Charlie Gibson, in the Clinton-Obama debate last night, proclaimed that when the tax rate on capital gains are reduced, the result is overall an increase in tax revenues from capital gains taxes. That seems to me a pretty big claim, so I was surprised that neither Clinton nor Obama took a position that disputed Gibson’s premise. I was surprised both by the fact that Gibson made such a bold claim, and the fact that neither Clinton nor Obama disputed him.  So, I tried a little Google research. I found a number of web-sites that support Gibson, and I found one web-site that gives a different view –written by Justin Fox, TIME Magazine’s business and economics columnist, here. Here are his comments:

One of the most cherished beliefs of supply-side zealots is that cuts in capital gains tax rates always increase revenue. To be sure, there are often dramatic upward revenue swings right after the cap gains rate is cut. But that is in part because people can choose when to enter into the transactions that result in capital gains–and they’d be idiots not to hold off a few months if they know the tax rate is about to drop.

A better test is whether receipts are higher over the course of an entire business cycle. Last week, as part of its latest 10-year budget projections (pdf!), the Congressional Budget Office published its estimate of capital gains receipts in fiscal 2007. I’m willing to bet that, recession or no, FY 2007 will prove to be a peak in capital gains receipts that won’t be matched for several years. Which means we can compare it with the peak of the last cycle, in 2000. Here’s the chart, with the numbers adjusted for inflation:

So no, the reduction in the capital gains tax rate from 20% to 15% in 2003 did not result in an increase in revenue over the course of the business cycle. In 2000 receipts totaled $119 billion, which equals $143 million in 2007 dollars. In 2007, they totaled $122 billion. That’s a 15% decline.

Now I guess you could argue that 2000 was the peak of a once-in-a-lifetime stock market boom, making it an unfair comparison. But that would amount to admitting that forces other than the capital gains tax rate determine the course of the stock market. Perish the thought!

I was surprised that in the debate last night Barack Obama gave Hillary a more of less free pass about her comments about encountering sniper fire in Bosnia. Obama said his Democratic rival for the White House “deserves the right to make some errors once in a while.”

Hilary in the debate said, “So, I will either try to get more sleep or have somebody that is there as a reminder (of the facts) to me,” implying that her repeating the Bosnia story was somehow a simple mistake.

Obama’s point is that the debate should focus on more important issues, but the issue of a presidential candidate’s character is a pretty important issue. In the back of my mind, as Hillary was dismissing her Bosnia claims as simple mistakes, I was thinking of Frank Rich’s column that appeared in the New York Times on March 30. I was surprised that Obama didn’t mention some of the facts mentioned in Rich’s column. Rich reported that the Bosnia story was not a simple mistake, but that Hillary told and retold the story after she definitely knew the story to be false. Rich in his column gave his theory of why Hillary kept repeating the story. Excerpts:

