More on the Misleading Economic Analyses of Pozdena, Conerly and Fruits
Chuck Sheketoff
In heated debate surrounding Measures 66 and 67, dozens of economists across Oregon weighed in with their views and analysis, with the vast majority of economists favoring the measures. Though the election is behind us, it won’t be the last time that Oregon debates such important economic policy.
That’s why OSU economics professor William Jaeger thinks it is important to ask Which Economic Analyses Can Oregonians Trust? He’s blogged about it over at his OSU colleague Patrick Emerson’s The Oregon Economics Blog.
According to Jaeger, in the Measure 66 and 67 debate, “a small number of economists . . . misled Oregonians by: a) misrepresenting what scholarly economic research tells us about state and local taxes and public services, and b) portraying their own estimates as having the same credibility as published, peer-reviewed research.”
Who are these untrustworthy economists? They are none other than Randall Pozdena, Bill Conerly and Eric Fruits (and their enabler, the Cascade Policy Institute).
Jaeger expects “the usual differences of opinion among well-informed economists.” What he doesn’t like is economists who mislead the public “by misrepresenting published economic research, making public claims about findings that have not been peer-reviewed, are not based on methods and analysis that are transparent and available to the public and to other economists for inspection.”
It’s not the first time that these economists have been called out for their shoddy work. On BlueOregon, Portland economist Joe Cortright issued a damning critique of the work of Randall Pozdena, Bill Conerly and Eric Fruits. Jaeger agreed with Cortright a couple of days later in Jobs and Taxes, adding that the Pozdena, Fruits and Conerly work “does not reflect the professional standards of academic scholarship.” Jaeger went on to make the case for why Measures 66 and 67 are good for the economy and challenged Oregon to better “prepar[e] Oregon’s workers to compete for those jobs that are created” by Measures 66 and 67. Last but not least, the nationally renowned Tax Policy Center also took Pozdena and Conerly to task for their “misleading” and “fatally flawed” analyses.
I must say that it was nice to see Jaeger note the sound approach underlying the Oregon Center for Public Policy’s work such as seeking advice from the Tax Policy Center. That’s because we believe that facts matter, unlike some others.
So check out Jaeger’s Which Economic Analyses Can Oregonians Trust? and decide for yourself which economic analyses you can trust.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.
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Feb 17, '10
Well Chuck, I figure your outfit is the far left and Cascade is the far right. The truth probably lies half way in between. Reasonable people will take both of you with a big grain of salt.
Feb 17, '10
What exactly does Jaeger know about the economics of tax policy? From his selected publications, it looks like he spends most of his time writing about rocks and water.
Feb 17, '10
Tomorrow Nights Main Event from the Rose Garden Areana:
OCCP vs CPI -- No holds barred cage match. Loser leaves town.
Preliminary Event:
Chuck "The Iron Shek" Sheketoff vs. Randall "The Poz" Pozdena in a "loser eats his words" Street Fight
Feb 17, '10
YOu realize FLIR just bought some new buildings in Cali? Keep at it - We still have some businesses left here.
Feb 17, '10
I, today, listened to a finance professor and investment advisor who was very clear on his views of 66 and 67. He said that short term they represented a very small adjustment to the unbalanced spending of our state government. Once the stimulus money goes away, he feels we will then see the true amount of the overspending, about 3 billion dollars. The long term, however, is his real fear. He believes that Oregon has sent a message to all who would start or build a business here that the only thing you can plan on is more taxes. He thinks Oregon would be hard pressed to find a better way to improve the business prospects for cities like Reno and Boise where California businesses will go instead of Oregon. I think he is exactly right and the many ("vast majority of"?) economist are wrong.
7:51 p.m.
Feb 17, '10
Uh, Tom, you might want to listen to some people in, say, Reno or Boise:
2011 could bring Idaho a tax hike
And in Nevada, "Despite hikes in the payroll tax, sales tax and nearly a $1 billion hike in total taxes by the Legislature, Nevada dropped just one spot - from third to fourth - in the 2010 State Business Tax Climate Index released Tuesday by the Tax Foundation."
Oh - and there's now an effort to increase taxes on Nevada's mining industry as well.
