Lying With Statistics: Republican Tax Cut Edition

I was doing a bit of research today for an article I have in the works and I happened to run across a great example of lying with statistics. That doesn’t happen to be part of the remit of the article, but I hated to let it go to waste. So here it is.

A couple of weeks ago the White House released a brief statement describing how great their 2017 tax cut has been for the economy. One of the predictions they made back at the time was that the tax cut would spur higher levels of business investment, which would then have knock-on effects on growth, productivity, and wages. According to the White House, this has been hugely successful:

Investment levels have been notably higher in the post-TCJA period than Blue Chip’s pre-TCJA projections from October 2016. In 2018, investment was 4.5 percent higher than the projections. In 2019, investment was 3.3 percent higher than the projections and the capital stock is on track to expand across each major asset class (equipment, structures, and intellectual property products).

And here’s the chart to prove it:

Huh. The starting point for the comparison between projected and actual is 2016. But who cares about growth between 2016 and 2017? That’s before the tax cut passed. What we should do is begin the comparison with the end of 2017. I have used my mad charting skills to do just that:

I moved up the blue dashed line so that it crosses the red line at 2017 and this cuts the effect in half right off the bat. But even this is merely a comparison of actual growth with an old consensus projection that may or may not mean anything. What’s more, it’s charted annually. There’s no need for either of those since we can calculate growth rates directly and BEA provides us with quarterly figures. Let’s look at that:

That . . . doesn’t look so great. The growth rate of business investment had been steadily rising for two years, but within six months of the tax cut it started to decline. In the most recent quarter it was barely more than 1 percent above the previous year.

The folks in the White House worked hard to dream up a chart that would make the tax cut look good, and they get three cheers for effort. Some bright young spark burning the midnight oil probably came up with the idea of using a comparison with an old forecast, and the old pros must have beamed with pride when they saw it. But even on its own terms their chart is a fake, and if you instead take a simple look at the growth rate of business investment then it’s obvious that the tax cut had no effect at all—except possibly for a negative one. Even the decline is a little hard to conclusively blame on the tax cut, however, since Trump’s trade war probably had something to do with it too.

Either way, however, business investment obviously didn’t skyrocket following the tax cut.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate