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Figures don't lie, but liars can figure

ricksfolly

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In the latest Newsweek, Samuelson says the 2 percent who earn over $250,00 a year represent a quarter of all consumer spending so if their taxes are raised it would have a negative effect on the economy.

When you consider that both rich and the 98 percent poor and middle class buy the same basic things, food, clothes, cars, gas, etc... S's figuring doesn't add up, and even if the 2 percent rich pay twice as much for the basics and yachts and other goodies, his figures still don't even come close.

ricksfolly
 

oldreliable67

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In the latest Newsweek, Samuelson says the 2 percent who earn over $250,00 a year represent a quarter of all consumer spending so if their taxes are raised it would have a negative effect on the economy.

When you consider that both rich and the 98 percent poor and middle class buy the same basic things, food, clothes, cars, gas, etc... S's figuring doesn't add up, and even if the 2 percent rich pay twice as much for the basics and yachts and other goodies, his figures still don't even come close.

ricksfolly
Why do they not add up? Where is he mistaken?
 

Solidus

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First of all they're not Samuelson's figures. Samuelson is referencing Mark Zandi in his article, "Just consider: these affluent households represent almost a quarter of all consumer spending, says Zandi." [1, emphasis added] Mark Zandi included this claim in an NYT op-ed [2], as well as his report for Moody's Analytics [3]. According to the footnotes in his report the consumer spending data is based on, "Estimates of the personal outlay share and personal saving rate by income group are based on data from the Federal Reserve’s flow of funds and survey of consumer finance." [3, page 9]

Secondly, back of the envelope math from BLS data [4, page 10 Table 3], shows the top 8% of "consumer units" (not strictly the same as taxpayer units) make up 16% of expenditures. Not sure how the BLS data differs from the Fed's flow of funds data.

Even though I'm skeptical about any one economist or economic modeling program being "always right", I'm not prepared to argue why BLS data and quick math is better the Zandi's analysis. If you are go for it. Regardless, the BLS data supports the notion that "the rich" account for a large share of consumer spending relative to their population.

J

PS: This is the sort of basic investigation and data presentation you should have done in your OP.

[1] Samuelson: The Trouble With Soundbite Economics - Newsweek
[2] http://www.nytimes.com/2010/08/15/opinion/15zandi.html
[3] http://www.economy.com/mark-zandi/documents/Tax_Cuts_091510.pdf
[4] http://www.bls.gov/cex/csxann08.pdf
 
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