August 21, 2007

New York Times Twists Data to Make Great Personal Income News Appear Awful

Filed under: Economy,MSM Biz/Other Bias,Taxes & Government — Tom @ 9:02 pm

TOPLINE UPDATE: Welcome Instapunditeers! Also worth noting — The Times has changed the headline from what you see below to “2005 Incomes, on Average, Still Below 2000 Peak.”

ALSO: See the “SOURCE DATA UPDATE POST” that follows this one if you’re on the home page if you feel a compelling need to dig into more detail. (I have moved the post you are reading to the top so that the Source Data post would follow it.)

August 25: See the correction about the Earned Income Tax Credit, mostly offset by the effect of other credits “kept in reserve,” in the body of the post.

August 26, 9:30 a.m.: There is now a post (“Top Six Errors Committed by David Cay Johnston and/or the New York Times in Their Income Growth Report”) showing that, among many other things, my core contention at the end of this post (“while average pre-tax income may have fallen, average after-tax income has risen — even during the Times’ artificially induced period of analysis.”) is correct.

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The New York Times has had to work very hard to make the performance of the economy during the past few years look bad. This morning, David Cay Johnston did his part; the link to his article will come later.

Bear with the technical stuff for a bit; the meat will arrive shortly.

Every year, the IRS publishes information about the tax returns it received in the second preceding year.

2005′s tax-return data was released yesterday (data referred to here is not linked because it is in PDFs and Excel files; anyone who wants to see the underlying data can e-mail me). Among the stats the IRS produces is one with the confusing name of “Adjusted Gross Income Less Deficit.” I will call it “Revised AGI” for this post. “Revised AGI” adds a long list of items back to taxpayers’ reported Adjusted Gross Income (the number at the bottom of Page 1 of the long-form 1040) in an attempt to approximate taxpayers’ total income, whether it is taxed or not.

Though there are problems with the data I will note later, looking at several years of this IRS information can be a useful starting-point indicator of workers’, or the economy’s, well-being.

Now try to imagine what the New York Times did with the following data:

IRSadjAGIdata2000to2005

Go ahead. Then click “More” if you’re on the home page to find out.

(more…)

SOURCE DATA UPDATE POST: New York Times Twists Data to Make Great Personal Income News Appear Awful

Okay, this has been fun so far.

Reader interest dictates that I need to show more detail on where these items came from and demonstrate that they parallel Mr. Johnston’s numbers in his article. So here’s the table at the original post with more intermediate steps shown:

IRSrevAGI2000to2005dt

As to where the data came from:

  • Each year’s inflation came from this Bureau of Labor Statistics table using the “Dec.-Dec.” column for each year. It is probably more correct to use the change in each year’s average value, but Dec.-Dec. recreated Johnston’s 2000 figure in his article within $1 (actually 90¢), and alternative measurements didn’t get anywhere near that close.
  • Each year’s revised AGI came from downloading Excel sheets at this IRS stats page. I used the Table 1.1s. 2005 and 2000′s numbers in Johnston’s Times article both tied in. If you download the files, you’ll see what you’re looking for in these cells: 1998, 1999, and 2000 – F12; 2001 – F13; 2002 – F12; 2003, 2004 and 2005 – F10.
  • The rest is math.

Other notes:

  • Near the end of his comment at the original post today, Mr. Johnston claims that 2003′s real income increase is $99, or about 0.2%. I believe the above chart showing a $348 increase amounting to 0.7% is correct. But if I am mistaken, that would appear to make 2004′s real income increase a more-impressive 4.9% instead of 4.4%.
  • In that comment, Johnston also makes a number of statements about changes within income groups that I’m not going to try to get into, partially because I don’t have the time, but more importantly because more current, more relevant, quintile-sorted, and (I believe) more credible and consistent Census Bureau data relating to income for 2006 should be published shortly, possibly even by the end of August (Update — Definitely by the end of August, per this Census Bureau press release).
  • In light of the impending census data, the BizzyBlog commenter who wrote the following criticism of the Times appears to have a valid point — “Considering that the 2006 data has a significant potential to exceed the 2000 data, the window of opportunity to write this article was quickly passing. Got to seize the moment I guess.”
  • Over at Tom Maguire’s place, Johnston writes that “…. nearly half of taxpayers report incomes of less than $30,000 and two-thirds report incomes of less than $50,000. I used these specifics to give perspective.” I believe he is referring to TRUE Adjusted Gross Income (the number reported at the bottom of Page 1 of the long-form 1040). If so he is mixing True AGI apples with Revised AGI oranges (which the IRS strangely calls “Adjusted Gross Income Less Deficit”). Since Revised AGI is really an attempt by the IRS to estimate total taxpayer income, regardless of whether it’s taxed, Johnston’s comment leaves what I believe is a misleading impression that there are millions of relatively low income folks bringing down the average, and not that many really, really rich folks bringing up the average. If you want to see what “Adjusted Gross Income Less Deficit” really means, look at the left half of Page 14 at this 165-page, 1.4mb PDF.
  • This second Johnston comment at Maguire’s place really does make me think that he believes he’s working with True AGI in the article he wrote. That is not the case; anyone looking at the spreadsheets at the IRS page linked above will see that each figure is in a column called “Adjusted Gross Income Less Deficit” (what I called “Revised AGI” above).
  • I do agree with those commenters, like this one, who have said that quoting a source like Citizens for Tax Justice without getting a countervailing opinion from a center-right think tank is weak, especially when CTJ is so obviously playing the partisan card by referring to “trickle down.” Putting the Administration, which necessarily has to be restrained in what it says, against a liberal think tank without any “expert” bolstering the Administration’s position isn’t fair, or balanced. But it IS typical.
  • Finally a mea minima culpa — the original and NB post data for 1998 was changed by $5 from $43,402 to $43,407 because yours truly’s eyes are getting old and tired. The inflated number increased by $6. It didn’t do anything to the percentage change in real income, so there’s no reason to call attention to the tiny changes at the original or NB posts.

