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.


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:


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

Here it is (link requires free registration; the Times’ figure of $55,714 differs from the table above because of rounding):


The Times and Johnston chose their “2000-2005″ reportorial spin, even though:

  • The more important news by far is that the real increase in Revised AGI in both 2004 and 2005 is greater than during either of the final two good years of the Clinton economy;
  • The real decreases in 2001 and 2002 occurred largely because of the bursting of the Clinton-Era dot-com bubble and the September 11 terrorist attacks. The dot-com bubble got mentioned by the Times in the context of quotes from White House sources (the better to make it look like excuse-making); Johnston and the Times made the September 11 attacks invisible.

An obvious omission: The IRS does not include the Earned Income Credit (EITC) in its compilation of Revised AGI, even though the EITC represents real money that either reduces other taxes or goes directly into beneficiaries’ pockets. Total EITCs claimed increased from $19.5 billion in 2000 to $42.4 billion in 2005, largely because of the credit’s expansion in the Bush tax legislation of 2001 and 2003. Spread over the annual average of roughly 132 million tax returns filed during that period, the $22.9 billion increase in the EITC ($42.4 bil minus $19.5 bil) amounts to over $170 per return.


(break in original August 21 post)

CORRECTION, August 25:

David Cay Johnston’s comment #74 calls my estimate of the impact of the Earned Income Tax Credit (EITC) into question. Upon further review, he is fundamentally correct, though my numbers that follow differ slightly from those in his comment. My error was to pick up the number of returns as the dollar amount in 2000. To use “my” famous six words — “I was wrong. I am sorry.” EITC, whether refundable or merely offset against other taxes, went from $32.3 billion in 2000 ($36.6 billion in 2005 dollars) to $42.4 billion from 2000 to 2005. Spread the real difference of $5.8 billion ($42.4 – $36.6) over the average 131.5 million tax returns filed in 2001-2005, and you get an effect of only $44 per return, vs. the $39 Mr. Johnston’s estimates based on what must be only the refundable portion. I think using the gross figure is correct, but I’m not about to quibble over $5. As to why I thought EITC was expanded in 2001 and/or 2003, it’s because I recall reading guidance to that effect from a lot of professional CPA-type publications at the time. (Update: The next two sentences were revised on August 28 for clarity) It’s clear that I was wrong about that and I am sorry. Others also were, but that doesn’t change my incorrectness.

But there’s a corollary to this, which I tend to follow when making a case as I did on Tuesday: Try to hold some supporting points in reserve in case you mess up somewhere.

Mr. Johnston helpfully pointed to one of those “in reserve” items in his comment #74 — The child tax credit, which as I recall went from $600 $500 to $1000 per eligible child (16 years of age and younger, I believe). I reckoned that child tax credits should have increased pretty significantly from 2000 to 2005, but I ignored their impact. Mr. Johnston did not quantify that difference, nor for that matter did he quantify the effect of increases in all of the credits other than the Earned Income Tax Credit.

So I will.

Credits taken other than EITC in 2000 (not the returns, the credits; I double-checked :–>) amounted to $37.7 billion in 2000 ($42.7 billion in 2005 dollars), and $54.3 billion in 2005. The inflation-adjusted difference of $11.6 billion ($54.3 – $42.7), again spread over 131.5 average returns as per two paragraphs ago, amounts to another $75 per return.

For those keeping score, we’re up to $132 ($44 + $88) out of my original “about $170″ that I erroneously assigned to the EITC alone. That $132 is $38, roughly 78% of what I had before. Mr. Johnston picked on the EITC number because it was quantified. Oh well, I should have held more in reserve.

BUT ….. I didn’t quantify the other factors that follow (the impact of the low-end 15% to 10% rate cut, and the effect of the across-the board rate cuts above that). As I will note below, those impacts are surely greater than the $170 Mr. Johnston focused on, by more than enough to wipe out the difference difference in real “gross income” (don’t get me started) Mr. Johnston uses as the basis for his report.

Note for the record that Mr. Johnston has not attempted to refute my admittedly unquantified contentions about numbers that are much bigger than my original estimate of the EITC’s impact of $170, and much bigger than my current estimate of the impact of all credits including EITC of $132.

(resumption of original August 21 post)


Don’t forget the tax-rate cuts: Now add the benefit of the Bush rate cut in the lowest bracket, which has benefited all but the very top few percent of taxpayers. Since its inception in 2001, that rate cut from 15% to 10% — never mind the reduction in higher brackets — has reduced taxes for most single filers by at least $350 per year, and for most joint filers by at least $700.

The EITC expansion, the cut in the lowest rate just noted, and the reductions in the rates applied in higher income brackets, when combined, surely more than make up for the $477 difference ($55,715 minus $55,238) between 2000′s and 2005′s Revised AGI amounts. So while average pre-tax income may have fallen, average after-tax income has risen — even during the Times’ artificially induced period of analysis.

