I've written a couple of posts about Marco Rubio's debate tiff with John Harwood, which revolves around the question of how the poor and the middle class fare under Rubio's tax plan. Harwood wanted to know why it was so much better for the rich than the middle class, and Rubio responded by saying his plan would help the very poor a lot.
How is Rubio helping the poor so much? Well, Rubio's plan would replace the standard deduction and personal exemption with a $2,000 credit ($4,000 for couples)....But Rubio's proposal, as originally laid out, is not a plain old credit. It's a fully refundable credit. Think about that for a second. Rubio's original proposal would give any household in America $2,000 or $4,000, no questions asked. It was a basic income. It was a massive increase in the welfare state of a kind that no Democratic candidate, including Bernie Sanders, is proposing.
So it's perhaps no surprise that when I asked his team about this, they insisted that this was a mistake, and the credit was in fact much more limited. "Rules would be tailored to ensure that our reforms would not create payments for new, non-working filers," a Rubio aide told me in April.
It's unclear what exactly that means....Here's the problem, though: The Tax Foundation assumed that Rubio had proposed a basic income....Given that Rubio will not, in fact, create a massive new welfare program, this finding is pretty dubious.
How about that? Rubio misled the Tax Foundation into concluding that his plan would help the poor, and for some reason he's never gotten around to correcting the error. In fact, he's been aggressively touting the Tax Foundation analysis to "prove" that his plan helps the poor. He even accused John Harwood of misrepresenting his plan on national TV even though he knew perfectly well that he was the one misrepresenting his plan. If I were the Tax Foundation, I'd be pissed.
Still, I'm sure this was all an honest mistake on Rubio's part, and he'll rush to give the Tax Foundation updated information now that he realizes what he's done. Right? He's an honest young man, after all.
CARSON: What we eat, how we treat our bodies, what we do to strengthen or to weaken our immune systems. We need to pay a lot more attention to preventive medicine—not so much to radiating, poisoning and cutting.
TERRY MEEUWSEN: Has going through what you've just gone through and sensing the truth of what you just talked about, has that changed the way that you live?
CARSON: Oh absolutely. I have changed my diet significantly.
Carson believes there is cause for great concern. "There certainly seems to be some dietary connection to cancer rates....And clearly there are environmental issues. Pesticides, water contamination, the list goes on and on."...Carson changed his diet to include mostly organic fruits and vegetables.
2003 or early 2004: Carson is booked to speak at the annual sales conference of Mannatech Inc., a multilevel marketer of glyconutrient supplements.
The father of one of Dr. Carson’s patients told him about a ten year-old company based in Coppell, Texas which had secured world-wide patent rights to a food supplement known as a glyconutrient....Dr. Carson then contacted Dr. Reg McDaniel, an authority in glyconutrients and medical director of Manna Relief Inc....“The science made sense to me,” Dr. Carson said. “God gave us (in plants) what we need to remain healthy,” he said. “In today’s world our food chain is depleted of nutrients and our environment has helped destroy what God gave us.”
March 2004, in Carson's keynote address for Mannatech Inc.:
One of the fathers of one of my patients asked me if I had ever heard anything about glyconutrients. And I said, well, I've certainly heard the term, but I didn't know anything specific about them. He gave me the website, and I subsequently contacted Dr. Reg [Reginald McDaniel, medical director of Mannatech], and we had quite a conversation about....possibilities. And he sent me some product and prescribed a regimen. And I started taking the product, and within about three weeks my symptoms went away.
Mannatech, Incorporated (NASDAQ: MTEX) today announced record sales and net income for its second quarter ended June 30, 2004. For the three months ended June 30, 2004, net sales reached $74.3 million, which was an increase of 59.8% from $46.5 million for the same period in 2003 and net income increased by 376.1% to $5.6 million.
Texas Attorney General Greg Abbott today charged Coppell-based Mannatech, Inc., its owner, Samuel L. Caster, and several related entities with operating an illegal marketing scheme in violation of state law....Texans will not tolerate illegal marketing schemes that prey upon the sick and unsuspecting, Attorney General Abbott said.
....According to investigators, the defendants encourage product user testimonials that tout their supplements’ alleged healing effects. These exaggerated testimonials, along with misleading before and after photos, are displayed prominently in seminar booths, brochures, videos, sales associates’ personal Web sites and training materials. Together, these marketing techniques mislead consumers into believing that the supplements dramatically cure or treat serious illnesses.
