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Saturday, August 21, 2004

WE'RE SO RELIEVED...    ...that the New York Times is aware of its unique responsibilities to the presidential candidates:
In fairness to Mr. Kerry, his aides were faced with a strategic dilemma that has become distressingly familiar to campaigns in this era when so much unsubstantiated or even false information can reach the public through so many different forums, be it blogs or talk-show radio.

Posted by Donald L. Luskin at 4:03 PM | link  

THE TIMES GETS SMART ON OIL    Reader John Van Laer asks a very smart question?
Did New York Times economics reporter Eduardo Porter just puncture Paul Krugman's hot-air balloon regarding the oil crisis?
Why yes, I believe he did. This marks the first time in memory that the Times has run a story on why something is not a crisis.

Posted by Donald L. Luskin at 2:22 PM | link  

THIS EXPLAINS A LOT...   

Thanks to Caroline Baum for the laugh.

Posted by Donald L. Luskin at 11:33 AM | link  


Friday, August 20, 2004

JOKE OF THE DAY   

Posted by Donald L. Luskin at 4:14 PM | link  

DOUBTING GRAVELY    We're quoted in BusinessWeek Online:
Other investors believe Kerry would be bad for growth because of the likelihood of higher taxes and more regulation. "We have grave concerns about the negative impact on the economy and the markets of a Kerry victory," wrote Donald Luskin...

Posted by Donald L. Luskin at 8:14 AM | link  

QUITE A CONFESSION FROM DELONG    Bruce Bartlett somehow forces himself to read Brad DeLong, and look what he came up with --
"Just what are the fundamental (valid) insights of Marxism? I ask as someone who is, I think, more inclined toward 'Marxism' than anybody else on the Berkeley campus."
Yeah, it's a little out of context (only because DeLong in his usual tricky I'm-the-smartest-guy-in-the-room way goes on to define Marxism so narrowly that the statement is neutered). But still, a self-destructive and ridiculous thing to say. Oh well -- I guess no appointments for Brad in the Kerry administration.

Posted by Donald L. Luskin at 8:08 AM | link  


Thursday, August 19, 2004

MEDIA BIAS? NO, BY US    A poem from Russ Vaughan:
For years we have said as we’ve watched and read,
That the Media is liberally left leaning.
When news only we sought, what we usually got
Was some coiffed commentator’s “true” meaning.
Just seeking the news, we instead got their views
And too much Peter Jennings-like preening.

We are fair they declare and your charge is unfair
Everything we put out is uncanted.
Then they snidely deride any charges they’ve lied
Though it’s clear where their left feet are planted.
They deny overmuch liberal leanings and such
While it’s plain they’re all Rather slanted.

What they call reporting we see as distorting
So obvious that it does appall us.
But they think we’re all sheep, unthinking, asleep,
And care less if their bias does gall us.
As Sunday eves dreadful they feed us a headful
Of that oh so impartial Mike Wallace.

And as for the press, what a self-righteous mess,
Intoning our right to know all.
While the grand New York Times, dismisses and slimes
Those, who for the truth, loudly call.
And the Washington Post sets it columnist host
To impugning these men, one and all.

So election year’s here and it’s crystalline clear
That John Kerry’s the media’s hero.
They praise him in war and completely ignore
Those brave men who rate him a zero.
With utter disdain for truth in the main
This Media’s fiddling like Nero.

At some future date, when it’s far, far too late,
To ever atone for their bias,
Finally faced with their fate that they carry no weight,
All those talking heads will be so pious,
As without any shame they will loudly declaim
How on earth did that phony get by us?

Posted by Donald L. Luskin at 4:29 PM | link  

ARE WE GOING TO TAKE THIS SITTING DOWN?    Reader Noel Sheppard notes another step down the road to universal feminization:
The WC ghost, a £6 voice-alarm, reprimands men for standing at the lavatory pan. It is triggered when the seat is lifted. The battery-operated devices are attached to the seats and deliver stern warnings to those who attempt to stand and urinate (known as "Stehpinkeln").