Johnston’s obviously agenda-driven bottom line (see UPDATE below for a revision of this assessment) is this:

The fact that average incomes remained lower in 2005 than five years earlier helps explain why so many Americans report feeling economic stress despite overall growth in the economy.

The growth in real incomes in the two years noted, the continuation of that growth in 2006, and the positive impact of the Bush tax cuts all make Johnston’s contention about the sources of whatever economic stress may exist absurd.

A more accurate revision to Johnston’s claim would be this: “The fact that Old Media won’t report the success of the economy since the Bush tax cuts took hold helps explain why so many Americans report feeling economic stress despite overall growth in the economy.”

Cross-posted at


UPDATE: I, along with other commenters, salute Mr. Johnston for responding (see Comment 4). He also called me and was eager to explain various things to me. I can assure you that the comment below is his (the source IP addess for his comment made me wonder). Unfortunately, I was in the midst of fixing this post, which had blown up into being all bold and had to be edited at the line-by-line HTML level, so we didn’t get into much substance. He may call back (I think I said that I hope he does), and I will let readers know what happened if he does.

In the meantime, several other commenters have made very good points in response to my post and to Johnston’s comment. The best, in my opinion, is from Jason at #12, who noted that mutual funds are required to show 1-, 3-, 5- and 10-year return data for a reason, i.e., complete context. Though Johnston could argue that the article’s graph covers the 1-3-5-year issue, I don’t think that cuts it, and I suspect that most readers here don’t either. By not specifically noting the stellar 4%-plus performances in each of the past two years, it’s almost impossible NOT to think there’s an agenda.

Adding fuel to the fire, Johnston then doubles down by making the 5-year result the only factor worth mentioning as relevant to how consumers feel now — again, after two really good years of income growth. C’mon, David — How does that get into a non-agendized article? People in this “What have you done for me lately?” world typically aren’t thinking about where they are financially compared to four or five years ago (unless a certain president helps them do it :–>).

The other point I was going to leave a comment on below, until the post blew up and had to be salvaged, is that, contrary to his contention, I was not accusing Johnston of dishonesty or lack of integrity. Those terms, or similar ones, do not appear in my post. Johnston says that any time you accuse a reporter of having an agenda (as I most definitely did), you are in effect accusing them of dishonesty and lack of integrity. I don’t agree.

Let’s leave it at this — If David didn’t have an agenda when writing the article, I have little doubt that his editors felt like they had died and gone to heaven (or wherever it is Times editors think they’ll go after they die) when his article showed up.

UPDATE 2: Back Talk confirms the roughed-out hypothesis in this post that thanks to EITC expansion and tax-rate reduction, after-tax income gains are very real. I believe he’s going to have allow more room for the line on his after-tax graph to go up after he incorporates 2005′s data.

UPDATE 3: Meant to mention this much earlier — Drudge had the Times story near the top left of his home page for quite a while on Tuesday. You would think after all these years of Times misreporting he would know better.

UPDATE 4, Aug. 23: Meant to note other weigh-ins earlier, but here goes — NixGuy, American Thinker, Dinocrat, Krile Files.

UPDATE 5, Aug. 23: Some are taking issue with Johnston’s alleged lack of econ and stats background (his Wiki entry is here). FWIW, I don’t think it’s worth going there, because this isn’t about creating stats, it’s about selective reporting on published stats, not looking for gaps in the stats, and failing to get fair and balanced thoughts from others. I don’t think it requires a Ph.D. I surely don’t have one, and don’t think I needed one to have done this post. Johnston has clearly accomplished a lot as a journalist and has many accomplishments to be proud of. The subject article, however, is not among them.

UPDATE 6: On Wednesday, Tom Faranda posted an e-mail that Johnston sent him (can’t tell when) about what he (Faranda) wrote at his blog about Johnston’s “average incomes” report the day before.



  1. Just curious. Do you ever get any email or comments from these bozos when you expose their bias?

    Comment by Jim in Texas — August 21, 2007 @ 10:36 am

  2. It is the old “Fake but Accurate” trick once again. Why am I not surprised?

    Comment by Hacklehead — August 21, 2007 @ 10:43 am

  3. And since when does two-year-old data “explain … feeling economic stress” today?

    Comment by Kurt — August 21, 2007 @ 10:57 am

  4. You make interesting points — and also some unfair ones, especially leaping to the conclusion that I am dishonest.

    The idea that in the most scrutinized news report in the world I could twist facts for some venal purpose is laughable. We fire reporters who do that and we should.

    I have been active in exposing dishonest reporting since 1973. I am the only reporter whose expose of news manipulations and blackouts lead to a broadcast station being sold to avoid losing their licenses (six stations were sold). I have many other published articles on such issues over the decades in both newspapers and journalism publications.

    Readers and reporters can reasonably disagree on what is significant and the choices in the limited space and time I had.

    I did not get into this line of work more than 40 years ago to make things up or twist them. If I wanted to I would have become a novelist or a screenwriter.

    I got into it to tell people things they did not know and would not know but for my work. That’s the joy of it. And throughout my career I have found things were not at all as I imagined, including in the world of tax that I have covered for more than a dozen years.

    Given your jaundice it may surprise you to know that I was the reporter — the only reporter — to do the calculations revealing that the very highest income America got a much bigger tax cut from a law signed by Clinton than they did from Bush, reporting this several times in articles and with detailed graphics.

    That is to say, I report the numbers the same way regardless of who is in the White House or any other position of power. My focus is on what happens after the politicians speak and enact laws, not on what they say.

    When I write about one-year changes bloggers criticize me for not taking a longer look at the data. In this article I focused on the peak of the previous economic expansion (and compare it to results going back to 1945) and you accuse me of being dishonest for not cherry picking data from the late 90s.

    It is reasonable to disagree about whether using the high point of the last economic expansion is the most informing measure. It is certainly common to use this measure. Making that choice is neither dishonest nor absurd.

    Behind my article today are extensive spreadsheets I did analyzing the data by income group, components of income (wages, dividends, etc.) and other factors. I then took care to not cherry pick the data, but to select those data points that exemplified what careful checking and cross checking showed. There are problems with using this analysis because of what might be called income bracket creep, which cannot be backed out from the data I relied on.

    EITC is not in the IRS data, which you use as a cudgel against my work. This money totals less than a half of one percent of all income (and is not market income). There are other forms of income not counted as well that you do not mention. For example, this administration and has said that there is widespread and significant understating of non-wage incomes at the top, as did the last.

    That is to say, there is no perfect measure and my article identified the measure I used — income tax data.

    Not in my report today was this finding from my analysis, which in light of your closing comments you may want to ponder:

    Among the under $100,000 income group, comparing 2005 to 2004, the number of taxpayers rose 0.5%, total real AGI fell by -$73 billion, or -1.9 percent, and average AGI incomes declined by -$801 from $33,847 to $33,046.

    In the year 2000 the average AGI (in 2005$) of those making under $100,000 was $35,286. That means, compared to 2005, that average incomes in this group are down -$2,240 or -6.3 percent from the peak year of the economic expansion.

    The figures are not directly comparable because some people moved up and out of that bracket. However, in 2000 this group comprised 90.7% of all taxpayers and it is now 88% of all taxpayers.
    But that is also not a large change in share of taxpayers.

    I cite this to show the care I take to analyze the data fully before I wrote about it and to make sure anomalies are not treated as substance.

    The fact is that average incomes remain below their peak and when you look at groups below $1 million of AGI, which 99.77 percent of all taxpayers in 2005, the declines are clear. It suggests that my reportorial observation about many people feeling economic stress (of which there is plenty of evidence from polls and other sources) is not absurd and does not lack a reasonable basis for mentioning.

    The growth in incomes from 2002 to 2003 is statistically insignificant at 0.2 percent or $99, contrary to your assertions about how many years we have had growth in average incomes.

    Whatever the data show is what I report. If, for example, the data showed that the incomes of those at the bottom were rising I would report that. Oh, gosh, I did report this morning that the number of Americans reporting very low incomes declined by more than 5 percent. That could have been the lede, but average incomes provides a broader measure of greater interest so I lead with that. Reasonable people can disagree without resorting to attacking the reporter’s integrity.

    Comment by David Cay Johnston — August 21, 2007 @ 10:59 am

  5. Does the date permit presentaiton of median results?

    The year 2000 was notable for the top of the dot com bubble, which added billions to a tiny handful, and contributed to an increase in the avergae, but I woulodn’t be surprised if it had less impact on the average.

    The Times often emphasizes median amounts for good reasons and bad – the good reasons – they are more representaative, a better indicator of results of typical people – the bad reasons – they often support the narrative they prefer.

    Interesting that they didn’t show the medians this time – is it for an acceptable reason (the data isn’t avaialle in that form – or a less acceptable reason – the results wouldn’t fit the narrative?

