Sir,

My name is [redacted]. I am a sophomore at [redacted] and the Vice-President of the [redacted]Republican Club, effectively the College Republicans. (By the way, the club was named after [redacted], President, Republican and a [redacted] grad).

Anyway, Paul Krugman is coming to speak at my school on October 5th. His topic is: "What's the Matter With America?" Can you guess the answer? and I was wondering if you'd be willing to furnish us with some relatively polite "gotcha" to ask the man during the Q&A session. My club has been brainstorming independently, but I thought I should ask you since you have obvious expertise on the subject.

Your help would be greatly appreciated. This is a unique opportunity for my club, although it may happen for you frequently, so thank you for any consideration you give this. Thank you for taking the time to read this. Have a nice day.

Sincerely,
[redacted]

Dear [redacted]:

Here is what I would ask him.

"Professor Krugman, in 1982 when you were with the White House Council of Economic Advisors, you forecasted that there would be a massive resurgence of inflation. You called it an 'inflation time bomb.'

"And in one of your Times columns in January 2002, you wrote, ' I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.'

"I'm just curious, sir, which one of these two statements do you now believe is the most wrong?"

"James (Jim) Flora concocted dozens of diabolic and hallucinatory album cover illustrations, many for Columbia and RCA Victor jazz artists, in the 1940s and '50s. His designs pulsed with angular hepcats bearing funnel-tapered noses and shark-fin chins, who fingered cockeyed pianos and honked lollipop-hued horns. Yet Flora's wondrous, childlike exuberance was subverted by a sinister tinge of the grotesque. He wreaked havoc with the laws of physics, conjuring up flying musicians, levitating instruments, and wobbly dimensional perspectives. He also took liberties with human anatomy, evoking bonded bodies, mutant appendages, ghoulish skin tints, and misshapen heads. He was not averse to pigmenting Benny Goodman and Gene Krupa like bedspread patterns."

Everyone is talking about a dramatic shift towards John Kerry in the wake of his Thursday debate performance. The most-cited poll is Newsweek's, which showed Mr. Kerry with a two-point lead, lending credence to the magazine's glowing cover story about the Democrat (headlined "Off the Ropes").

But the Newsweek poll merits a small pillar of salt. It uses a methodology that describes a highly volatile electorate. Just after the Republican convention, Newsweek found Mr. Bush ahead by 11 points, far more than other polls. One explanation is Newsweek's different mix of partisans in its survey sample. Its September 11 poll showing a strong Bush lead was based on a partisan breakdown of 39% Republicans, 30% Democrats, and 27% Independents. That's a sample clearly too rich in Republicans.

Conversely, its latest sample showing a Kerry surge featured 34% Republicans, 36% Democrats and 27% Independents. If you buy Newsweek's methodology, one out of nine voters has changed their party affiliation in the last month. That might explain why the poll found that one out of eight voters changed their mind on how they will vote too. But how many people do you know who have switched parties and/or changed their mind on the presidential race in the last month? Frankly, the Newsweek poll is more volatile than any electorate could be.

There are other anomalies in its survey. Newsweek released its poll on Saturday at 6 pm and thus conducted interviews only on Thursday night (debate night), Friday night (when many pollsters believe Democrats are more likely to be at home), and bizarrely Saturday morning, a highly unusual time to call people. Apparently, Newsweek was in a rush to release its poll on the same day it also conducted interviews, something other pollsters almost never do. In addition, the Thursday night survey was limited (due to the lateness of the hour) to the Mountain and Pacific Time Zones. Excluding so many states for one night can certainly throw off a sample that was taken over only two nights and a Saturday.

Other polls don't show nearly the volatility of Newsweek's. Democracy Corps, a very partisan Democratic firm, found a 2-point bounce for Mr. Kerry after the debate and Mr. Bush still up by two points. ABC's poll found no change. The Los Angeles Times poll found a 1-point swing. Rasmussen Reports also found a 1-point bounce.

Newsweek, on the other hand, shows a 13-point swing from its pre-debate poll to its post-debate poll. But 11 points of that swing is accounted for by Newsweek's wildly fluctuating partisan mix. That would leave an "unadjusted" Newsweek poll with a 2-point swing, roughly the same as almost all other pollsters.

Squeeze Play

Donald Luskin, in his August 19 NRO article “Squeezed Out,” sullied National Review with baseless attacks on my reputation.

He asserted that Paul Krugman’s endorsement of my best-selling and national award-winning book, Perfectly Legal, gives me my “liberal credentials.” Yet Jack Bogle, a premier capitalist, and Lou Dobbs, surely no liberal, also endorsed my book.

Luskin also attacked my integrity over my July 29 New York Times “claim” that the I.R.S. said that the incomes of Americans fell for two consecutive years, 2001 and 2002. He said I “cleverly” avoided facts in an accompanying chart and that my piece was “designed to trash-talk the Bush economy.”

Provable nonsense.