Feb 17, '10
It is completely obvious that taxes will have to go up here and everywhere to pay the debt down. No more credits or subsidies or anything else. No more tax cuts. The Bush tax cuts need to expire and the estate taxes go back to Clinton level. What we have been doing has been insane. We need services, we need to pay for them. So there is nowhere to run, no where to hide.
Feb 17, '10
"you might want to listen to some people in, say, Reno or Boise"
Don't forget Cali also, they all 3 taxes (or as you like to say all 3 legs of the stool) and they are in the toilet with over-spending.
I don't think raising taxes is really the answer? Do you?
Feb 17, '10
"It is completely obvious that taxes will have to go up here"
Let's see all funds: 07-08 = $48B 09-10 = $52B 11-12 = I hope you can see a pattern
Why does no one ever ask why we aren't cutting spending? By the above, if you cut all funds by 2%, you'd have a nice $1B to stick in the rainy-day fund.
Feb 17, '10
Steve, Oregonians are not required to believe in an all funds budget.
There is the general fund, there are other funds.
Now, if you want no federal funding to come into this state, then there would be a lower "all funds budget".
If that is what you want, say so.
Feb 17, '10
@Dan P,
Thanks for the mention of the 2010 State Business Tax Climate Index. It was interesting to note that Oregon fell from number 20 to number 31 in Corporate Tax Climate from 2009 to 2010. It was also interesting to see that they had not included the gross revenue tax confirmed by 66/67 which would likely have dropped Oregon a few more spots. Clearly, the Tax Foundation thinks that 66 and 67 made Oregon's business climate worse. They also showed Nevada as Number 3 and Idaho as number 17 on Corporate Tax Index. The Index is a 60 page pdf and can be seen here
Feb 17, '10
Then again, the vast majority of 'the vast majority of econonomists favoring the measures' here are employed by publicly-funded universities - thus they're hardly neutral dispassionate observers with no dog in the M66/67 fight. Now, this doesn't discount their opinions entirely, of course - but it's not a something that should just be totally ignored either.
9:41 p.m.
Feb 17, '10
Tom,
Your own reference says that Oregon is ranked the 14th best state for taxes in 2010. Where do you get the 31st ranking for Oregon?
9:51 p.m.
Feb 17, '10
I must say I find it a bit funny that in a post about three economists twisting facts and reality and misrepresenting others' work some of the people who bought the economists' faulty rap are themselves throwing out bad numbers, such as the all funds budget number. Or the claim that California is overspending, when one of the reasons California is in the mess it is in is because of its unworkable rule that requires a supermajority to pass a budget. Why people keep insisting that a revenue shortfall is caused by overspending escapes me. But then again, why people would rely on the advice of three economists who for years advocated turning Social Security into private accounts at the whim of Wall Street....well. They are sorta like the doctors who appeared in smoking ads years ago. Who'd trust them?
Feb 17, '10
@ John
As I stated, it was 31st in Corporate Tax Index. The 14th overall Tax Index is largely due to the Zero Sales Tax and dropped from 8 to 14 because, I think, of 66/67.
Feb 17, '10
Chuck Sheketoff: "Why people keep insisting that a revenue shortfall is caused by overspending escapes me."
Chuck! WTF! If you are spending more than you take in, you are in a "shortfall" to meet your obligations!
It doesn't matter whether the "shortfall" was not anticipated. It is here! That is reality! If you don't cut spending, you run a deficit. If you raise taxes to make it up, you risk running the responsible taxpayer away to aggravate your problems. That is California to a tee.
"Share the wealth man!" only works until the person you want to take it from thinks they are getting screwed.
Feb 17, '10
Chuck Sheketoff: "Why people keep insisting that a revenue shortfall is caused by overspending escapes me."
Chuck! WTF! If you are spending more than you take in, you are in a "shortfall" to meet your obligations!
It doesn't matter whether the "shortfall" was not anticipated. It is here! That is reality! If you don't cut spending, you run a deficit. If you raise taxes to make it up, you risk running the responsible taxpayer away to aggravate your problems. That is California to a tee.
"Share the wealth man!" only works until the person you want to take it from thinks they are getting screwed.
