Fallacious Time Magazine Post Alleges Tea Party Will Cause Hyperinflation
Time Magazine is having some problems with very basic issues of logic. First, it doesn't seem to understand the difference between correlation and causation. The notion that debt is equal to income minus expenditures also eludes the folks at Time.
A blog post on the magazine's website on Wednesday alleged that the Tea Party will cause hyperinflation. If that seems counterintuitive, take comfort in knowing that the post had to ignore basic logic to reach that conclusion.
The article begins by trying to pass off correlation as causation:
Before the Tea Party, inflation is rising slowly. But in the first year the Tea Party or a group with similar views wins the Presidency or takes over Congress, whamm-o. Inflation doubles, and keeps going up.
The implication is that political movements for limited government cause inflation. Of course one might also conclude that the same factors that gave rise to such movements also cause inflation - factors like, say, massive, unprecedented deficit spending.
The article goes on to lend credence to that alternative interpretation - albeit unintentionally - while still trying to pull the wool over the reader's eyes.
The real threat of inflation comes from tax policy, namely lower taxes. Lower taxes and the government will have a harder time paying back its debt. Investors run from our bonds and currency. Inflation ensues.
But here's the trick. Leeper doesn't just model actual tax policy. He is looking at tax expectations. You don't actually have to lower taxes for inflation to rise. Nor do you have to raise taxes to get inflation to fall, for that matter. Leeper says as we get closer to the point that is looks like the government is unwilling to raise taxes people will get increasingly nervous about our debt. And that's the problem with the Tea Party.
So if the problem is that "government will have a harder time paying back its debt," cutting spending is just as effective a solution as raising revenues. That possibility mysteriously escapes mention in the article. It implies that the only possible way to reduce the debt is by raising taxes, an absurd statement on its face.
The problem is not, as the article claims, the expectation that taxes will go down. The problem is the expectation that the national debt will increase. So if tax-cutters are to shoulder the blame, so too must big spenders.
Unless of course there is a political end game, in which case one might choose to ignore one side of the equation in an attempt to bolster the case for a particular policy. But of course Time Magazine would never do that.
Ed Morrissey drills down the simple illogic of Time's argument, and its clear political implications:
Uncontrolled inflation doesn’t get created from tax cuts; it arises from bad monetary policy, ill-advised government interventions, and a serious lack of confidence in the currency. Tax cuts uncoupled from spending cuts can certainly make for bad policy and set the stage for inflation, but all one has to do is look at the last nine years of stable tax rates and the runaway rate of spending increases in Washington to determine where the actual problem lies. It’s not the tax rates that kept changing, nor is it a decline in revenue that created the massive deficits. For most of the last ten years, revenues have increased, with the exception of the last two years of deep recession; the deficit problem resulted from spending increases that have far outstripped the revenue increases.
Finally, the Tea Party may be philosophically inclined to low taxes (seeing how well they worked in the 1980s and in the early 2000s in stimulating growth), but that’s not the issue on the table. Democrats in Congress want to raise taxes on the employer class, not cut taxes for everyone else. The Tea Party and Sarah Palin want to cut spending instead and shrink government, a strategy that has worked to restore economic growth in this country when it was tried in the 1960s, the 1980s, and in 2001-3, and in none of those cases created runaway inflation. Perhaps Time needs a little more intellectual curiosity.