The chart should have used inflation-adjusted figures, making it consistent with my text. Imperfect coordination between graphics and reporter is hardly grounds to attack my integrity, especially since Luskin knows real from nominal incomes.

Even so, the income “increases” Luskin cited from the chart were infinitesimal — and may be due to people falling into the upper reaches of lower statistical categories.

My piece was designed to report important new income and tax data. Belying Luskin’s partisanship charge, my references to President Bush showed that income taxes fell primarily because of factors that are not his responsibility: the stock market drop, the recession (on its way before he took office), and changes in compensation practices.

Luskin wrote that I gave a false impression because the data show that “the richer you were, the worse you got hit” and asserted that the Times would “never admit” that the rich got poorer during the Bush administration.

Did Luskin read my report? I wrote that the higher one stood on the income ladder the greater the fall. Taxpayers making $10 million plus were reduced by half. One of eight making over $200,000 fell below that level. And I explained why.

For 38 years I have signed my work, winning a wall of awards including a Pulitzer, for reports that are enterprising, fearless, and rounded, the last a point that even Luskin grudgingly acknowledged at his personal blog.

As a reader of National Review for more than four decades I am appalled that you publish Luskin’s jaundiced tripe.

David Cay Johnston

Donald Luskin replies: I stand by every word of jaundiced tripe in my column.

As to Johnston’s liberal credentials, I can think of none more impeccable than having one’s book endorsed in a Paul Krugman column (being a New York Times economic reporter is another good one). The fact that the book has been endorsed by others whom Johnston judges to be non-liberal is immaterial.

I would go further. Johnston not only has liberal credentials, he has a liberal agenda. He is a strong advocate of populist tax polices — progressive taxation of incomes and estates, and the taxation of income from capital. These are cornerstones of the canonical liberal economic agenda. His advocacy is very much in evidence in interviews he has given to the liberal website Buzzflash, and the more conservative website Forbes.com.

The book in question, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich, strongly reflects Johnston’s liberal views on these issues. As a reviewer put it in Tax Notes — the respected journal for tax professionals — Johnston’s book is a “populist tirade against the super rich.” The review continues,

As to my judgment that Johnston’s August 27 New York Times story is deceptive, the fact is that the chart accompanying the article showed taxable incomes falling from 2000 to 2002 only for taxpayers with taxable incomes above $100,000. For everyone else — the majority of taxpayers — taxable incomes rose over the period. And it is a fact that the story begins with the statement “The overall income Americans reported to the government shrank for two consecutive years,” without making reference to the fact that this “overall” result is due entirely to income declines among America’s highest-income taxpayers. While the story makes various distinctions among income groups, it never states the fact that incomes rose during the period for those with taxable incomes below $100,000.

Johnston justifies the failure of the text of the story to conform to the statistical evidence presented in the accompanying Times chart by noting that the chart was not adjusted for inflation, while the text of the story was based on inflation-adjusted taxable incomes. The truth is that some of the statistics cited in the text of his story are inflation-adjusted, and others are not. There is no mention of an inflation adjustment in the misleading first sentence of the story, which I quoted above.

Be that as it may, there is no unique virtue to inflation-adjusting — except that it makes all changes in income look worse, which well serves the liberal agenda of the Times’s economic reporting during an election year. As long as Johnston is applying his own adjustments to statistics he obtained from the Internal Revenue Service, why not adjust for effective tax rates (which fell over the period) or for non-cash forms of compensation (which rose). Simple: because those adjustments make changes in income look better.

As to whether the gains in taxable income among lower-earning taxpayers are “infinitesimal,” this is immaterial to the argument I made in my column. Even infinitesimal gains are not losses, as Johnston’s story led readers to believe that they are.

And as to whether those gains are “due to people falling into the upper reaches of lower statistical categories,” that was precisely the point of my column. To repeat: contrary to John Kerry’s claim that the middle class is “shrinking,” Johnston’s statistics show that it has grown, if only by virtue of the falling incomes of the highest-earning taxpayers.

Finally, I emphatically dispute the truthfulness of Johnston’s statement that I acknowledged on my personal blog, grudgingly or otherwise, that Johnston’s work is “enterprising, fearless and rounded.”

I thank David Cay Johnston for taking the time to write, and for his forty years of devoted readership of National Review.

This isn't the first time that Johnston has lashed out at his critics. According to the Wall Street Journal, Johnston "encouraged colleagues to ask confrontational questions in a meeting" with the Times' internal critic, "public editor" Daniel Okrent, saying "Sometimes you have to treat others like the Russians -- you have to demonstrate strength." In the meeting, Johnston "pounded his fist on the table," and Okrent described the meeting as a "lynch mob." Johnston called Okrent's membership on a corporate board a "scandal," and "took his complaint to Mr. Keller, the executive editor."

This isn't even the first time Johnston has lashed out at me -- and on the same subject: the fact that I implied he is a liberal because he was favorably mentioned by Paul Krugman. Here's his note to me as published here on this blog, and my response.

Posted by Donald L. Luskin at 8:58 AM | link    

Sunday, October 03, 2004