    Comment by Phil — August 21, 2007 @ 11:12 am

  6. Hat tip to David Cay Johnston for responding.

    Comment by Mr. Forward — August 21, 2007 @ 11:28 am

  7. It was very nice of David Cay Johnston to respond. Very nice! But, he says that he has integrity. But integrity means that you should cover a story with a fair and balanced and a well-reasoned perspective. Tom Blumer was just pointing out that you didn’t do this very well. I have a feeling that you knew that you weren’t giving a fair and balanced perspective either. People in this country are desperately wanting to read reports in the news that are fair and balanced — they are very, very tired of the biased reporting (from both sides). They are tired of the endless agenda-based reporting that goes on. Very, very tired of it. This is truly the reason for the general animosity towards the news media nowadays.

    Comment by kman — August 21, 2007 @ 11:50 am

  8. ~~~The idea that in the most scrutinized news report in the world I could twist facts for some venal purpose is laughable. We fire reporters who do that and we should.~~~

    So why hasn’t the New York Times returned Walter Duranty’s Pulitzer?

    Comment by Jason Van Steenwyk — August 21, 2007 @ 11:53 am

  9. Big thumbs up to Johnston for his sensible response, though I certainly see BizzyBlog’s point.

    Comment by Jim — August 21, 2007 @ 11:53 am

  10. Well, I’ll say this about Mister Johnston… he’s a liar (as evidenced by this article).

    I can’t see how you can defend this sort of blatantly dishonest ‘reporting’ as anything more than a desire to hurt the American people for the ‘gain’ of getting Democrats in power in 2008.

    On second thought, the word ‘liar’ might be too kind.

    Comment by Neale Davidson — August 21, 2007 @ 11:55 am

  11. It was good of him to check in, but I’m not really sure he responded to the same points our host here has made. And I don’t know exactly how you can call a huge migration of tapyers into upper income brackets “not a large share”, particularly since the earners lost to higher brackets were dragging the average up.

    If I had more time, I might find some flaws in my own thinking here, but I don’t! So hurrah for me!

    Comment by spongeworthy — August 21, 2007 @ 12:00 pm

  12. To put a finer point on it, you would use the high-point of the last economic expansion if, and only if, your purpose were to make the current administration look bad. You would use the 2002 low point if, and only if, your purpose were to make the administration look good.

    Neither case is all that truthful or intellectually honest. In fact, it’s so intellectually dishonest, David, that if you were a mutual fund advertising your returns dating from the most favorable point in recent history, you would be slapped with a steep fine by the SEC and/or NASD.

    In order to prevent the consumer from being misled, regulations require publicly traded fund companies to publish a series of data points – including the 1-year, 3-year, 5-year, and 10-year trailing returns, assuming the fund has been in existence that long.

    The data is there, and is easy enough to acquire. In fact, I know you have it yourself.

    Using the high point of the last market cycle is not dishonest or absurd. But using ONLY that point in crafting the headline and lede is dishonest and absurd – which is exactly why investment companies are prohibited from doing precisely what you did.

    In fact, your lede could easily find itself very much at home on a Democratic candidate’s campaign Web site. The strong growth of the last two years is easily as much a part of the story as the five year record. But your prose goes out of its way to discount it.

    Comment by Jason Van Steenwyk — August 21, 2007 @ 12:12 pm

  13. David: Thank you for the lengthy explanation. I’m curious as to why you chose to remove the information regarding the under $100,000 wage earners since that (at least from my reading of your post) makes your case better than much of what you chose to include in the article.

    It may also be worth noting that you did not write the headline and I suspect the headline is the source of much of the hostility you will encounter on sites like this. I, along with most others here I’d bet, are quite certain that, had a Democrat been sitting in the White House, the headline would have been something more like “Rebounding Economy Approaches the Heights of the Dot-Com Boom”.

    And I still agree with Bloomer that undeplaying the bubble burst and ignoring 9/11 undermine your story.

    Comment by tim maguire — August 21, 2007 @ 12:13 pm

  14. Cay – many, many kudos for coming to this site and giving us your perspective! You and the Times earn real respect because you are willing to do so.

    Comment by Wildmonk — August 21, 2007 @ 12:21 pm

  15. Also a big hat-tip from me to David for responding.

    Some questions I would like to know:

    Does the income figure include health insurance costs? Costs to employers during the last several years have been skyrocketing. In my own department, the cost per employee per month has risen from $225 to $412 in the years 2004-2007. This is income earned by employees, but is typically not included in income per household statistics (I don’t know if it is being counted here). If it is not, it is a double strike against the income per household figure because not only is it not counted, but the inflation factor of health care is counted in the inflation stats.

    Also, when looking at household incomes, the long-term trend is for fewer persons per household. If you see any household income figures quoted comparing today to 50 years ago, keep in mind that people are having fewer children, are divorcing more frequently and are marrying later in life, all of which have created many more households per person. I can’t state that this has occurred in the numbers between 2000 and 2005 (I don’t have access), but it wouldn’t surprise me if that trend were continuing and may have a small influence.