....In fact, the company’s health claims are not supported by legitimate scientific studies, nor are its products approved as drugs by the U.S. Food and Drug Administration.
September 2007, Ronald Schnaar and Hudson Freeze publish A "Glyconutrient Sham" in the journal Glycobiology:
Faith leads many to Mannatech, and that faith, combined with desperation and lack of tools to judge the claims of the company and its associates, can be a powerful basis for glyconutrient sales....We feel that glycobiologists do have a responsibility to serve the public by speaking out against claims of glyconutrient therapeutic efficacy, often based on legitimate glycobiology discoveries, when there is a lack of credible clinical data to support such claims.
2011, Carson speaks again at Mannatech's annual sales conference, as recounted by the Wall Street Journal:
He got a round of applause by telling Mannatech associates that the company had donated funds to help him get a coveted endowed post at Johns Hopkins Medicine, according to a video of the event.
"Well three years ago I had an endowed chair bestowed upon me," Mr. Carson said in his "Keynote Address" at a 2011 Mannatech convention. "And uh, it requires $2.5 million to do an endowed chair and I’m proud to say that part of that $2.5 million came from Mannatech."
Despite the fact that this was a prepared address at a Mannatech conference, his campaign now says he "simply got things mixed up" and Mannatech never provided any funding for his endowed chair.
Fascinating, no? In 2002 and 2003 Carson talks repeatedly about diet and immune system issues, but for some reason fails to mention glyconutrients. Then he signs up to speak at Mannatech's 2004 sales conference. Almost immediately, he starts mentioning glyconutrients and claims he began taking them within weeks of his cancer diagnosis. Mannatech's sales soar after Carson's implicit endorsement. Three years later Mannatech is sued by the Texas attorney general for making unproven health claims, and scientists call Mannatech's work a "sham." Nevertheless, Carson continues his association with Mannatech: apparently accepting funding from them for an endowed chair; speaking at their sales conference in 2011 and 2013; appearing in promotional materials on their website; and appearing in a PBS special touting glyconutrients.
May 2015: Carson announces he will run for president.
In a Republican debate, Carson flatly says he has no association with the company:
"I didn't have an involvement with them. That is total propaganda, and this is what happens in our society. Total propaganda. I did a couple of speeches for them, I do speeches for other people. They were paid speeches. It is absolutely absurd to say that I had any kind of a relationship with them."
This plan would institute a flat 10 percent tax rate on all varieties of individual income, with a large standard deduction and personal exemption....The plan would replace the corporate income tax and all payroll taxes with a broad-based “Business Transfer Tax,” or value-added tax (VAT), with few exemptions.
I just want to make a quick point about this: if it ever became a serious proposal, AARP would go ballistic. Wonks might support a switch from an income tax to a VAT, but old people decidedly don't. Here's why.
Businesses would pay Cruz's VAT and then pass along the cost to consumers. In practice, you can think of it like a sales tax. If it's been around forever, everything is fine. But if you replace existing income and payroll taxes with a VAT, the elderly get screwed.
Take a look at the table on the right. To make the arithmetic easy, my example assumes:
$100 in income.
A current combined federal income/payroll tax rate of 25 percent.
A Cruz income tax of 10 percent and a Cruz VAT of 15 percent.
In our current system, you pay 25 percent in federal taxes when you earn your money and sock away the rest in savings. When you retire you can withdraw the original sum without paying further taxes. Of your $100 in original earnings, you have $75 to spend.1
Now look at the last column. This is Cruz's system once it's fully established. You pay 10 percent in federal taxes when you earn your money, and when you retire you pay an extra 15 percent federal sales tax on everything you buy with your savings. The net result is the same: you effectively have $75 to spend.
But now take a look at the middle column. Suppose you're 65. You already paid 25 percent when you earned your money. You have only $75 to withdraw. But you also pay an extra 15 percent on everything you buy. You effectively have only $60 to spend.
This transition problem is well known. It seems a bit arcane, but believe me, AARP knows all about it—and there's no simple solution. If you transition a VAT slowly, it doesn't hurt too much. But Cruz doesn't say anything about that. He just wants to flip a switch. If he ever starts looking like a serious candidate, he's going to have some serious explaining to do to America's elderly.
1Don't worry about interest and inflation. They don't change the basic picture.
After reviewing the transcript of last night's debate I realized I had a few leftover questions. Nothing hard. Just some simple, easy-peasy stuff:
Carly Fiorina: You say you want to reduce the tax code to three pages using normal 11-point type. I'm tired of paying our CPA every year to prepare our tax returns, so this sounds terrific. It also sounds short enough that you can produce draft legislation for us pretty quickly. How hard can three pages be? When do we get to see it?