Feb 17, '10
Chuck Sheketoff: "Why people keep insisting that a revenue shortfall is caused by overspending escapes me."
Chuck! WTF! If you are spending more than you take in, you are in a "shortfall" to meet your obligations!
It doesn't matter whether the "shortfall" was not anticipated. It is here! That is reality! If you don't cut spending, you run a deficit. If you raise taxes to make it up, you risk running the responsible taxpayer away to aggravate your problems. That is California to a tee.
"Share the wealth man!" only works until the person you want to take it from thinks they are getting screwed.
Feb 18, '10
Shecky says: 'Who are these untrustworthy economists? They are none other than Randall Pozdena, Bill Conerly and Eric Fruits (and their enabler, the Cascade Policy Institute).'
Who exactly "enables" you Chuckie?
Feb 18, '10
"If that is what you want, say so."
A budget is what the state spends. The state spends the all-funds budget which goes up at a 10% clip on average per biennium. A lot of people didn't get a 10% raise from 2008 to 2009. Clear enough?
6:53 a.m.
Feb 18, '10
@Tom: Excuse me, but your point was that businesses would shun Oregon because now "the only thing you can plan on is more taxes." My point, which your partial/distorted reference fails to address, was that virtually every state is now having to raise taxes.
You've already lost this debate here in Oregon; maybe you'd prefer, say, Utah, where one legislator has an innovative plan to further cut state spending by eliminating 12th grade. Or maybe we should follow Detroit in innovative cost cutting and revenue generating ideas and turn our high schools into Wal-Mart training centers.
Feb 18, '10
Who exactly "enables" you Chuckie?
SEIU is Chuck's sugar daddy. Center on Budget and Policy Priorities is the brains from which Chuck cribs all his "research."
Feb 18, '10
Dan P., You said, "My point, which your partial/distorted reference fails to address, was that virtually every state is now having to raise taxes." To me that indicates that you think that because everyone is doing it, it must be right. I disagree. My point, which you misinterpreted, was that I think Chuck's favorite Economists got it wrong. In fact, Oregon has dropped in every tax index except property tax. In my view this was due almost exclusively to the passage of 66/67. I also believe that business people will make decisions about where they locate/expand businesses, not university economics professors. Based on the information I have provided, the business people will choose to do their business elsewhere when they have the option. You provided nothing to back your assertion, but, you did provide some interesting anecdotes.
It is also interesting to me that Chuck does not bring up the obvious conflict of interest that university economics professors have regarding the measures 66 and 67. Since education funding was at the top of the list of areas to be cut in a budget without 66/67 funds, the majority of the 'economists' who signed the letter were doing so out of self preservation. I wonder if that tainted their view to make them distort things in a manner similar to Chuck's "untrustworthy economists".
Feb 18, '10
Yes, Chuck, the vast majority of government-funded economists are in favor of more money for government. Duh.
Feb 18, '10
As usual, there is more critiquing of the person rather than the substance of what is being said - very informative, very useful. Let's just base all of our decisions on whether we like the person. How about some substance, such as is in Jager's blog:
"Pozdena and Conerly, in the official Oregon Voters’ Pamphlet, wrote that their studies estimate the impact of Measures 66 and 67 to be a loss of 70,000 jobs in Oregon. They added: “You will find that our views are shared by the OECD, a 30-country organization that studies factors affecting economic development.” This claim is simply not true. First, the OECD has not expressed an opinion about the effects of taxes in Oregon. Second, Pozdena and Conerly are referring to a research study by OECD economists (Johansson et al., 2008) that used cross-country data to examine how different tax structures (the composition of different types of taxes) affect growth, not the effects of tax levels on growth. In fact, the OECD authors state explicitly that an analysis of changes in tax levels was an issue “beyond the scope” of their study. Moreover, if Pozdena and Conerly were to apply the main results from this study to Oregon, they would conclude that Oregon should have a sales tax. A different OECD study, however, did look at the effects of tax levels on growth across OECD (industrialized) countries (Myles 2009). That study concluded that “empirical evidence for the hypothesis that the level of taxation affects economic growth is very weak.” Pozdena and Conerly make no mention of this study, or the fact that many other studies have come to similar conclusions."