"Hey, stand-peeing is not allowed here and will be punished with fines, so if you don't want any trouble, you'd best sit down," one of the devices orders in a voice impersonating the German leader, Chancellor Gerhard Schroder. So far 1.8 million WC ghosts have been sold in German supermarkets.

But Klaus Schwerma, author of Standing Urinators: The Last Bastion of Masculinity? doubts whether it will ever be possible to convert all men...In German, the phrase for someone who sits and urinates, a "Sitzpinkler", is equivalent to "wimp".


Posted by Donald L. Luskin at 4:25 PM | link  

DEMOLISHING HERBERT'S CLAIMS OF FLORIDA VOTER INTIMIDATION    All-seeing reader Jill Olson points out this deadly fisking of Bob Herbert's irresponsible New York Times column accusing Jeb Bush of intimidating black voters in Florida (yes, the same irresponsible column lauded by Paul Krugman in his irresponsible column the next day). From RealClear Politics:
On March 9, 2004 Orlando Mayor Buddy Dyer won reelection with 12,422 votes out of the 24,375 ballots cast. However, to avoid a runoff Dyer needed to break the 50%, which he did in the end by only 234 votes, and with the help of a good number of absentee ballots.

As it turns out, 264 of those absentee ballots were witnessed by Ezzie Thomas, President of the Orlando League of Voters. This is, of course, the same Ezzie Thomas that Bob Herbert describes in his column by saying, "with his demonstrated ability to deliver the black vote in Orlando, Mr. Thomas is a tempting target for supporters of George W. Bush in a state in which the black vote may well spell the difference between victory and defeat."

Herbert fails to mention that, as reported in the Orlando Sentinel on July 25, 2004, Mr. Thomas was paid $10,000 by Mayor Dyer to collect absentee ballots for the election and that his handling of absentee ballots has been under scrutiny in the past (including as recently as 2002) though charges have never been filed.

This time, they were. Right after the election in March, second place finisher Ken Mulvaney filed a civil suit to try and get the absentee ballots witnessed by Thomas thrown out and get himself into a runoff with Dyer. Mulvaney interviewed a number of absentee ballot voters and eventually produced 42 signed affidavits alleging mishandling of ballots.

On April 8 a circuit judge in Orlando decided there was enough evidence to proceed with the suit. Additionally, Mulvaney's complaint sparked the FDLE criminal investigation which Herbert decries as a concerted effort to suppress the black vote.


Posted by Donald L. Luskin at 3:43 PM | link  

OKAY, NOW THIS IS AN ODD COUPLE    It's Krugman versus Klugman! Can you tell the difference? Thanks to reader Mike Tocci for the link.

Posted by Donald L. Luskin at 3:03 PM | link  

NOW WHY CAN'T BUSH EXPLAIN IT THIS WAY?    From a reader:
While I have neither the time nor the sufficient mathematical skills to pore over the CBO report to buttress my beliefs, I would argue from my own personal experience that I am a middle class American who has benefited from the tax cuts, particularly the reduction of the tax rate on stock dividends to 15%.

For quick background info, I am a married father of two on Long Island, NY, and my wife and I have a combined gross income of about $110 - 120K per year. While that might put us on the upper level of what one might consider to be middle class, when you factor in our local tax levels and the cost of living on Long Island, our $1,500 per month mortgage payments etc., I don't think one could claim that we are wealthy.

Anyway, what few people seem to point out, particularly those who hail from the left of center on the political spectrum, is how the 15% tax rate on stock dividends is such a gift for middle class Americans who invest in companies that have dividend reinvestment plans. I have been steadily accumulating shares in two prominent local companies, North Fork Bank, with a 3% dividend yield, and Keyspan Energy, with about a 5% dividend yield. These yields are better than anything I will get from a money market fund, and these are not companies whose share prices will wildly fluctuate, so I consider my investments to be fairly safe.