    I believe that the article is tilted unfairly towards the negative. A fairer take would be to highlight that household income has increased strongly for the second consecutive year and the fact that it is still behind the peak of 2000 should be a secondary aspect.

    Comment by Worrierking — August 21, 2007 @ 12:23 pm

  16. the number of Americans reporting very low incomes declined by more than 5 percent.

    I think that’s a much more interesting lede than the median; “relative” poverty (fewer luxuries) will always be with us, but REAL poverty is shrinking.

    Comment by HeatherRadish — August 21, 2007 @ 12:23 pm

  17. Quoting Mr. Johnson:

    “Not in my report today was this finding from my analysis, which in light of your closing comments you may want to ponder:

    Among the under $100,000 income group, comparing 2005 to 2004, the number of taxpayers rose 0.5%, total real AGI fell by -$73 billion, or -1.9 percent, and average AGI incomes declined by -$801 from $33,847 to $33,046.

    In the year 2000 the average AGI (in 2005$) of those making under $100,000 was $35,286. That means, compared to 2005, that average incomes in this group are down -$2,240 or -6.3 percent from the peak year of the economic expansion.

    The figures are not directly comparable because some people moved up and out of that bracket. However, in 2000 this group comprised 90.7% of all taxpayers and it is now 88% of all taxpayers. But that is also not a large change in share of taxpayers.

    I cite this to show the care I take to analyze the data fully before I wrote about it and to make sure anomalies are not treated as substance.”

    End of Quote

    I respect Mr. Johnston coming here to defend his article, but this example is misleading. As Mr. Johnston points out, the 2005 average fails to take into account the 2.7% (90.7% – 88%) of taxpayers who made less than $100K in 2000 and more than $100K in 2005. Instead of addressing this, he simply dismisses the effect.

    Assuming that these 2.7% of taxpayers made the bare minimum $100K (which is unnecessarily conservative), then we can combine the 88% who averaged $33,046 with the 2.7% who averaged $100,000 to get an aggregate average of $35,039. This is less than one percent below the 2000 AGI of $35,286. If the higher earners averaged anything above $108,300, then the average 2005 AGI would exceed the average 2000 AGI.

    Given that he specifically cites this example “to show the care I take to analyze the data fully before I wrote about it”, it makes me want to question his other analyses even more.

    Comment by Greg — August 21, 2007 @ 12:37 pm

  18. Mr Johnston, how is a one-year growth of $99 statistically insignificant, yet a five-year drop of $561 makes the headline?

    It’s a pretty transparent trick to claim you must be unbiased because you criticized Clinton for not being leftist enough too.

    Any thoughts as to how illegal immigrants affect the income distribution? In the 2005 tax year, the last for which such data is available, 1.9 million returns were filed with the primary taxpayer’s using an individual taxpayer number, known as an ITIN, up 30 percent from 2004. ITINs are used primarily by illegal immigrants, a group which has been growing faster than the general population in every year from 2000-2005. Returns using an ITIN accounted for 1 of every 65 individual returns filed in 2005.

    Comment by bgates — August 21, 2007 @ 12:37 pm

  19. [...] Every time David Cay Johnston writes about income, or economics in general, my teeth hurt. This is a good example of why: [...]

    Pingback by A Second Hand Conjecture » Artificially shrinking the income pie — August 21, 2007 @ 12:43 pm

  20. Excellent article. I wrote a similar letter to the Times editor and Public Editorl last night. They will no doubt ignore my letter, so I am reproducing it here.

    There were several technical flaws in this article:
    1. It’s meaningless to say that average income fell FOR MOST. An average already reflects all the incomes. The words “for most” should not be included.
    2. Two types of average are commonly used: mean and median. The article does not explain which type of average is being used,
    3. I know that the income being discussed is family income, rather than individual income, but the article doesn’t say so.
    4. Average family size has been dropping, so it’s possible that average income per person may have been higher in 2005 than in 2000.
    5. The reporter incorrectly described the income as what was available “to make ends meet.” In fact, income after taxes is what’s available to make ends meet. Since Bush cut taxes for everyone paying income tax, it’s possible that the average income after federal income tax may have been higher in 2005 than in 2000. However, the article didn’t report that figure.
    6. The usual economic reporting of how much income rose or fell would compare the latest year to the prior year. From other sources I am believe that average family income rose from 2004 to 2005. The article doesn’t address that point.
    7. Why did the Times choose 2000 as a base to compare the latest year against? The most likely reason is avoid focusing on the good news that average income rose in 2005.
    In my opinion, the Times ought to have access some professional statistician/economist so they could avoid elementary errors like these.
    David Skurnick
    Fellow, Casualty Actuarial Society

    Comment by David Skurnick — August 21, 2007 @ 12:50 pm

  21. Conservatives and liberals can all rot in hell.

    Comment by The Truth Commission — August 21, 2007 @ 12:51 pm

  22. The New York Times is to the democrat party what Pravda was to the Communist party.

    It is an organ of propaganda, misinformation, and disinformation, published for the purpose of retaining and enlarging political power.