Feb 18, '10
I wonder what the political leanings are of the economists who supported 66/67?
Economics 101: The way we view economics, is no different than the way we view spiritual or political aspects of life. We draw our conclusions based upon our experiences, and our beliefs. Economics is more about human behavior, and how we react to financial issues, more so than an exact science. (What we're really talking about here is the size of government and the kinds of programs and spending it engages in. That's the real issue.)
For you, Chuck, to insinuate that all economists who were against 66/67 are misleading people, or are kooks (I know you didn't use the word, but the inference is there), is insidious at best. Your view is your view, but it doesn't make you right, and vice versa.
Did anyone see this article: http://www.oregonlive.com/news/index.ssf/2010/02/pew_center_study_states_face_1.html
How is this state going to pay for PERS? DHS? More taxes? Probably. That seems to be the only answer anymore for plugging budget gaps and shortfalls. Yes, Oregon is still competitive tax-wise compared with other western states; however, that competitive edge will slowly erode if taxes and fees are always going to be the answer every time this state ends up in a pinch.
I expect our lawmakers on both sides to have the backbone to fix this problem, rather than engage in politics. Unfortunately, we have the latter. Until our elected leaders get a spine and work to reform Oregon's tax structure, the divisiveness we saw because of 66/67 is only the beginning.
9:07 a.m.
Feb 18, '10
Sorry, Tom, but you're still being evasive. You may well believe that raising taxes is always wrong, but (1) you lost that argument in the election, and (2) whatever you or I think about the merits of the proposed increases, all of the states surrounding Oregon will also be increasing taxes, so your contention that the certainty of future increases here will send businesses to neighboring states where they wouldn't also face tax increases is bunk - at least as a general statement. The particulars of the tax systems and their effects on specific enterprises may enter into decision making, but not the simplistic idea that "taxes" will or won't go up.
Feb 18, '10
Posted by: Robert Collins | Feb 17, 2010 4:15:47 PM
Well Chuck, I figure your outfit is the far left and Cascade is the far right. The truth probably lies half way in between. Reasonable people will take both of you with a big grain of salt.
So, next time you wonder what the point is with all the disinformation and spin, what they hope to accomplish, reread Mr. Collins. 90% of what is thrown out for political consumption is based on the fact that Americans are ill-equipped to reason through the issues, and that they will never acknowledge that fact and recuse themselves (or learn). Here is one of the biggest fallacies going around, at it works every time on the likes of Mr. Collins.
It goes something like this. Every side is lying. They lie equally, therefore the truth lies in the middle. So, if someone comes out with well reasoned, factually based arguments, and the Republicants don't like it, they put up a stooge to lie and lie in a particularly insulting, uncivil way. This automatically brings the original facts down several notches, without actually refuting one iota of data! Simply by virtue of having a stooge lie shamelessly, the likes of Mr. Collins will never go for the original position, in its pure form. He knows better. He knows to be cynical. And the Repulicants never let him down. Look at it closely. "The truth probably lies...Reasonable people" don't take their best guess as "the truth". We assess an ignorance tax and then pander to the kind of thinking that would pay an ignorance tax. "Probabaly"...from the lottery to politics it's the fulcrum demagogues use to move the corpulent body politic. As our climate change deniers would be first to point out, the strength of your modeled correlations don't mean jack if the model is invalid.
"What do you mean I'm not equipped to judge the issues"? "I know more than that guy with the Pollyana ideas"! And so the Republic slums on through world history.
Feb 18, '10
Good report, as always, Chuck. We visited our accountant yesterday to receive our corporate tax forms for last fiscal year. (We are an Oregon C-corp, fiscal year end October 31.) He showed us where our Oregon tax liability for our last fiscal year, thanks to his hard work, will be the $10 minimum. The bill for his services was $1500. With over $1 million in annual revenues our Oregon tax next year will be $1000 but I figure I can file that return myself, saving the $1500 accountants fee, a net savings to me of $500. Pretty cool. Thanks.