My goal over the next few years is to amass an investment portolio worth about $500K. If that sum is invested in stocks that pay a dividend of around 4%, that's about $20K a year in dividend income that can go towards paying the mortgage and then college tuition for my children, or whatever else I deem appropriate. Plus, since we would no longer have to pay the mortgage from our salaries, my wife and I could afford private school tuition for our kids. But my impression of the Krugmanites of this world is that it is that they consider it to be far more virtuous that I not accumulate such wealth, but instead pay higher taxes so that the government can provide me with taxpayer funded goodies so the Krugmanites (maybe that's a term you can use! Sounds like some alien species from Star Trek) can demonstrate how benevolent the government is. They also seem to think that a paycheck is the only legitimate source of income for working and middle class folks and cannot conceive of the idea that people who are not wealthy might want to try to become wealthy. I suppose this is part of what you mean by the conspiracy to keep you poor and stupid.

Part of it also is that so many people want to be wealthy, but have no clear idea about how to do it other than buying those scratch-off lottery tickets. Four years ago, I read 'The Millionaire Next Door', and while it is not a how-to book about becoming wealthy, it stressed that the first generation wealthy are frugal, and I took that gospel to heart. Luckily, my wife has supported me, though occasionally I have to yield to her desire to buy stuff. After all, compromise is an important part of a happy and successful marriage.

Tom Kearney


Posted by Donald L. Luskin at 1:23 PM | link  

RETHINKERING THE FLORIDA VOTE FRAUD MYTH    Long, thoughtful analysis at The American Thinker of Paul Krugman's column forecasting vote fraud in Florida this election. The best parts are the demythification of the 2000 election:
Florida was practically a tie in 2000, but Bush won. Close state races are not that uncommon, either for the Presidential ballot, or Senate or Governors races. In 2000, Gore lost Florida very narrowly, but won New Mexico, Iowa, Oregon and Wisconsin by less than 0.3% of the vote overall, taking all 29 Electoral votes from those 4 states. Florida, on the other hand, only gave 25 electoral votes to Bush. In three of these four states which Gore won (all but Iowa), there were suspicious voting or tallying issues that might have thrown the results into some question.

But neither Bush nor Republicans ever made an issue of the results in any of the four states. They accepted their very narrow defeats, as the GOP did in the Senate races in South Dakota in 2002, and in Nevada in 1998, and in Washington State in 2000, three races the GOP lost by a total of 3,000 votes out of over 3 million cast (0.1% margin). Had the GOP won these three Senate seats, and Jim Jeffords not done his Benedict Arnold imitation (there would have been no reason for him to switch parties if his move would not have given the Democrats Senate control), the GOP today would hold 55 Senate seats, and a lot more federal judges would have been confirmed.

Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 10:53 AM | link  

JOKE OF THE DAY   

Posted by Donald L. Luskin at 8:41 AM | link  

CBO OVERSTATES BREAKS TO THE WEALTHY    Incredibly smart questions and comments about the Congressional Budget Office tax study keep coming in from incredibly smart readers. Jeffrey Kahn says,
I am amazed that the CBO was willing to attribute a corporate tax cut to individuals. I don't have the stats in front of me, but my understanding is that pension funds are a major owner of corporate shares which are obviously not owned only by the highest income earners. Wouldn't that decrease the percentage of corporate taxes paid by this group, and thus decrease the size of the tax cut they get this year because of the temporary cut in corporate taxes?
I checked with an economist at the CBO, and indeed Jeffrey is precisely right. The CBO methodology looks only at dividend and capital gains income reported by households in tax filings. So dividends and capital gains earned in pension funds, endowments, 401-ks, and IRAs are not caught in the process. Therefore, and cut in corporate taxes appears to go entirely to the wealthiest Americans who pay taxes on their dividends and capital gains -- and not at all to the far greater number of Americans who don't. Yet all Americans who receive dividends benefit from lower corporate taxes. A back-of-the-envelope guess would be that this methodological problem may as much as double the apparent benefit for the wealthy in relation to its true size.

Bottom line -- once again, a Bush tax cut benefits all Americans -- and lower-earning Americans most of all. Yet -- once again -- that tax cut is falsely portrayed as most helping the wealthy. In this case it's not just the media. Here the CBO's own methodology is just plain wrong.