    Comment by Labamigo — August 21, 2007 @ 12:55 pm

  23. Kudos to Mr.Johnston for responding – and for a few more laughs.

    “I did not get into this line of work more than 40 years ago to make things up or twist them. If I wanted to I would have become a novelist or a screenwriter.”
    As we say in New York – Oh please. I think at this point very few people would consider publishing articles in the NYT to be “reporting” as opposed to “twisting things”. This doesn’t mean that decent people don’t write for NYT, of course, so let’s look at the article.

    Not mentioning 9/11 and the dot-com bubble burst, while ending the article with a quote from Citizens for Tax Justice “trickle down doesn’t work”, strikes me as a rather obvious attempt to “twist things” just a little bit.

    Again, I’m glad Mr.Johnston has the spine to answer his critics, but it would be even better if he didn’t get all self-righteous, and instead of boasting about the amount of numbers he’s looked at, admitted the obvious.

    People become reporters because they want to spread what they believe to be the truth. Trouble starts when they start confusing the truth with their own opinion. I think Mr.Thompson’s case is a perfect example: he sincerely believes he hasn’t twisted anything, while to an observer it’s clear that he has. That doesn’t make Mr.Thompson a liar. What it makes him is a true believer in “The People”, whose faith overtook his reason.

    Comment by Ivan Lenin — August 21, 2007 @ 1:03 pm

  24. I read somewhere that money that goes into 401K programs is not counted in the income figures. Does anyone know if this is true? If it is, then the numbers don’t mean much.

    Comment by Emory — August 21, 2007 @ 1:09 pm

  25. If anyone takes issue with the numbers, I ask them to feel free to publish their own.

    To me this shows stagflation.

    Wages have been stagnant. Pre-tax, after-tax, doesn’t really matter. I’m purely middle-class, the tax reductions are maybe $200 tops for me. Whoopdeefrickindoo. So it’s pretty irrelevant unless I made something like a quarter mil.

    Yet, wages have stayed the same while the costs of everything we buy has increased in five years. When I turned 16 in 1998 gasoline costs $0.80/gallon. It has since tripled to quadrupled. Then take all those costs over into everything that requires gasoline. Anything that requires transport, like food and business goods. Then there are service costs that have increased – education (over the time of my 4 years in school, tuition had increased 4 thousand per year), healthcare (my company has started reducing their costs for my healthcare plan due to their exploding costs, don’t blame them, I would too), etc.

    Neither party offers anything to fix this. Their both married to a communist government to provide us cheap goods. They’re both married to banks on Wall Street that are begging for a bailout because they’ve lost 5% – socialized risk, privatized profits. The Republican and Democratic parties are the personification of Ingsoc from 1984 – they don’t seek power for any reason other than to hold it, cause once they get power, both parties do nothing.

    Our country is headed to a recession, you can either prepare or not. Call me a tinfoil all you want, I know to take care of myself cause no one else will if trouble occurs. If you don’t take care of yourself, that’s your fault, and don’t ask for the government to bail you out.

    Comment by rj — August 21, 2007 @ 1:13 pm

  26. Well, no, the numbers don’t mean much. Because Thompson wrote the article based on pretax, rather than after tax income.

    He knows full well that a focus on after tax income, or total compensation -which would reflect 401k matches, 401k contributions, and the increasing value of health insurance – and would likely blow his desired conclusion out of the water (although employers in some circles have been cutting back on health coverage).

    Comment by Jason Van Steenwyk — August 21, 2007 @ 1:19 pm

  27. #4: David, quoting your article:

    “The growth in total incomes was concentrated among those making more than $1 million. The number of such taxpayers grew by more than 26 percent, to 303,817 in 2005, from 239,685 in 2000. These individuals, who constitute less than a quarter of 1 percent of all taxpayers, reaped almost 47 percent of the total income gains in 2005, compared with 2000.”

    Doing the math, the number of taxpayers with total incomes greater than $1 million (I’m assuming you’re referring to their adjusted gross incomes) increased by 64,032 from 2000 to 2005.

    I checked the data maintained by the Tax Policy Center ( Ref: ) and I noticed that the number of taxable $1 million-plus AGI individual income tax returns for those who include their business, partnership or S-corp income grew by 71,706 from 2000 to 2005.

    I’m curious to know how you dealt with those individuals who file their business taxes through their individual income tax forms in your spreadsheet analysis. Thanks in advance for your reply.

