Paul Krugman vs. Stephen Moore: Kansas is at the center of feud after tax cut errors

07/30/2014 3:00 AM

07/30/2014 5:56 PM

In recent days I inadvertently got in the middle of a feud between liberal New York Times columnist Paul Krugman and Stephen Moore, chief economist for the conservative Heritage Foundation think tank in Washington, D.C.

And it’s all because of Kansas Gov. Sam Brownback.

I’ve written several times about the poor job growth in Kansas after Brownback took office in 2011, including since the first of his costly income tax cuts went into effect in 2013. Krugman referred to a Star editorial on this subject in a June 29 column, “Charlatans, cranks and Kansas.”

Krugman in that article also took a shot at the credibility of Moore. The former Wall Street Journal editorial writer — who earlier this year challenged Krugman to a debate on economic issues — supports the low-tax mantra of Arthur Laffer, an economist who led Brownback and Kansas into the tax-cut wasteland and decimation of state revenues in 2014.

Moore responded to Krugman’s column in early July in The Star, stating “strategic tax-rate reductions can ignite growth and employment.”

However, research shows Moore used outdated and inaccurate job growth information at a key point in his article.

Moore had written that states following “Krugman’s (and President Barack Obama’s) economic strategy are getting clobbered by tax-cutting states.” Moore then added with a bit of snark:

“No-income-tax Texas gained 1 million jobs over the last five years; California, with its 13 percent tax rate, managed to lose jobs. Oops. Florida gained hundreds of thousands of jobs while New York lost jobs. Oops.”

Here are the problems that led to a corrected version of Moore’s column on The Star’s website.

Moore wrote about job creation “over the last five years.” But he later told The Star he had measured from December 2007 to December 2012, using federal Bureau of Labor Statistics information. That decision misled readers. The bureau’s data is updated monthly, so he could have provided more up-to-date figures, not nearly 18-month-old data.

Texas did not gain 1 million jobs in the 2007-2012 period Moore measured. The correct figure was a gain of 497,400 jobs.

Florida did not add hundreds of thousands of jobs in that span. It actually lost 461,500 jobs.

New York, with it very high income tax rates, did not lose jobs during that time. It gained 75,900 jobs.

The problems with Moore’s article damage his credibility. They also don’t help bolster Brownback’s argument that his experimental tax cuts are going to work out just fine for the state’s residents.

True, jobs figures can be cherry-picked by people on both sides of this debate. Since December 2012 — when Moore stopped measuring employment growth — California has added 541,000 jobs, more than Texas’ 523,400. So, high taxes are good?

After the corrections were published online, some national websites picked them up, criticizing Moore for using incorrect data.

Krugman last weekend got in a few digs at Moore on his blog: “What gets me here is the sheer laziness; it looks as if Moore pulled numbers from an old piece of his, and never bothered to update.”

In an email to The Star, Moore wrote, “I do regret the mistakes in my piece.” But he quickly added, “My point is that they don’t change the conclusion that the no income tax states have substantially outperformed the high income tax states over every period since about 1970....”

Still, Krugman made an excellent point about tax cuts in Kansas and elsewhere:

“Real empirical work on state growth shows multiple factors — mildness of climate, cheap housing, high wages, and yes, some impact from tax rates. The idea that you would find an overwhelming one-factor correlation with taxes alone is something only a, well, Heritage Foundation analyst could believe.”

And so the feud continues.

To reach Yael T. Abouhalkah, call 816-234-4887 or send email to abouhalkah@kcstar.com.

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