Posted by Donald L. Luskin at 8:25 AM | link  


Wednesday, August 18, 2004

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TIMES TO CHAVEZ OPPONENTS: GET OVER IT   
Reader Jill Olson comes up with a gem. The New York Times-owned International Herald Tribune reports mounting evidence of electronic vote fraud in Venezuela's recall election. Exit polls showed Hugo Chavez losing by a wide margin, yet the official results have him winning by a wide margin. Just yesterday Times columnist Paul Krugman strongly supported exit polls as an audit-check against electronic election fraud. Yet in today's lead editorial, the Times sniffs that Chavez' "opposition...needs to stop shouting foul."

So when Democrats in the US shout foul it's fine -- even if it's before the questioned election even happens. But when a Times-approved populist strongman wins -- one who "has made programs directed at the everyday problems of the poor - illiteracy, the hunger for land and inferior health care - the central theme of his administration, and he has been able to use higher-than-expected oil revenues to advance social welfare" -- well, then, just deal with it, guys.

Posted by Donald L. Luskin at 12:51 PM | link  

JOKE OF THE DAY   

Posted by Donald L. Luskin at 11:56 AM | link  

TAX FOUNDATION ON CBO TAX STUDY    Here's another great insight from reader Jim Glass:
Regarding all the CBO tax data brouhaha, here's something from the Tax Foundation:
"...a Congressional Budget Office Report on changing effective tax rates of American households causes confusion by relying on household data rather than income tax data, thus including 14 million households that do not earn enough to file a tax return.... Comparing these non-payers to regular taxpayers paints a distorted picture of who benefits and who does not from income tax cuts...."
Another Tax Foundation study finds that "Bush Tax Cuts Erased Income Tax Burden for 7.8 Million Families." That's something not covered yet in the New York Times.

Posted by Donald L. Luskin at 11:36 AM | link  

KRUGMAN'S FLORIDA VOTING SCAM    The liberal New Republic's blog disagrees strongly with Paul Krugman that exit polling would be a way of auditing the vote in Florida. But by taking Krugman's crackpot suggestion seriously enough to debate it, TNR conveniently validates Krugman's overarching point: that if Bush wins Florida, it will be ipso facto a fraud. That heads-I-win/tails-you-lose scam is well analyzed in this excellent posting on RealClear Politics.

Thanks to Bruce Bartlett and reader Samuel Baker, and two anonymous readers for these great links.

Posted by Donald L. Luskin at 11:19 AM | link  

ANOTHER CBO INSIGHT    Do I have the smartest readers in the world, or what? Here's an email from Howard Handelman with a great insight into the CBO report on effective tax rates.

This table adds one column to yours. This shows the percent difference in the income tax rates paid by the income class member. This reveals that the lower groups benefited in greater proportion.

Income Class 2000 Law Bush Tax Cuts Difference %Difference
Bottom 20% -4.3 -5.7 1.4 32.6
Next 20% 1.9 -0.1 2.0 105.3
Middle 20% 5.2 3.5 1.7 32.7
Next 20% 8.5 6.6 1.9 22.4
Top 20% 17.1 14.2 2.9 17.0
Top 10% 19.4 16.0 3.4 17.5
Top 5% 21.4 17.6 3.8 17.8
Top 1% 24.5 19.6 4.9 20.0

Posted by Donald L. Luskin at 9:50 AM | link  

A CAMBODIAN CHRISTMAS    Reader Ashby Foote sends this little gem:
Twas the night before Christmas and we were afloat
Somewhere in Cambodia in our little boat.
While the river was lightened by rockets red glare
No one but the President knew we were there.

The crew was all nestled deep down in their bunks,
While the Spook and I watched the sampans and junks.
Our mission was secret, so secret in fact,
No one else would remember it when we got back.

When out on the water there arose such a clatter
I leaped down from the bridge to see what was the matter.
The incoming friendly was starting to flash
And I knew that the ARVN's were having a bash.

The snap of friendly fire on the warm tropic air
Convinced me for sure no one knew we were there,
On a clandestine mission so secret it's true
That I'm still convinced only Tricky Dick knew.

While I huddled for safety in the tub on the bow,
I thought of a title, "Apocalypse Now."
To give to the films I was I making each day
To show all the voters when I made my big play.