Feb 18, '10
Nothing personal, CS, BTW. Our TEA group captain asked us to prove that "a fool can ask more questions than a wise man can answer", which I think we've done pretty well! We're forming more at-tax groups every day. Soft targets like this are history! Talk behind closed doors, because if it's public it's ours and we are proud and loud! "I'm here and I have tax fear. Get used to it"! Guess the f*g-front was some use after all. Politics makes strange bedfellows.
Chuck W gonna get man o' de month! Maximum disruption, man. Awesome "scientist guy" distraction! Ralph...yer name sez it all. Keep blowin' chunky. Go back to "Red Ted" man. You sound like a friggin' injun!
Feb 18, '10
Chuck, While I strongly supported the Measures, I believe that part of the state's budget problem is the tax credit giveaway not only in the BETC but also in the tax credit system as a whole. Some legislators seem to love the system, which gives away tax dollars, usually to the biggest corporations in the world, without ever showing up in the published budget. Ending taxpayer-funded corporate welfare would be one way to start turning the budget problem around.
A favorite example: as you know, BETC funds the retrofitting of commercial trucks without even requiring that they be driven in Oregon. Neighboring states should give ODOT a trophy. Sigh . . . .
Feb 18, '10
Dan P., You say "Sorry, Tom, but you're still being evasive. You may well believe that raising taxes is always wrong, but (1) you lost that argument in the election, and (2) whatever you or I think about the merits of the proposed increases, all of the states surrounding Oregon will also be increasing taxes, so your contention that the certainty of future increases here will send businesses to neighboring states where they wouldn't also face tax increases is bunk - at least as a general statement." 1. I'm not trying to be evasive and don't see how you feel my direct answer to your question is, but I'll chalk that up to disagreement. 2. I did not lose that argument in the election. The side of the argument for which I voted did not win. That does not lose the war, just the battle. 3. You say, "all of the states surrounding Oregon will also be increasing taxes." That is a pretty wild assumption for which you have shown zero factual basis. 4. I did not say that "the certainty of future increases here will send businesses to neighboring states." I said that by passing 66/67 we gave business people good reasons to go elsewhere and among those reasons was that Oregon has chosen a propensity to spend beyond its means. In this case it also chose to try to bring things in balance with more taxation. 5. You can choose to think that I, "believe that raising taxes is always wrong..." You would, however, be wrong. I am against raising taxes that will not accomplish a worthwhile goal and which allow politicians to avoid making the decisions that they should make.
12:34 p.m.
Feb 18, '10
@Tom: I'm done with this back and forth, and will leave it to you to take up between your two avatars here, since there must be more than one of you chiming in:
Tom Vail #1:
The long term, however, is his real fear. He believes that Oregon has sent a message to all who would start or build a business here that the only thing you can plan on is more taxes.
Tom Vail #2:
I said that by passing 66/67 we gave business people good reasons to go elsewhere and among those reasons was that Oregon has chosen a propensity to spend beyond its means. In this case it also chose to try to bring things in balance with more taxation.
Feb 18, '10
"Well Chuck, I figure your outfit is the far left and Cascade is the far right. The truth probably lies half way in between. Reasonable people will take both of you with a big grain of salt."
This is nice corporatist mythology......that the "reasonable people" are in the political middle along w/ the "truth." When it's come to the biggest decisions of our time, the environment, deregulation, Iraq, healthcare, civil rights................the "reasonable people," the ones who have been right, who have demonstrated vision, are highly concentrated on the "far left." There's some truth for you.
Feb 18, '10
Dan P. wrote:
"You've already lost this debate here in Oregon; maybe you'd prefer, say, Utah, where one legislator has an innovative plan to further cut state spending by eliminating 12th grade."
C'mon Dan, you know Rescumlicans would prefer less education, ignorance is good for the party.
Feb 19, '10
How come OCCP & BlueOregon never comments on the misleading economic travesty in the abuse and corruption of Urban Renewal/TIF schemes?
Schemes which essentialy skim countless millions away from the basic services you care so much for you demand higher taxes.
The answer is these politicans who perpetrate the scams are the same ones you elect and rely upon for advancing your agenda so they get a pass on any and every malfeacence. Good for you, not good for taxpayers or goverment services.
8:24 a.m.