• In January, after Senator Clinton first inserted the threat of “sniper fire” into her stump speech, Elizabeth Sullivan of The Cleveland Plain Dealer wrote that the story couldn’t be true because by the time of the first lady’s visit in March 1996, “the war was over.” Meredith Vieira asked Mrs. Clinton on the “Today” show why, if she was on the front lines, she took along a U.S.O. performer like Sinbad. Earlier this month, a week before Mrs. Clinton fatefully rearmed those snipers one time too many, Sinbad himself spoke up to The Washington Post: “I think the only ‘red phone’ moment was: Do we eat here or at the next place?”
• Yet Mrs. Clinton was undeterred. She dismissed Sinbad as a “comedian” and recycled her fiction once more on St. Patrick’s Day. When Michael Dobbs fact-checked it for The Post last weekend and proclaimed it worthy of “four Pinocchios,” her campaign pushed back. The Clinton camp enforcer Howard Wolfson phoned in to “Morning Joe” on MSNBC Monday and truculently quoted a sheaf of news stories that he said supported her account. Only later that day, a full week after her speech, did he start to retreat, suggesting it was “possible” she “misspoke” in the “most recent instance” of her retelling of her excellent Bosnia adventure.
• Since Mrs. Clinton had told a similar story in previous instances, this was misleading at best. It was also dishonest to characterize what she had done as misspeaking — or as a result of sleep deprivation, as the candidate herself would soon assert. The Bosnia anecdote was part of her prepared remarks, scripted and vetted with her staff. Not that it mattered anymore. The self-inflicted damage had been done. The debate about Barack Obama’s relationship with the Rev. Jeremiah Wright was almost smothered in the rubble of Mrs. Clinton’s Bosnian bridge too far.
• Which brings us back to our question: Why would so smart a candidate play political Russian roulette with virtually all the bullet chambers loaded?
• Sometimes only a shrink can decipher why some politicians persist in flagrantly taking giant risks, all but daring others to catch them in the act (see: Spitzer, Eliot). Carl Bernstein, a sometimes admiring Hillary Clinton biographer, has called the Bosnia debacle “a watershed event” for her campaign because it revives her long history of balancing good works with “ ‘misstatements’ and elisions,” from the health-care task force fiasco onward.
• But this event may be a watershed for two other reasons that have implications beyond Mrs. Clinton’s character and candidacy, spilling over into the 2008 campaign as a whole. It reveals both the continued salience of that supposedly receding issue, the Iraq war, and the accelerating power of viral politics, as exemplified by YouTube, to override the retail politics still venerated by the Beltway establishment.
• What’s been lost in the furor over Mrs. Clinton’s Bosnia fairy tale is that her disastrous last recycling of it, the one that blew up in her face, kicked off her major address on the war, timed to its fifth anniversary. Still unable to escape the stain of the single most damaging stand in her public career, she felt compelled to cloak herself, however fictionally, in an American humanitarian intervention that is not synonymous with quagmire.
• Perhaps she thought that by taking the huge gamble of misspeaking one more time about her narrow escape on the tarmac at Tuzla, she could compensate for misvoting on Iraq. Instead, her fictionalized derring-do may have stirred national trace memories of two of the signature propaganda stunts of the war: the Rambo myth the Pentagon concocted for Pvt. Jessica Lynch and President Bush’s flyboy antics on the U.S.S. Abraham Lincoln during “Mission Accomplished.”
• That Mrs. Clinton’s campaign kept insisting her Bosnia tale was the truth two days after The Post exposed it as utter fiction also shows the political perils of 20th-century analog arrogance in a digital age. Incredible as it seems, the professionals around Mrs. Clinton — though surely knowing her story was false — thought she could tough it out. They ignored the likelihood that a television network would broadcast the inevitable press pool video of a first lady’s foreign trip — as the CBS Evening News did on Monday night — and that this smoking gun would then become an unstoppable assault weapon once harnessed to the Web.
• The Drudge Report’s link to the YouTube iteration of the CBS News piece transformed it into a cultural phenomenon reaching far beyond a third-place network news program’s nightly audience. It had more YouTube views than the inflammatory Wright sermons, more than even the promotional video of Britney Spears making her latest “comeback” on a TV sitcom. It was as this digital avalanche crashed down that Mrs. Clinton, backed into a corner, started offering the alibi of “sleep deprivation” and then tried to reignite the racial fires around Mr. Wright. …
• But the political power of the Bosnia incident speaks at least as much to the passions aroused by the war as to the media dynamics of the Web. For all the economic anxiety roiling Americans, they have not forgotten Iraq. The anger can rise again in a flash when stoked by events on the ground or politicians at home, as it has throughout the rites surrounding the fifth anniversary of the invasion and 4,000th American combat death. This will keep happening as it becomes more apparent that the surge is a stalemate, bringing neither lower troop levels nor anything more than a fragile temporary stability to Iraq. John McCain’s apparent obliviousness to this fact remains a boon to the Democrats.
• The war is certainly a bigger issue in 2008 than race. Yet it remains a persistent Beltway refrain that race will hinder Mr. Obama at every turn, no matter how often reality contradicts the thesis. Whites wouldn’t vote for a black man in states like Iowa and New Hampshire; whites wouldn’t vote for blacks in South Carolina; blacks wouldn’t vote for a black man who wasn’t black enough. The newest incessantly repeated scenario has it that Mr. Obama’s fate now all depends on a stereotypical white blue-collar male voter in the apotheosized rust belt town of Deer Hunter, Pa….
• The 2008 campaign is, unsurprisingly enough, mostly of a piece with 2006, when Iraq cost Republicans the Congress. In that year’s signature race, a popular Senate incumbent, George Allen, was defeated by a war opponent in the former Confederate bastion of Virginia after being caught race-baiting in a video posted on the Web. Last week Mrs. Clinton learned the hard way that Iraq, racial gamesmanship and viral video can destroy a Democrat, too.

From The New York Times, “Hillary’s St. Patrick’s Day Massacre,” written by Frank Rich