Mike Huckabee: You say we can save Medicare by focusing on cures for four big diseases that apparently we've been ignoring: cancer, Alzheimer's, diabetes, and heart disease. Since I happen to have bone cancer, this sounds like a great idea to me. In fact, I'd be OK with pauperizing the whole country in order to speed up cures for multiple myeloma. So what's the plan? I checked out your website, but the only mention of cancer I could find was a blog post comparing Iran to cancer. This makes me concerned about how serious you are. Do you have some ideas about research priorities? How much money will you spend on this? Inquiring minds want to know.
Donald Trump: Some of your luxury resorts have policies that ban guests from carrying guns. You said you'd change this, and since you're the boss I assume you can do it with the stroke of a pen. When are you going to do this?
Marco Rubio: You might have been confused about John Harwood's tax question last night. I think he agrees that your tax plan is generous to the very poor. But now that we have that straight, why does your plan increase middle-class income by only 15 percent compared to 28 percent for the top earners? As he said, that really does seem kind of backward for a guy who's so dedicated to average workers like your parents.
Ben Carson: Last night you said that our economy is doing poorly because it's "tethered down right now with so many regulations." But then you failed to make the obvious blimp joke. What's up with that?
Ted Cruz: Carl Quintanilla rudely refused to let you talk about the debt ceiling even though that was what he asked you about. But it sure seemed like you had something you wanted to get off your chest about that. So: what do you think about the debt ceiling? And one other thing: are you serious about returning to the gold standard? Really?
I got a fundraising email from Marco Rubio this morning:
Last night, in the latest Republican presidential debate, one of the moderators actually asked me if I should "slow down." That's exactly what the establishment has been telling me for years. That I should "wait my turn."
....P.S. I couldn't believe it when one of the moderators misled about my tax plan — despite having to correct a story earlier this month where he made the exact same claim!
Poor Marco. Speaker of the Florida House at age 35. US Senator at age 39. Lionized presidential candidate at age 44. He's really had a rough time with the GOP establishment.
Oh, and John Harwood was precisely correct in his debate question about Rubio's tax plan. He didn't mislead anyone. It's true that a couple of weeks ago Harwood corrected a tweet about Rubio's tax plan, but he didn't repeat that mistake last night. His characterization of the Tax Foundation's analysis of Rubio's plan was 100 percent accurate. It's Rubio who seemed either confused or deliberately deceptive about the whole thing.
Is it worth reporting the results of the overnight online polls following the debate? Sure. Why not? We all know that online polls are mostly garbage, but we also know that if you aggregate them we can turn dross into gold. So let's do it! The chart on the right shows you the average of three online polls from Drudge, Time, and CNBC.
Let's also check out Betfair. Unfortunately, I've never been quite sure I know how to interpret their trend charts, but if I did it right this time it looks like Cruz is up, Trump is even, and Rubio, Carson, and Bush are down. Since this is probably all meaningless, I suppose it doesn't matter much if I'm interpreting the betting results right. Still, one of these days I guess I should figure it out for real.
If this stuff has any legitimacy at all, I'd say that (a) Cruz did well, (b) Rubio might have helped his cause, (c) Carson is ebbing, (d) Jeb is toast, and (e) nobody else changed their standing much. I'm ignoring the huge number of people who thought Trump won the debate because I refuse to believe it.
Question for those of you who watched last night's debate: what did you think of the questions the moderators asked?
It was an odd display. The wording of the questions often veered close to outright rudeness. For example:
Is this a comic book version of a presidential campaign?
You're skipping more votes than any senator to run for president. Why not slow down, get a few more things done first or least finish what you start?
In terms of all of that, it raises the question whether you have the maturity and wisdom to lead this $17 trillion economy.
At the same time, if you take a look an inch below the surface, most of the questions the CNBC crew asked were actually very substantive. The candidates generally didn't feel like engaging with anything other than their plans to cut taxes and slash regulations, but that's not the fault of the moderators. That's because it's a Republican debate, and these are pretty much the only economic issues Republican candidates like to talk about.
This year's debates have all followed a similar pattern, with the moderators asking each candidate at least one "tough" question near the beginning of the show. Fox did it too, and Anderson Cooper did it to the Democrats, so it's not a liberal media conspiracy. Mostly it seems to be some kind of alpha chimp display to demonstrate that the moderators are real live journalists, not just pretty faces letting the candidates make stump speeches.