As I sat there sweating in my lucky flight jacket,
Spook said, "Merry Christmas!" and tossed me a packet.
And what to my wondering eyes did appear,
But a new lucky cap, which I still have right here.

I keep it tucked here, in this leather brief case,
Just sharing with the press its secretive place
As I regale them again with my senate refrain,
That Christmas in Cambodia is seared into my brain.

Don't bother to quibble with history my friend,
By pointing out Johnson was President then.
Don't listen to Swiftees who try to explain,
For I tell you that night is seared into my brain.

Down Hibbard, down Lonsdale, and you too O'Neill,
So you don't remember? Well it's something I feel.
I don't need all you Swiftvets to support my campaign,
Cause Christmas in Cambodia is seared into my brain,

Into my brain, into my brain, into my brain...

Posted by Donald L. Luskin at 8:56 AM | link  

LIVING UP TO HIS NAME    Perfect. Look who's writing to the Times with an atta-boy for Paul Krugman's column on how Bush is going to steal the Florida election (simply by winning).
As a Florida voter, I am doubly concerned. I believe that the 2000 election was stolen in this state, and I do not, as Paul Krugman put it, fear "sounding conspiracy-minded" (column, Aug. 17).

I live in Sarasota County, which will offer voters only two options: to vote using the unreliable and vulnerable electronic machines that leave no paper trail or to use an absentee ballot...

Jonathan Winer


Posted by Donald L. Luskin at 12:01 AM | link  


Tuesday, August 17, 2004

IT COULD HAVE BEEN WORSE    At least John Kerry didn't bring Mary Jo Kopechne out on stage and talk about how she couldn't get auto insurance. But this is almost as bad.
WHEN NEWS broke in the New Hampshire Sunday News that John Kerry made up the story of Mary Ann Knowles having to work through her chemotherapy for fear of losing her health insurance, deja vu bells went off.

Knowles, the New Hampshire resident and campaign volunteer he cited in his Democratic National Convention acceptance speech and used as justification for his health care plan, didn’t work through chemo because of an insurance problem. She kept working because her salary would have been reduced if she had gone on disability — a weighty prospect, to be sure. But, her husband told the newspaper, "Her coverage is very good. . . It’s not something that is a problem with her employer."

The newspaper asked Kerry campaign adviser Judy Reardon if she had confirmed the details of the Knowles’ story, and she replied, "When a woman has a mastectomy and goes through therapy, I don’t need to double-check on her."

Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 11:55 PM | link  

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THE TIMES CATCHES KERRY IN A LIE   
A signature campaign issue for John Kerry is the idea that the middle class is being "squeezed." A couple months ago he concocted a "Middle-Class Misery Index" designed to show how bad things are today (and how great they were under the presidency of Democrat Jimmy Carter). And in his acceptance speech at the Democratic National Convention, he went so far as to melodramatically warn that George Bush is squeezing so hard that "our great middle class is shrinking."

That's a lie. And for proof, we'll go to the least likely source you can imagine -- the pages of that crusading liberal newspaper, the New York Times.

I'll look at a story published on the very same day that Kerry's made his claim about the shrinking middle class. It's by David Cay Johnston, whose liberal credentials include a ringing endorsement from Paul Krugman for his best-selling book on how conservative "ideologues have made America safe for wealthy people who don't feel like paying taxes."

Johnston's story is typical Johnston and typical Times, designed to trash-talk the Bush economy. Its headline blares, "I.R.S. Says Americans' Income Shrank for 2 Consecutive Years." The story reports a drop in average income of 5.7% in 2001 and 2002, compared to 2000 -- that zenith of the much-nostalgized "Clinton prosperity." Johnston claims that's a new record -- that there has never been another two-year period of back-to-back income declines.

But there's something remarkable revealed in one of the tables that accompany Johnston's story -- which he cleverly never comes out and says in the text. As perspicacious reader Jim Glass pointed out to me, the table shows that the entire income decline in 2001 and 2002 is due exclusively to losses by taxpayers making over $100 thousand a year, with the vast majority of it coming from taxpayers making over $1 million. Taxpayers earning less than $100 thousand -- the overwhelming majority of American households -- actually saw their income rise during the two years.