Feb 19, '10
How come OCCP & BlueOregon never comments on the misleading economic travesty in the abuse and corruption of Urban Renewal/TIF schemes?
You're kidding, right? Lents Park & stadium: Outrageous travesty of public process
8:37 a.m.
Feb 19, '10
Richard, there are a number of issues we don't address, and the reason is our lack of resources. We are a small shop. I'd love to have the staff capacity to address the urban renewal TIF issue. We don't have electeds on our board and we do not get involved in candidate elections, so your charge is unfounded. Proof that we are not afraid of the issue is our work trying to get the state to have better disclosure and job quality standards for all subsidies, including TIFs.
Feb 19, '10
You guys are a hoot.
Dan, The lone and narrow critiquing of the "Lents Park & stadium-public process" is in no way a demonstration of any protesting of TIF abuse and the many schemes it has produced. It's really quite disingenuous and insulting to suggest it is. Only the most uninformed would fall for such a claim. Was that your intent?
Chuck your excuse fails like there's no tomorrow. And tomorrow is looking very ugly.
UR/TIF is not just an issue among many others of low significance and priority. I'll charge that you are perfectly aware of it tremendous impact on government services and the revenue streams they demand.
Yet you've obviously committed your small shop, limited resources to far less impacting issues. Those issues of course have been of higher importance to your constituents and political activism, and objectives. Never mind what those represent. But no doubt most involve funding government.
You say you'd "love to have the staff capacity to address the urban renewal TIF issue."
Get real Chuck. Your total silence on the issue speaks volumes about that. It would have been low cost and high credibility for you to at least chime in on the greater TIF offenses. Or even a single critiquing on the collective statewide impact to the same basic services you continually advocate for higher funding.
Let's be clear about a couple things Chuck.
First, there are billions of tax dollars involved in the UR/TIF devastating of basic services budgets which you haven't enough time or resources to address at any level.
Second, although you claim not to get involved in candidate elections, your advocacy aligns with and bolsters both the campaigns and agenda of left wing Democrat politicians.
The same politicians who would be embarrassed by sunlight shinning on the UR/TIF scandals.
Do you need the long list of those politicians wound up in the UR/TIF schemes?
So how is it a false charge to make this observation of aligned interests and your silence on UR/TIF?
Right now as we speak/blog there are numerous UR/TIF schemes in the making. Additional 1000s of acres of fully developed city centers about to get tmillions in property tax revenue raided, for decades, by reckless and irresponsible schemes called public/private partnerships.
Regardless of how you try and spin this, OCCP and BO is AWOL on the issue and with your absence, shares the blame for the upcoming massive diverting of basic services revenue.
12:26 p.m.
Feb 19, '10
Both Zara and Joshua get the cookies on this thread.
The story line that "The Truth" lies somewhere in the middle between careful analysis and wild allegations pulled out of some shill's butt, is The Weapon used by the flatly dishonest against the tragically (but voluntarily) uniformed.
Both the senders and receivers of these signals place their eco-religious beliefs ahead of all else, and no data will be accepted into the brain pan that fails to conform to the extant Dogma.
It's been working pretty well since the mid '70s with no end in sight.
12:48 p.m.
Feb 19, '10
@Richard - my point was that there have in fact been numerous discussions of the kind of TIF abuse you're raising (in fact, it's an oft raised issue in progressive/community development circles), and Chris Lowe's post was the first example that came to mind for me this morning.
Evidently my link went awry; Chris's piece is here, and he goes into the substance as well as the process:
http://www.blueoregon.com/2009/06/lents-park-stadium-outrageous-travesty-of-public-process.html
Feb 19, '10
Dan,
I got your point the first time. I dispute it and reject the idea about "numerous discussions" unless you are talking about covert discussions.
There are some on the left who have harshly criticized and advocated the abuse of UR/TIF. But they are not here and not at OCPP.
That was my point.
And why are they not? It's perfectly clear that it is a deliberate avoidance in order to prevent embarassing critisism of the politicans and agenda BO & OCPP align with.
So as many more millions are being diverted away from basic services general fund budgets through UR/TIF schemes BO and OCPP will remain AWOL.
Not one of the regulars here will say one word about it.
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