    Comment by Ironman — August 21, 2007 @ 1:23 pm

  28. I did not get into this line of work more than 40 years ago to make things up or twist them. If I wanted to I would have become a novelist or a screenwriter.


    it may surprise you to know that I was the reporter the only reporter to do the calculations revealing that the very highest income America got a much bigger tax cut from a law signed by Clinton than they did from Bush


    The idea that in the most scrutinized news report in the world I could twist facts for some venal purpose is laughable.

    You mean like Jayson Blair did?

    Comment by The Ace — August 21, 2007 @ 1:23 pm

  29. #24 Emory, 401(k) is effectively in there because the Total Income Concept that backs up the IRS work includes Salaries and Wages (i.e., before 401(k)).

    Comment by TBlumer — August 21, 2007 @ 1:53 pm

  30. The bottom line is this: The average income in 2006 and 2007 have almost certainly gone up. Perhap teh 2006 data are not available yet. However, how can you possibly draw conclusions about why people feel the way they do in the middle of 2007 based on data only as recent as 2005, especially when, by most measurable indications, income has probabably risen since 2005.

    The article should never have been published until 2006 data was availble, and if that were the case, there would have been no way to finnagle the presentation of the results to make it look like things were still looking bad.

    This seems like a no brainer to me, what am I missing?

    Comment by Chris — August 21, 2007 @ 2:26 pm

  31. Bush lowered interest rates to 1% and accelerated the spending of future tax dollars. Like Jim Rogers said, give me $1 trillion and I can throw a helluva party, too.

    Watch those income “gains” disappear when you factor in REAL inflation (not official numbers) and see housing go bust.

    If the NYT has so much of an agenda, why don’t they mention that? Are they right-winged and are therefore “going easy” on the situation? Maybe the truth the NYT bashers haven’t considered is: the NYT doesn’t have so much of an agenda but just don’t analyze information they way everyone wants them to. (They can’t.)

    Comment by wunsacon — August 21, 2007 @ 2:27 pm

  32. Interesting exchange between the blogger and Mr. Johnston. It reminds me of conversations I have had with a very close relative who happens to be very liberal and who also happens to be a journalist. I can state with absolute certainty that this relative has complete integrity and, as I am sure is the case with Mr. Johnston, would never “twist facts for some venal purpose.”

    That said, sometimes the story that isn’t reported is often as significant as the one that is. I suspect if you showed the bar graph from the article to people at random (and without the bias-inducing heading, “Lagging Behind,”) some would remark on the fact that the ’05 bar is below the 2000 bar. Others, however, would probably notice the recent positive trend. If the data were presented as a series of annual changes, as in the original post above, then the recent trend becomes more noticeable.

    The New York Yankees are currently 5 games out of first place. Not too long ago they were 14 ½ games out. What is the story there, the fact that they are still behind or the fact that they are on a hot streak? (Notwithstanding last night’s painful loss to the Angels.) Both are true, of course, but I’ll bet most observers are at least aware that the team is playing very well.

    Mr. Johnston’s article, however, seems to me to be overwhelmingly focused on the negative, which to me makes it understandable that people infer bias. I am not addressing his ‘integrity,’ which I have no reason to believe is anything but intact. But it is as if the article was structured to support the conclusion that Americans are “feeling economic stress despite overall growth in the economy.” (He provides no facts in support of the claim regarding Americans’ stress level, by the way).

    I’m not sure anyone has mentioned that, other than the White House, the only comments in his article are from Citizens for Tax Justice. It would have been appropriate to identify them not just as ‘a group’ but as a ‘liberal group,’ which they are (see Wikipedia and No conservative think tanks are quoted.

    Comment by gator80 — August 21, 2007 @ 2:40 pm

  33. I found the NYT article misleading as well, for one thing people who make less than $100k are more suspectible to lay offs than those over in my opinion. As such, once the debacle and 911 events took hold, it was this group that took the greatest hit. It should be obvious and definitely wasn’t alluded to that the work force has expanded and that the 6.8 million people who are currently unemployed also factor into the so called average income and their numbers absolutely effect the income average of the under $100k group. Obviously an unemployed person is getting a stipend from Unemployment benefits and thus reports a lower wage, therefore in a period of high unemployment the “average” wage goes down. It is disengenuous to represent that the under $100k group is loosing ground when in fact that average income level will always be affected by unemployment skewing the stats whereas all groups above $100k will NEVER be affected. When someone who make $200k gets the boot, their income drop never is reflected in the average of their group, on the contrary, their income now is pulling down the under $100k group.

    Secondly, the income includes capital gains and dividend distributions not just hourly/salary wages. It is completely disengenuous to proclaim the national average has dropped when 5% of the population pays half of the taxes, hence a disportionate share of the national income making up the average. One could easily make the case that the year 2000 high was inflated by the capital gains prior to the burst by people of means.