It's plain as day: the richer you were, the worse you got it. So why wasn't the headline "The Rich Get Poorer, and The Poor Get Richer"? Because that's exactly what the Times and the rest of the liberal establishment so desperately wants -- and they will never admit that it occurred during George Bush's presidency.

Instead, the Times indulged in a "fallacy of composition," talking about an overall average that ignored the composition of the different elements it comprises. It should know better. Its own pet economist Paul Krugman is fond of pointing out the same fallacy when the Bush administration indulges in it. In one column he joked,

A liberal and a conservative were sitting in a bar. Then Bill Gates walked in. "Hey, we're rich!" shouted the conservative. "The average person in this bar is now worth more than a billion!" "That's silly," replied the liberal. "Bill Gates raises the average, but that doesn't make you or me any richer."

Well, here it is working in reverse. Bill Gates has left the bar -- yet the Times claims that we are all poorer.

Another table accompanying the story shows that the middle class is not only doing fine, but expanding -- in direct contradiction to Kerry's convention claim that it is shrinking. This table shows the change in the number of tax returns filed in each income category. Note that the lowest-income category shrank as people on the bottom rung of the economic ladder advanced. And all the highest-income categories shrank, too, as "the rich" fell down a rung or two (from the artificial heights of Clinton bubble, back when liberals weren't so concerned with income inequality because their team was in the White House).

Which categories grew? The middle class, of course.

You see, as they say on TV, "the truth is out there." It can even be found in the pages of the New York Times if you know how what to look at and what to ignore.

But you'll have to ignore a lot. Get a load of the very first sentence of an article in the current issue of the leading liberal magazine, The American Prospect:

"For most Americans, the last four years have represented a low point in our economic history."

Never mind that Great Depression thing you learned about from your grandparents. That was hyped intelligence. But I can't say the same thing about what Kerry and his surrogates are saying about the economy. That's hyped stupidity.

Posted by Donald L. Luskin at 11:01 PM | link  

LOCATION, LOCATION, LOCATION    A Merrill Lynch poll of worldwide money managers shows that most think Kerry will beat Bush in November. But wait... according to Reuters,
...there was a difference in view depending on where the fund manager was based...Bush won among the 36 North American-based respondents by a margin of 44 percent to 33 percent, among the 68 British-based managers by 37 percent to 34 percent, and among the 43 Japan-based respondents by 49 percent to 37 percent. Kerry, however, was favoured by the 96 continental Europeans by 46 percent to 33 percent, by 28 Asian Pacific-based respondents by 43 percent to 29 percent, and by 16 South African managers by 50 percent to 31 percent.
Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 9:37 PM | link  

THE ACCIDENTAL FLAT TAX?    Reader Jeff Clemens chimes in with a great observation about the CBO report on effective tax rates:
I can't help but notice that even outside the contexts of corporate taxation and a progressive income tax system, the 70-to-1 number is almost exactly what fairness would dictate. You point out that the average income of the top 1% is about $1 million, and that the average income of the lowest quintile is about $15,000. Lo and behold, $1 million divided by $15,000 gives us almost exactly 70. So this is the same ratio we would get if we passed a tax cut under a system of perfectly flat income taxes.

Posted by Donald L. Luskin at 11:42 AM | link  


Monday, August 16, 2004

ABOUT AVERAGE    Paul Krugman has warned us about abusing averages in the analysis of who gets what benefit from Bush's tax cuts. Does his warning apply only when Bush is doing the talking? Or does it apply to the liberal media as well? Reader Jeffrey Jacobson says,
Let me add another criticism of the Wall Street Journal (and other) reports of the recent Congressional Budget Office study. By credulously repeating the story about "people with incomes over $1 million" receiving an "average tax cut" of $70,000, these reports strongly imply that a person with an income of $1 million received a $70,000 tax cut. Of course, that's not true.