Couldn’t Help But Notice (082107)

That timeless oldie but goodie, “If they don’t name the party, it must be a Democrat,” gets played again.

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Louisiana’s David Vitter has approval ratings in the high 60s (HT Hot Air’s headlines). See what those six magic words, “I was wrong, I am sorry” can do?

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Failing Femtalk network to fired help: Severance, Schmeverance.

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History shows that the Fairness Doctrine was abused in the early 1960s to intimidate those who opposed the nuclear test-ban treaty and the continuation of Democratic control of the White House (HT NewsBusters):

In 1962 President Kennedy’s policies were under sustained attack from conservative broadcasters across the country. Of particular concern to the president were vocal right-wing opponents of the nuclear test ban treaty being considered by the Senate at the time. The administration and the DNC seized upon the Fairness Doctrine as a way to “counter the radical right” in their battle to pass the treaty. The Citizens Committee for a Nuclear Test Ban Treaty, which was established and funded by the Democrats, orchestrated a very effective protest campaign against hostile radio editorials, demanding free reply time under the Fairness Doctrine whenever a conservative broadcaster denounced the treaty. Ultimately, the Senate ratified the treaty by far more than the necessary two-thirds majority.

Flush with success, the DNC and the Kennedy-Johnson administration decided to extend use of the doctrine to other high-priority legislation and the impending 1964 elections. Democratic Party funding sources were used to establish a professional listening post to monitor right-wing radio. The DNC also prepared a kit explaining “how to demand time under the Fairness Doctrine,” which was handed out at conferences. As Bill Ruder, an assistant secretary of commerce under President Kennedy, noted, “Our massive strategy was to use the Fairness Doctrine to challenge and harass right-wing broadcasters in the hope that the challenges would be so costly to them that they would be inhibited and decide it was too expensive to continue.”

By November 1964, when Johnson beat Goldwater in a landslide, the Democrats’ “fairness” campaign was considered a stunning success.

Those who think the Supreme Court wouldn’t stand for a reinstatement of the bogusly-named Fairness Doctrine need to read the three paragraphs preceding the above excerpt.

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Here’s a passage on Leona Helmsley, who died yesterday, from a column written by Ellis Henican, of all people, that is guaranteed not to get a lot of circulation:

I caught up with (former front-desk staffer at the Park Lane Hotel on Central Park South Victor) Colicchio yesterday in Pennsylvania, where he lives now. He’d already heard the news when I got to him.

But to my surprise, he wasn’t doing cartwheels at his evil boss’ demise. He wasn’t humming, “Ding dong! The witch is dead!” He sounded more like a man who had one last chance to set a record straight.

“She was a millionaire long before she married Harry,” Colicchio said. “She would not have gotten as far as she did in real estate with the kind of personality that was painted as being her. She was intelligent, dedicated. She could be charming if she wanted. And her hotels were union hotels. She didn’t have the authority to just fire people left and right. The union would have held a hearing. Those people would have been hired back with back pay. It wouldn’t make business sense.”

The famous Helmsley tantrums, her former shrimp-plopper said, were almost always aimed at conniving hotel managers – not the maids, bellmen and other union workers who staffed the hotels.

“Back in the 1980s, a lot of those managers didn’t believe a woman belonged out of the kitchen – much less as the boss of a big hotel. They said awful things behind her back.”

Give Henican credit for writing a story that didn’t fit his expectations template.

Positivity: Trenton’s little miracle

Filed under: Positivity — Tom @ 5:57 am

From Trenton, New Jersey:

Baby defies odds to live
Saturday, August 18, 2007

TRENTON — Every birth is a miracle. But for tiny Tamera Dixon, who was born 15 weeks premature in April weighing only 11 ounces, the chance of survival was beyond miraculous.

“They told me she had a 15 percent chance of survival,” said Andrea Haws, the baby’s mother. Haws, 40, had three surgeries during her pregnancy, her blood pressure was high and her kidneys were failing. Haws’ doctor told her the baby was no longer growing inside her uterus and recommended a Caesarean section.
Tamera was born on April 25, weighing less than a soda can and smaller than her mother’s hand.

“They told me she had no chance of survival (if she remained in her uterus),” Haws said. “I was not doing good. She was not doing good so they said they had to take her.”

So Tamera was born at about 25 weeks gestation, 15 weeks premature, the second smallest baby ever born in New Jersey to survive, according to Donald MacNeill, a spokesman for Capital Health System.

“She didn’t look human. She had everything but she didn’t look like, you know, a regular human,” Haws said. “I was like, ‘Oh my God.’ She was all skin and bones. She was 7 1/2 inches long.” It was about a month until she could hold her daughter and when she first did, she felt a burst of joy.

Dr. Stephen Moffitt, the neonatologist and pediatrician who treated Tamera, said some of the equipment in the neonatal intensive care unit at Capital Health System at Mercer had to be adapted because she was so small. …..

Go here for the rest of the story.