreover, the chief value of the Ryan proposal, perhaps more than anything, is to launch a great public debate on our fiscal state.

    Sorry, but the “great public debate” has been on for years. And one junk proposal after another does not help.

  41. econimonium says:

    Still not seeing any numbers, just politics. Can someone give us some numeric analysis on the Ryan plan here instead of bluster?

  42. wunsacon says:

    Today, Mish is comparing the Ryan and Obama proposals. Ryan’s *looks* better. But, I can make an even better proposal, especially because *my* proposal achieves a 0.5% unemployment rate and we all get unicorns.

  43. wunsacon says:

    econimonium, Ryan and Heritage gave you numbers. What you refer to as “bluster” is the doubt critics are expressing regarding the quality of those numbers. (Like when people doubt AAA ratings or the latest suggestions on Mad Money…)

  44. econimonium says:

    wunsacon, they did NOT give us any credible numbers. They HID data that was unreasonable and then made something up. EVERYONE has pointed out that the numbers don’t work. They are not credible. So please refute that analysis using numbers, not bluster.

  45. wally says:

    The trouble with criticizing Krugman is that he almost always posts or cites a fact, chart or set of stats when he makes a claim. In the long run that makes him extremely credible compared to others who are ‘faith based’, to put it politely.

  46. DeDude says:

    What we need is an analysis of the Ryan and Obama and Progressive Caucus proposals conducted by an entity (CBO?) that fully publish what model they use and what assumptions they put into the model. That way you can get an apples to apples comparison of the projected outcomes of each of those proposals.

    Personally I think we should go with the Progressive Caucus proposal because it cuts the deficit more than any of the others. It is time to pay the bill for 3 decades of “tax-cut-and-spend-on-the-children’s-credit-card” insanity, before all of those responsible have died. However, we have to protect the consumer class more than we would by going purely back to the Clinton rates – by doubling the personal exemptions and retaining the 10% tax bracket. You need a healthy consumer class to retain a healthy economy.

  47. James says:

    “Obviously, the CBO has some differences with some of the administration’s numbers.”

    Why, yes it does, by they are obviously trivial: If you see some that at not by all means list them.

    Trivial? CBO’s analysis of the FY 2012 President’s budget projects accumulated debt for the 10 year period 2012-2021 nearly $2.3 trillion or 31% higher than the OMB’s projection. For this budget CBO projects debt held by the public will be 87.4% of GDP vs. 77% by OMB. These are hardly minor differences.

  48. DeDude says:

    Public debt being 87% or 77% of GDP is not going to make a lot of difference to any economic parameter that I know. Next step is for CBO to get a little more details and specifics from Ryan (instead of hot air and BS) so they can run the same model and assumptions with his proposal and see what that will do.

  49. OK Avenger says:

    From now on, I’m assuming a wealth effect coefficient of about 0.8. That’ll do it fer shure. Throw the Social Security Trust Fund into the stock market and voila!

  50. James says:

    Public debt being 87% or 77% of GDP is not going to make a lot of difference

    Well maybe it would if it was also pointed out that in the OMB projections these numbers over the 10 year period are shown as holding steady . . . while the CBO has them going steadily up without letup.

  51. wngoju says:

    Invictus: Great post – informative. Wow, for some reason you really upset the weirdo division of the commentariat.

    I liked BR’s defense of the blog too.

    Invictus: “…for some reason you really upset the weirdo division of the commentariat.”

    I had noticed that, too, and thought it rather odd.

  52. gman says:

    Ryans budget comes from the same type of place the was SURE the Bush tax cuts AND the Iraq war would pay for themselves!

  53. DeDude says:

    If you worry about past the 10 year period based on current projections you need to look back at the history of these types of projections. Even at their best they are not accurate for predicting more than 2-3 years ahead. Unpredictable things happen (good and bad) on a regular basis and the models then have to be adjusted to take those things into account. Remember how the Bush tax-cuts got passed because we were going to have this problem 10 years later of tens of trillions in surpluses – how has that worked out? Personally I agree that we should cut the debt as much as we can without killing the economy. I think the Obama plan is way to light on increasing taxes and as a result does not reduce the debt enough, however the Ryan plan is a complete joke on taxing. The progressive caucus plan has it right and should be the dems starting point for negotiations. The Clinton tax-rates worked just fine so lets get back to them.

  54. DeDude says:

    The Bush tax-cuts were a repeat of an experiment that had already failed 2 decades earlier, and that his dad correctly had chided as voodoo. Having once again proven that this “tax-cuts-pay-for-themselves” stupidity is pure fantasy, we simply need to nullify these irresponsible tax-cuts and pay our bills.

    The effects of tax-cuts are extremely content dependents and very different for different types of tax-cuts. The problem with many models are that they fail to understand and incorporate this fact. In an export driven economy with a lack of investment capital you can increase growth by cutting taxes on rich people and capital gains. However, a consumer driven economy with a huge excess of investment capital, needs to target tax-cuts to the consumer class – and increase taxes on the rich to prevent excess of investment capital from drifting into and driving prices up on consumer items. In the early phases of a recession, tax-cuts have no stimulatory effect because they are simply used to pay back debt and create more of a cash cushion – so government spending is the only way to stimulate. When the recovery is established it can be speed up by tax-cuts to consumers (and investors if there are clear signs of shortage of investment capital).

  55. [...] Heritage Foundation is just making stuff up. They can call Paul Krugman names all days it still doesn’t make their math [...]