Posted by Donald L. Luskin at 11:37 PM | link  

I GUESS THERE ARE REALLY 58 VARIETIES    At least she knows a good lawyer. Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 8:46 PM | link  

THE TIMES IS "SADDENED"    The New York Times finally interviews Ray Fair, the Yale econometrician whose political model is forecasting a Bush landslide (I just love scooping the Times). When I interviewed Fair, he wouldn't reveal his own political preferences -- he was adamant, and I didn't push it. The Times did push it (people will say anything to get big ink, you know), and it turns out he's for Kerry. But the strangest part of the interview is this passage (questions from the Times' Deborah Solomon are in italics):
It saddens me that you teach this to students at Yale, who could be thinking about society in complex and meaningful ways.

I will be teaching econometrics next year to undergraduates. Econometrics is a huge deal, because it is applied to all kinds of things.

Yes, I know one of your studies used the econometric method to predict who is most likely to have an extramarital affair.

In that case, the key economic question was whether high-wage people are more or less likely to engage in an affair. They are slightly more likely to have an affair. But the economic theory is ambiguous because if your wage is really high, that tends to make you work more, and that would cut down on how much time you want to spend in an affair.

Ah, I see. So it "saddens" her to think that Yale students are burdened with scientific approaches to social questions. But she seems to perk up when the story concerns sex -- and better, yet, income inequality. For the Times, that's a deluxe combo.

Thanks to Bloomberg's Caroline Baum for the link.

Posted by Donald L. Luskin at 3:00 PM | link  

DOWN MEMORY LANE WITH PAUL    John Henke takes the stroll with Professor Krugman, and look what he finds...

Posted by Donald L. Luskin at 2:47 PM | link  

JOKE OF THE DAY    Just posted two new ones.

Posted by Donald L. Luskin at 1:16 PM | link  

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BUSH'S TAX CUTS -- NO GOOD DEED GOES UNDISTORTED   
Have you seen all the headlines in the liberal press about the new report from the non-partisan Congressional Budget Office? Here are but three samples, listed proudly on John Kerry's website:

And Kerry himself is touting the report on the campaign trail, claiming it proves that "Over the last four years, the burden of taxes has shifted from the wealthy to the middle class."

Those are liberal lies that completely distort the findings of the CBO report. Here's the truth.

The report proves that what George W. Bush said about his tax cuts is absolutely positively true: "tax relief is for everyone who pays income taxes."

It's true for the rich, and it's true for the not-so-rich. Across 109.4 million tax-paying households -- from the wealthiest 1% with incomes averaging over $1 million, to the lowest-earning quintile with incomes averaging $14.9 thousand -- the report shows that all income classes have seen their income tax rates lowered thanks to Bush's three tax cuts in 2001, 2002 and 2003.

Here's a simple table based on data from the CBO report, showing how 2004 income tax rates have dropped for everyone, compared to tax laws in force in 2000.

Income class 2000 law Bush tax cuts Difference
Bottom 20% -4.3% -5.7% -1.4%
Next 20% 1.9% -0.1% -2.0%
Middle 20% 5.2% 3.5% -1.7%
Next 20% 8.5% 6.6% -1.8%
Top 20% 17.1% 14.2% -3.0%
Top 10% 19.4% 16.0% -3.3%
Top 5% 21.4% 17.6% -3.8%
Top 1% 24.5% 19.6% -4.8%

The report also shows that Bush's tax cuts have been "progressive" -- that is, they have shifted the share of the overall federal income tax burden toward the wealthy, and away from lower-income earners. Without the Bush tax cuts, the highest-earning 20% of households this year would have paid 78.4% of all federal income taxes. Now, after the Bush tax cutes, their share of the burden has risen to 82.1%. Every other quintile now pays a smaller share of the total income tax burden.

Here's another simple table based on data from the CBO report, showing how the 2004 income tax burden has shifted upward for the rich, and downward for everyone else.

Income class 2000 law Bush tax cuts Difference
Bottom 20% -1.6% -2.7% -1.1%
Next 20% 1.5% -0.1% -1.6%
Middle 20% 6.4% 5.4% -1.0%
Next 20% 15.3% 15.2% -0.1%
Top 20% 78.4% 82.1% 3.8%
Top 10% 63.5% 66.7% 3.2%
Top 5% 51.4% 53.7% 2.3%
Top 1% 31.6% 32.3% 0.6%

What a brilliant victory for compassionate conservatism! Everybody gets an income tax cut, and when it's all done the rich end up paying proportionately more.

