Distortion for Votes
One of the current Republican talking points, is the claim that what's holding the economy back is business uncertainty about taxes and/or regulation. When they began making that claim, they pointed to a survey of small business owners put out by the National Federation of Independent Businesses. Based on what's being said on campaign, you'd think that the number one greatest concern in that survey would be taxes or government regulation.
I thought I'd take a few minutes to see how hard it is to get the survey. It turns out, all it takes to get any of the monthly surveys from the last two years, is to go to their archive. As I write this, the most recent release was July 2010, which has the survey for June 2010. But it also has data on previous surveys; numerical data goes to January 2005, and the charts go all the way back to 1986. Since the NFIB has been asking the same few questions of their members every month for a couple dozen years, this is a treasure trove of how small business attitudes shifted over the decades.
Interestingly, though, the commentary at the front disagrees with the numbers that follow. The commentary says that government is the problem, holding businesses back -- which is pretty much what the Republicans are saying. The numbers tell a different tale. On Page 20 of that file is the answer to the question "What is the single most important problem?" The most common answer, agreed to by 30% of respondents, is "poor sales." This is a mild improvement from a year ago, when 32% of owners identified poor sales as their biggest single problem, and pretty close to that answer's all-time peak of 34%. (The lowest that "poor sales" has ever come in was 2%, so we're close to the worst sales environment since the surveys began.)
How about concern over taxes? In the most recent survey, 20% of business owners picked that as their greatest concern. The historical range for that answer had a high of 32% and a low of 8%, so that result is dead center average.
Maybe the concern is "government regulations and red tape?" 15% of business owners picked that one. This answer's popularity has ranged from a low of 4% to a high of 27%, so we're a half percentage below dead center of the range. In other words, dead center, give or take a rounding error.
There are six other suggested choices for "most important concern," plus a seventh of "other." All seven of those options are near the bottom of their historical ranges.
What does looking at the numbers tell us? Small business owners are concerned about taxes, and concerned about regulations, but those concerns are about average for the last quarter century. Their greatest concern is poor sales. Interestingly, poor sales for everyone is precisely what left-leaning economists mean when they say "net failure of aggregate demand." And they've been saying they're worried about that since at least October 2008.
Of course, doing something about poor sales involves the government spending more, and that's what the left wing of the Democrats have been saying is the solution to the recession since the days that Republicans were denying a recession had begun. So, when your principles prevent you from doing what it takes to solve the problem, what do you do on campaign? Try to convince the voters that something else is a bigger problem.
Running on "uncertainty" being the problem takes confidence that the voters are failing to pay attention. The uncertainty about taxes was baked in, when the Republicans put a time limit on the 2001 tax cut.* The decades-long trend of growing health care costs has been another source of business uncertainty. Now that businesses have begun to adapt to the health care reform bill, throwing it out would add to that uncertainty. Some are proposing a Constitutional Amendment to limit the national debt as a cure for uncertainty. Unfortunately, unless that amendment addressed exactly how finances would be rearranged when the national debt hit the limit, that notion would only add another source of uncertainty. Given just how much of the uncertainty is the result of Republican proposals, it seems an odd choice for Republicans to run on the uncertainty-is-bad slogan. Then again, I've become increasingly puzzled by the Republicans since they declared Barry Goldwater a liberal.
* For those who have forgotten, the time limit was a result of how they overcame the Democratic objections to the bill in the Senate. Why the objections? Because Democrats were worried that cutting taxes would cause the national debt, which began to shrink as a result of Clinton's tax hike, would start growing again. It takes a certain degree of, ah, creative accounting, to argue that the Democrats' fears aren't pretty much what happened.
I thought I'd take a few minutes to see how hard it is to get the survey. It turns out, all it takes to get any of the monthly surveys from the last two years, is to go to their archive. As I write this, the most recent release was July 2010, which has the survey for June 2010. But it also has data on previous surveys; numerical data goes to January 2005, and the charts go all the way back to 1986. Since the NFIB has been asking the same few questions of their members every month for a couple dozen years, this is a treasure trove of how small business attitudes shifted over the decades.
Interestingly, though, the commentary at the front disagrees with the numbers that follow. The commentary says that government is the problem, holding businesses back -- which is pretty much what the Republicans are saying. The numbers tell a different tale. On Page 20 of that file is the answer to the question "What is the single most important problem?" The most common answer, agreed to by 30% of respondents, is "poor sales." This is a mild improvement from a year ago, when 32% of owners identified poor sales as their biggest single problem, and pretty close to that answer's all-time peak of 34%. (The lowest that "poor sales" has ever come in was 2%, so we're close to the worst sales environment since the surveys began.)
How about concern over taxes? In the most recent survey, 20% of business owners picked that as their greatest concern. The historical range for that answer had a high of 32% and a low of 8%, so that result is dead center average.
Maybe the concern is "government regulations and red tape?" 15% of business owners picked that one. This answer's popularity has ranged from a low of 4% to a high of 27%, so we're a half percentage below dead center of the range. In other words, dead center, give or take a rounding error.
There are six other suggested choices for "most important concern," plus a seventh of "other." All seven of those options are near the bottom of their historical ranges.
What does looking at the numbers tell us? Small business owners are concerned about taxes, and concerned about regulations, but those concerns are about average for the last quarter century. Their greatest concern is poor sales. Interestingly, poor sales for everyone is precisely what left-leaning economists mean when they say "net failure of aggregate demand." And they've been saying they're worried about that since at least October 2008.
Of course, doing something about poor sales involves the government spending more, and that's what the left wing of the Democrats have been saying is the solution to the recession since the days that Republicans were denying a recession had begun. So, when your principles prevent you from doing what it takes to solve the problem, what do you do on campaign? Try to convince the voters that something else is a bigger problem.
Running on "uncertainty" being the problem takes confidence that the voters are failing to pay attention. The uncertainty about taxes was baked in, when the Republicans put a time limit on the 2001 tax cut.* The decades-long trend of growing health care costs has been another source of business uncertainty. Now that businesses have begun to adapt to the health care reform bill, throwing it out would add to that uncertainty. Some are proposing a Constitutional Amendment to limit the national debt as a cure for uncertainty. Unfortunately, unless that amendment addressed exactly how finances would be rearranged when the national debt hit the limit, that notion would only add another source of uncertainty. Given just how much of the uncertainty is the result of Republican proposals, it seems an odd choice for Republicans to run on the uncertainty-is-bad slogan. Then again, I've become increasingly puzzled by the Republicans since they declared Barry Goldwater a liberal.
* For those who have forgotten, the time limit was a result of how they overcame the Democratic objections to the bill in the Senate. Why the objections? Because Democrats were worried that cutting taxes would cause the national debt, which began to shrink as a result of Clinton's tax hike, would start growing again. It takes a certain degree of, ah, creative accounting, to argue that the Democrats' fears aren't pretty much what happened.