Sarah Palin Interview

Palin finally agreed to appear before the press. She embarrassed herself by not knowing what the "Bush Doctrine" is. The use of pre-emptive war with no imminent threat (the "Bush Doctrine") has been a major focus of our foreign policy debates for years now, and Palin didn't even know what it was.

After a brief deer-in-the-headlights moment, she almost tricked Charlie into telling her what it was, though.

[UPDATE: Crazy person Charles Krauthammer argues that it's unfair to criticize Palin over this, since foreign policy debates often argue over the precise doctrine of the "Bush Doctrine." Krauthammer argues that there are four different interpretations of the phrase (none of which he identifies). But this misses the point, since Palin was clueless as to all of them. She nodded her head and guessed that "Bush Doctrine" meant Bush's "world view." She was simply clueless.]

Charlie Gibson also embarrassed himself with some pretty bad reading comprehension. Palin had not explicitly said that Iraq was "a task that is from God." Instead, she had asked a gathering of people to pray that it was "a task that is from God." Watch the video yourself:


That being said, and despite her protestations to Gibson that "I would never presume to know God’s will," I think that it's important to point out that she also said at that same church gathering that it was "God's will" that Alaska build a natural gas pipeline.


She also made a big blunder when talking about energy policy. She said this: "…I've been working on for these years as the governor of this state that produces nearly 20 percent of the U.S. domestic supply of energy..."


However, that is just plain wrong. According ot the Department of Energy, Alaska produces 3.5% of the country's total domestic energy. Palin was most likely referring to domestic crude oil production, of which Alaska provides 18.5%. I'm really sick of Palin equating "energy" with "domestic oil production."

UPDATE: Rep. Zack Wamp (R-TN) damns Palin with faint praise:

Governor Palin is confident, smart, disciplined and while not yet totally prepared on the issues, she clearly is getting there....The country likes her so she will get a pass or two. If she holds up beyond that, she could be a transformative woman in American history. If not, we will all be disappointed.

UPDATE II: Apparently Charles Gibson didn't show her enough "deference," so Palin is doing her next interview with college dropout Sean Hannity.

UPDATE III: The major news networks apparently hold Palin to a low standard. Hey, if some random guy on the street doesn't understand modern foreign policy debates, why should we expect the potential leader of the free world to know?

Charles Gibson: Wrong on Capital Gains Question

At the ABC debate, in between questions about flag pins, Charles Gibson made some eyebrow-raising claims about the capital gains tax and how he thinks it leads to increases in revenue. However, his claims were highly misleading. This is what the Center on Budget and Policy Priorities found:

Cutting capital gains rates reduces revenues over the long run. That’s the conclusion of the federal government’s official revenue-estimating agencies, as well as outside experts and the Bush Administration’s own Treasury Department.

• The non-partisan Congressional Budget Office (CBO) and the Joint Committee on Taxation have estimated that extending the capital gains tax cut enacted in 2003 would cost $100 billion over the next decade. The Administration’s Office of Management and Budget included a similar estimate in the President’s budget.

• After reviewing numerous studies of how investors respond to capital gains tax cuts, the non-partisan Congressional Research Service concluded that cutting capital gains taxes loses revenue over the long run.

• The Bush Administration Treasury Department examined the economic effects of extending the capital gains and dividend tax cuts. Even under the Treasury’s most optimistic scenario about the economic effects of these tax cuts, the tax cuts would not generate anywhere close to enough added economic growth to pay for themselves — and would thus lose money.

Gibson's claim was highly misleading, since the spike in revenue is only the short-term effect of investors reacting to a sudden change in tax rates:

While a capital gains tax cut can lead investors to rush to “cash in” their capital gains when the lower rate first takes effect, it does not raise revenue over the long run.

• Especially when a capital gains cut is temporary, like the 2003 tax cut that Gibson cited, investors have a strong incentive to sell stocks and other assets in order to realize their capital gains before the capital gains tax rate increases. This can cause a short-term increase in capital gains tax revenues, as happened after the 2003 tax cut.

• Capital gains revenues also increased after 2003 because the stock market went up. But the stock market increase was not a result of the 2003 tax cut, as a study by Federal Reserve economists found. European stocks, which did not benefit from the U.S. capital gains tax cut, performed as well as stocks in the U.S. market in the period following the tax cut.

• To raise revenue over the long run, capital gains tax cuts would need to have extraordinary huge, positive effects on saving, investment, and economic growth that virtually no respected expert or institution believes they have. In fact, experts are not even sure that the long-term economic effects of these capital gains tax cuts are positive rather then negative.
  
  One reason is that preferential tax rates for capital gains encourage tax sheltering, by creating incentives for taxpayers to take often-convoluted steps to reclassify ordinary income as capital gains. This is economically unproductive and wastes resources. The Urban-Brookings Tax Policy Center’s director Leonard Burman, one of the nation’s leading tax experts, has explained, “shelter investments are invariably lousy, unproductive ventures that would never exist but for tax benefits.” Burman has concluded that, “capital gains tax cuts are as likely to depress the economy as to stimulate it.”

So in the end, ABC's questions were either trivial scandal-issues, or based on false premises. This is the journalism we have to put up with.

UPDATE: Brendan Nyhan points out that John McCain and The Wall Street Journal make the same claims.

Let me state that again. Once again, the supply-side argument has been undercut by the administration's own economists.

Of course, that didn't stop John McCain, who has frequently claimed that tax cuts increase revenue, from making the same argument on ABC's This Week today:

MCCAIN: And [Barack Obama] obviously doesn't understand the economy, because history shows every time you have cut capital gains taxes, revenues have increased, going back to Jack Kennedy.

The Wall Street Journal also made the same claim in an editorial Friday (subscription required). It's sad to see the mainstream media giving life to this kind of supply-side foolishness.