A little economics
May 10, 2012 1 Comment
Well, it’s been pretty heavy on social issues lately, let’s change it up.
First, more domestic drilling is not going to have a significant on gas prices. Really. Planet Money:
No matter how much oil the U.S. produces domestically, we’ll still face huge swings in the price of gasoline. That’s because there’s a single, global price for oil.
This chart from a new CBO report shows gas prices over time in Canada, Japan and the U.S.EnlargeCBO
Canada produces all of its own oil; Japan imports all of its oil; and the U.S. produces some and imports some. Yet all three countries show the same wide swings in gas prices. (Absolute price differences are driven by different levels of taxes and fees in the different countries.)
Of course, more U.S. drilling could increase the global supply of oil, lowering the global price a bit for everyone. But more likely, according to the report, is that other oil producers would respond by cutting their own oil production, “diminishing or eliminating the effect” of increased U.S. production.
Second, enough already about how taxing small business is crushing for “job creators.” Yglesias:
Does increasing the marginal income tax rate on high income Americans create a crushing burden on small businesses? The Obama administration, evidently possessed of a high degree of confidence in the fundamental wonkiness of the American people, included this in the latest Treasury Department chartpack to try to convince us that it doesn’t.
This issue is, I think, actually better explained by words than with charts. Lots of people, especially rich people, have some “small business income.” But if you examine only the small businesses that actually have employees it turns out that people in the top two tax brackets report just $113 billion in small business income deriving from businesses with employees. That’s out of $1.2 trillion in total income of people in the top two tax brackets. In other words, only a tiny share of the revenue raised by higher taxes on the top two brackets constitutes taxation of income derived from operating real businesses that people work at.
Republicans want lower taxes on rich people. Fine (okay, not really so fine), but just be honest about it and don’t make up stuff about how this ruins things for “job creation.”