The report also shows that Bush managed to craft a tax reduction package that even benefits the lowest-earning taxpayers who already pay what amount to negative income taxes. That's right, thanks to various refundable tax credits, before the Bush tax cuts the lowest-earning quintile not only paid no income taxes at all -- on average they received money from the IRS. Under Bush's tax-cuts, as the first table above shows, they now receive even more money. Now that's compassionate.

But will John Kerry or the liberal media give Bush one ounce of credit for any of that? No, the liberal establishment always has to find a way to demonize anything that comes from the policies of George W. Bush, no matter what the truth is. Let's take a look at how the supposedly conservative Wall Street Journal spun the story.

Here is the lead of the Journal's story Friday covering the CBO report:

President Bush's three tax-cut laws will reduce this year's income taxes for the richest 1% of taxpayers by an average of $78,460, more than 70 times the average benefit for the middle 20% of taxpayers, congressional analysts found.

The nonpartisan Congressional Budget Office today will release the government's first multiyear projection of the Bush tax cuts by income class...

These paragraphs involve three major deceptions that reveal not only a profound partisan bias, but are based on downright misrepresentations of what the report even said.

First, the Journal gives the false impression that the statistics cited in the first paragraph are from the CBO report. They are not. They appear nowhere in that report. Instead, they are from a separate analysis of the CBO report by the Democratic members of the Joint Economic Committee of congress, which includes Teddy Kennedy.

The first paragraph of the Journal's story is substantially identical to the first paragraph of the Democrat's press release touting their own analysis:

An analysis of the CBO data by Joint Economic Committee Democrats shows that the average tax cut for the
richest one percent of households is more than 70 times larger than the tax cut for middle-income
families in 2004.

Second, the Journal's version of the Democrats' analysis inserts a critical -- and erroneous -- word that was deliberately not used by the Democrats. The Journal refers to income taxes -- when the Democrats just refer to taxes. In fact the expression "income tax" appears literally nowhere in the Democrats' report. And the CBO report is always careful to draw a distinction between income taxes and total taxes.

It's an important distinction, because the 2002 tax cuts allowed for greater deductibility of capital expenses for corporations -- a deliberate (and successful) attempt to stimulate corporate capital investment after the terrorist attack of September 11, 2001. The CBO attributes those corporate tax cuts to individuals, based on the extent to which individuals receive dividends and capital gains. So naturally the highest-income earning taxpayers will get the bulk of this -- even though all taxpayers enjoy the many benefits of a stronger economy as a result of greater capital investment by corporations.

If that corporate tax cut and the CBO's quirky methodology for attributing it to individuals it is eliminated from the analysis, then the 70-to-1 advantage of the top 1% versus the middle 20% is almost cut in half. Yes, the Democrats' surely used data selectively to make their claims as extreme as possible -- that's their partisan job. But the supposedly objective Journal made the data seem even more extreme than the Democrats did, by incorrectly stating that it was about income taxes as opposed to an abstract measurement of total taxes.

Third, the Journal eliminated a critical word from the Democrats' press release --"2004." The Democrats were clear that they were talking about a particular point in time, while the Journal made it sound as though the analysis applied to all time. The corporate provisions of the 2002 tax cut expire after 2004, so the extreme numbers focused on by the Democrats settle down considerably in 2005 and thereafter.

I spoke today to several senior staff members of the Congressional Budget Office. There is no other word than "stunned" for how they feel about what the media has done with their report, and no other word than "frustration" about the media's utter lack of willingness to let the report's authors them tell their story about what their report really says.

These are people who have been in Washington for many, many years. You'd think they'd know by now. But apparently even they have never seen the media as rabidly partisan and as relentlessly ignorant as it is right now.

Update [8/17/2004]... A reader makes a great point, posted above.

Update [8/17/2004]... And another!

Update [8/18/2004]... And yet another!

Update [8/18/2004]... Wow! Another one!

Update [8/19/2004]... This just keeps getting better!

Posted by Donald L. Luskin at 11:39 AM | link