Atlas Shrugged: The Mocking

Monday, November 11, 2013

How To Fix Megan McArdle's Poverty

We have been busy but we would be remiss not to point out a plaintive missive from Megan McArdle (who else?). McArdle asks someone to figure out How Conservatives Can Fix Poverty and Win Elections for her, for on top of all its other crimes against humanity, Obamacare is destroying marriage. McArdle read and commented on Garance Franke-Ruta's Atlantic interview with a couple who might get a divorce because they can't afford health insurance of Obamacare.

Let us enjoy take a moment to note that, for all intents and purposes, Franke-Ruta replaced McArdle when the latter slowly faded off into the sunset.

Okay, we're done.

Then there's this little bit about something else, and after that bit we return to marriage. McArdle has read people who have read studies that say married people have more money than unmarried people, so conservatives should find a way to incentivize marriage, reducing the need for "entitlements" and consequently winning elections with their imaginary solutions.

Let's begin with McArdle's cri de coeur:

[...Conservatives need to think hard about their answers to the mess that is our current patchwork of benefits. I’ve seen suggestions here and there, but nothing, so far, that the movement has coalesced around. The liberal answer -- give subsidies to more people! -- creates plenty of problems. If conservatives can come up with a better one, they’ll have a cornerstone for the more populist conservative policy platform that Ross Douthat has been calling for. Maybe even for a more populist conservative policy platform that can win elections in 2016.

McArdle understands the need for alms for the poor; they keep the dirty and unwashed at arms' length. But let's not overdo it!

Generous welfare benefits discourage work, eroding the tax base that is supposed to support them. Even Social Security benefits seem to reduce the number of children people have -- children who are still very necessary to support the universal entitlement.

Since Social Security is given to retired and disabled workers and their survivors and dependents, yes, I suppose Social Security does "seem" to reduce the number of children people have. You know what else reduces the number of children? Not having children. McArdle is married yet has no children, for reasons we neither know nor want to know. It's not very fair of her to insist that the poor have more children so she can ensure she gets Social Security. McArdle plows on anyway.

I’m on the record as a marriage booster. Marriage is a happiness booster, it’s the best environment for raising kids, and it’s one of the most reliable personal finance programs around. It’s good for you, and good for society. Good policy should encourage marriage, not discourage it.

Conservatives support “family friendly” policies such as child tax credits, but they tend to give this issue shorter shrift. This dynamic plausibly plays a role in the disintegration of marriage among the less educated. You often hear that welfare helped to destroy fragile families by making men less necessary to their economic support. But welfare did more than that: It actually chased men away. A two-adult family was unlikely to be eligible for welfare, or ancillary benefits such as housing and Medicaid.

Unfortunately McArdle can't think of any actual policies so she merely wafts a request out into the ether, where no doubt it will land on some fallow conservative mind, who will be able to convince people to do what McArdle will not: give up something that is to their benefit. McArdle herself refused to give up her mortgage deduction or employer-provided and tax-payer subsidized health care. Yet she insists that people much, much poorer than herself give up their government benefits, benefits they use to survive.  The poor's government benefits pay for food and shelter for their children. McArdle's government benefits paid for a Thermomix.

And speaking of those deductions, we now come to the little bit of the post that is sandwiched in between the odes to marriage. Less charitable minds than ours might think that this little section was the real reason for McArdle's rare venture outside of Obamacare.

This is not the only program that has this effect. Many tax subsidies phase out at higher income levels, such as IRAs and student loan deductions, and thanks to the tax deal cut over the fiscal cliff, higher-income earners will face more such phaseouts this year.

The link leads to an article on the Pease Limitation.

One of the impacts from the fiscal cliff legislation to be felt by high-income earners is the reintroduction of the Pease limitation, reduces the amount of itemized deductions that certain taxpayers are allowed.  While the American Taxpayer Relief Act of 2012 reduced the impact of the Pease Limitation, it is still around, and it can greatly limit itemized deductions like mortgage interest and charitable gifts.

The infamous Pease limitation was first incorporated into the Omnibus Budget Reconciliation Act of 1990 and it is named after former Congressman Donald Pease.  The purpose of the Pease limitation was to raise revenue by limiting some popular and common itemized deductions among high-income earners.  Pease limitations aim to reduce the benefit of the following itemized deductions:
  • Charitable Contributions
  • Mortgage Interest
  • State, Local, and Property Taxes
  • Miscellaneous Itemized Deductions
The limitation for 2013 will kick in on AGI levels that exceed $300,000 for joint filers and $250,000 for individuals, indexed for inflation.  Income over the applicable amount will trigger an itemized deduction limitation that is the lesser of (a) 3% of the adjusted gross income above the applicable amount, or (b) 80% of the amount of the itemized deductions otherwise allowable for the taxable year.

It seems that Mr. and Mrs. McArdle are about to take a bit of a tax hit. No wonder McArdle is trying to think of a way to save tax monies by squeezing the poor. Some people might complain at length about such an injustice, but McArdle is a libertarian and is no doubt overjoyed at the chance to stop taking advantage of those mooching and looting laws.


Downpuppy said...

Too funny. I had the one guy who asks about Pease & PEP (151(d)(3)) collar me this morning. He gives away half his income, but doesn't want to pay an extra penny in tax.

Reality is that Megan is probably going to be in AMT & neither will matter. She is likely to get hit by the Medicare surtax.

Seriously - a $3000 hit to deductions for every $100,000 AGI exceeds $300,000 is the least sympathy grabbing section in the entire IRC.

Anonymous said...