I didn't really mind this the first time or two, but I'm starting to find it annoying. Fine: you folks are real journalists. Now let's move on and ask questions that are really tough. Dig a little more deeply into policy and then follow up. Maybe switch up the rules and get rid of the "anyone who's named gets 30 seconds to respond" nitwittery. Give the moderators a couple of minutes for each question, and make it a real back-and-forth. Less mud wrestling and more policy depth.
It probably wouldn't work. I'm not sure there's any power on earth that can get the candidates off their rehearsed talking points. But it might be worth a try.
POSTSCRIPT: And on the candidate side, how about giving the attacks on the media a rest? I know it's a great applause line, but honestly, who cares? It's just pandering. Find something new to get applause for.
The change in private inventories was by far the largest factor holding back stronger growth, subtracting 1.44 percentage points from the overall advance. The pairing down of stockpiles could suggest businesses aren’t confident about future demand and avoided overproducing. The figure could also reflect that falling prices for oil and other commodities caused the dollar value of inventories to decline.
Headwinds from overseas are just too persistent. Europe is weak and China is faltering. In the face of that, it's hard for the American economy to pick up any steam.
I just took my first look around at post-debate commentary, and there seems to be a consensus that Ted Cruz was the night's big winner.
Ted Cruz? I barely even noticed him most of the night. How did he end up getting so much pundit love? The answer, it turns out, lies in one (1) exchange early in the debate. Here's what Cruz said after getting a question about his opposition to John Boehner's budget deal:
You know, let me say something at the outset. The questions that have been asked so far in this debate illustrate why the American people don't trust the media. This is not a cage match. And, you look at the questions — "Donald Trump, are you a comic-book villain?" "Ben Carson, can you do math?" "John Kasich, will you insult two people over here?" "Marco Rubio, why don't you resign?" "Jeb Bush, why have your numbers fallen?" How about talking about the substantive issues the people care about?
That's it. It got huge applause, of course. Attacks on debate moderators, and the media more generally, always do at Republican debates. I even thought about doing a post rounding up all the shots the candidates took at the media tonight, but then thought better of it.
Anyway, I took Cruz's attack on the moderators as basically a cheap—and frankly kind of stale—applause line, and thought nothing more about it. But I guess it was actually one of the highlights of the debate. This does not speak well for the overall quality of tonight's proceedings.
I'm used to politicians fudging and tap dancing during debates. All part of the game. But the number of flat-out lies in tonight's debate was pretty stunning. Here are the four that stood out.
First up is Donald Trump:
QUICK: I think you called him [Marco Rubio] Mark Zuckerberg's personal senator because he was in favor of the H1B.
TRUMP: I never said that. I never said that.
Trump said exactly that in his own immigration plan. Maybe he never read it. It's right here.
Next we have Carly Fiorina:
FIORINA: We have 400,000 small businesses forming every year in this country. How great is that? They are employing themselves, they are potentially employing others. The bad news is, we have 470,000 going out of business every year. And why? They cite Obamacare.
No, we don't have 470,000 businesses going under and claiming it's because of Obamacare. Crikey. By the way, she didn't save 80,000 jobs at HP either. And the tax code isn't 73,000 pages long no matter how often she says it. Nor have 307,000 veterans died because the VA couldn't see them. Etc.
And Ben Carson:
QUINTANILLA: This is a company called Mannatech, a maker of nutritional supplements, with which you had a 10-year relationship. They offered claims that they could cure autism, cancer, they paid $7 million to settle a deceptive marketing lawsuit in Texas, and yet your involvement continued. Why?
CARSON: Well, that's easy to answer. I didn't have an involvement with them. That is total propaganda, and this is what happens in our society. Total propaganda.
HARWOOD: The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.
....RUBIO: No, that's—you're wrong.
HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent…And people in the middle of the income spectrum, about 15 percent.
RUBIO: Yeah, but that—because the math is, if you—5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money, numerically, it's gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan.
That's completely wrong. Rubio's plan gives the rich more percentage-wise than the middle class. The Tax Foundation did indeed say this, right here. The median taxpayer gets 15 percent more. Rich taxpayers get 28 percent more. Hell, Harwood even gave Rubio a break by quoting the extremely dubious dynamic estimates instead of the more conventional static estimates.
I dunno. Everyone seems to have internalized the fact that you can say anything you want at a televised debate, and only a tiny fraction of the audience will ever see a fact-check. So why not claim the moon is square?