I should note that Megan is also on record as being against gay marriage because umm...yeah she really had no logical reason for this one.
It was "well it's always been that way, there might be drawbacks even though I can't think of any."
Happiness for me, but not for thee. That's our Lady of the Poverty of the Soul.

Megan also fails to understand that welfare services have done wonders for women in bad marriages and for women to get jobs, but she does not care very much for this sort of person who needs a hand. Everyone's a leech who ends up bad circumstances in her mind, but she's always been a victim blamer.

Ruta has done some great work on AIDS reporting in the past, but she has a soul and all.

Susan of Texas said...

Yes, marriage will help the economy unless it's a gay marriage, which will destroy families because bigots will be so outraged by gay marriage that they will refuse to marry, thus ensuring their inevitable illegitimate children will be raised on her tax dollar. That's pretty much her entire "reasoning."

If you look at the numbers, something every marriage booster seems to avoid, it's very unclear. Women who wait to marry make more money, men who wait make less. But men who can't afford to marry will wait. Women who marry young tend to make less but they are also frequently women with fewer economic prospects. There are a multitude of variables that complicate the issue. But when you want to push Catholic doctrine or cut entitlements you tend to dismiss anything that doesn't support your bias.

I don't think she's told us why marriage automatically means economic security. She has linked to Pascal-Emmanuel Gobry, who has made that statement, so she's probably just going by what others tell her. He says:

"There also exists a marriage wage premium, which is roughly as significant and as consistent as the college wage premium. To say that the marriage wage premium doesn’t get the same amount of attention is an understatement. Economists recoil at the idea of praising marriage and supporting public policies that increase marriage. They are much more likely to dismiss the marriage wage premium as reflecting selection bias (it’s not that marriage makes people earn more money, it’s that people who would have earned more money anyway tend to get married) or intone that “correlation is not causation”–criticisms that apply equally to analyses of the college wage premium. I would bet a goodly sum of money that if you picked at random ten tenured economists from top-20 economics departments, and asked them to list what an 18-year-old should do to increase his chances of getting high wages, none of them would say “get married and stay married”–even though the data on the marriage wage premium supports this conclusion to the same extent as it does going to college."

He does not link to any studies proving his hypothesis; perhaps he has done so elsewhere. Gobry also adds:

"To clarify: my point here isn’t “I’m right, economists are wrong” or, worse, “No need to evaluate economists’ arguments on the merits, because they’re biased anyway.” And by the way, yes, I am a practicing Catholic and a social conservative, so my pro-marriage, pro-natality views have plenty of bias too. My point here is to praise Tyler Cowen for recognizing that economists have bias, and to note that fellow economists have cheered him for doing so. It’s a great step for intellectual honesty. Let’s be even more honest, and let’s have economists who are willing to look beyond their biases. I’ve suggested two places to start. I’m sure there are more."

McArdle poo-pooed Elizabeth Warren's The Two Income Trap, which showed that two incomes doesn't always mean financial security. McArdle also ignores such things as death, divorce, job less, everything that might mess up her tidy theory.

Anonymous said...

Now that you've reminded me...
I hope there's a chapter in her book on failure about Part II of her Elizabeth Warren takedown.

I wish Tyler Cowen would just keep writing books about food instead of working for Mercatus's PR division. He's about the last person you'd want to believe has intellectual honestly.

ifthethunderdontgetya™³²®© said...

But let's not overdo it!

Overdoing alms for the rich, on the other hand...

=>Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history.

And the impact? Even by the Fed's sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn't really working.

Unless you're Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.<=

Susan of Texas said...

Failure is only a good thing when it's accomplished by a conservative. They will always be backed by the rich so they win even when they lose.

Actually, McArdle must be delighted by the Obamacare rollout. Its failures will teach the government how to succeed!

I am very relieved that everyone who ripped off their customers and then ripped off the taxpayer does not have to suffer. Think of the Prada-wearing children!

Smut Clyde said...

If conservatives can come up with a better one

When your starting premise is "Liberals are proposing what is currently the best solution (though imperfect)", shouldn't you be promoting liberalism? Perhaps joining the movement, in order to push it towards less imperfect solutions?

Susan of Texas said...

Which reminds me that she was going to vote for Obama and his dreaded Obamacare. And Obamacare is a mostly Republican plan from the Heritage Institute.

John E. Williams said...

The one thing that gives me hope that Obamacare will one day right itself and become viable (if imperfect and a huge payout to the insurance industry)is Megan's tireless opposition and doomsaying towards the ACA. I mean, can you imagine five years from now looking back at all this and having to say "well, McMegan was right"? It's impossible. It's never happened before. She's as wrong about this as she was about 9/11 and Iraq. So I read this shit and I relax.

Anonymous said...

A brief look back in time.
Yup, she's still wrong.

Anonymous said...

"Some of the left-wing commentators I’ve seen seem to be under the impression that health insurers make fabulous profits..."

Roger said...

McBargle's boosting of marriage doesn't extend as far as support for recognition of all marriages, or paying heads of households living wages.

It extends no further than putting Suderman in his booster seat.

Anonymous said...

found this: dying of laughter

Anonymous said...

Anonymous said...

Downpuppy said...

KLo has gone completely around the bend -

"POTUS sure has audacity when he quotes pope when it serves his purposes, ignoring what F1 had 2 say, say, re US Bishops & "

Code words KLo - Remember your code words!

Batocchio said...

If the poor didn't want to be poor, they could've been born into privilege, like Megan McArdle.

(Or learned to shill for plutocrats, like Megan McArdle.)

Anonymous said...