    Example let’s say for the sake of argument that the average income increased 5% for the year 2000, then let’s assume that everyone who drew a paycheck got a zero % wage increase. Under this scenerio it only takes a 10% increase in income from capital gains for the 5% who pay 50% of the taxes. That scenerio was not unreasonable in 1999 and 2000. Basically, the smart ones took the money and ran. I submit this chart could easily be explained by variable income from stocks and bonds, what should have happened was to go to the Bureau of Labor statistics wages to wring out the stock and bond income for a more realistic look at the worker’s wages. The fact Mr. Johnson went to the IRS figures instead which had all the income mixed together suggests either he totally incompetent in reporting facts or that he intentionally mislead the readers. After 40 years of reporting economic news, one would think by now that he actually had a grasp of economics statistics. So which is it Mr. Johnson, you lied because you have an agenda or your an idiot?

    Comment by dscott — August 21, 2007 @ 2:43 pm

  34. “Watch those income “gains” disappear when you factor in REAL inflation (not official numbers) and see houseing go bust.”

    I have a hard time taking any argument seriously that resorts to conspiracy theories “(not official numbers)” and an assumption that some aspect of the ecomony will, at some date in the near future “go bust” (which implies more then just leveling of or going down a little bit).

    Can you imagine the NYT suggesting that the officially reported inflation numbers are really just a right-wing conspiracy and that based on their prediction that the housing market will “bust” and wreck the economy we should be feeling really bad about the economy? That is more than just bais, that is unsubstantiated accusation and gut feeling mass prediction about the economy.

    Bottom line: The NYT can still be left-baised without being absolutely crazy and losing all the credibility they have left in one swoop.

    Comment by Chris — August 21, 2007 @ 2:51 pm

  35. I think gator80 (3-5 posts up from this post, depending on how many have added comments) has made the most eloquent argument I have yet read illustrating the problem with the article.

    Comment by Chris — August 21, 2007 @ 2:58 pm

  36. Yes, how dare you not cherry pick the data… that’s my complaint.

    Instead you’ve taken a 2 year downturn, a nearly flat year, and a two year upturn and reported it as bad news, a 5 year depressed downturn, and economic bad news. Which is of course the open honest rational viewpoint. Reality Based Community member are you?

    Who could think you were being dishonest there. Sure you massaged the data, the headline, and the first paragraph to “fit the meme”; but how could that be a surprise. It’d be like the NYT covering up the immigration status of a convict as a politically incorrect factoid to be buried… oh yeah, that was yesterday, wasn’t it?

    It’s both “factually” true, and incredibly dishonest. The headline is gloom and doom, the first paragraph is gloom and doom… and you know as well as I do most readers don’t get past that.

    So, then later you “hide” the actual information, the real numbers, the upswing. Why not give it then, most have quit reading, and you’ve gotten your main point across.

    Why do all the mistakes “fit the meme”? Why is the headline/first paragraph data always the same side of the idealogical fence?

    Now, given an even probability distribution, what are the odds that this distribution could occur? Either you’ve got a freaking act of God style miracle, or for some reason there isn’t an even probability distribution.

    This is why there’s a suspicion of “pushing a story” or “making crap up”… because the odds say this can’t be chance.

    The only ones claiming you’re not working stories to fit a bias is you, and the evidence seems to show a different story. How could people believe this evidence when you’ve already told them what to think? I dunno, but it seems some of them do…

    Comment by Gekkobear — August 21, 2007 @ 2:59 pm

  37. Mr. Johnson’s point about short term versus long term analysis is undercut by the fact that his headline is only true if one compares 2005 with 2000. 2005 and any other year yields a different headline. And since I’m feeling snippy, he should learn the difference between led and lead.

    Comment by RR Ryan — August 21, 2007 @ 3:06 pm

  38. [...] So carefully indeed, as to paint a rather misleading conclusion. To his credit, Johnson shows up in comments at Bizzyblog to defend his result, if not his method. Points on for playing the game, but still – bad form. [...]

    Pingback by There are three kinds of lies - Neptunus Lex - The unbearable lightness of Lex. Enjoy. — August 21, 2007 @ 3:07 pm

  39. Can anyone be critical of Bush Administration tax policies without being termed a “liberal,” “anti-American,” “Bush Derangement Syndrome” type, “communist,” “socialist,” or just plain biased against any and all Conservatives?

    Can we discuss the economic issue without the blanket diatribes?

    Just a thought.

    Comment by Mark — August 21, 2007 @ 3:10 pm

  40. “New York Times Twists Data to Make Great Personal Income News Appear Awful”

    And that’s an objective, factually accurate headline?

    By the way, I strongly dislike The Times. For numerous reasons up to and including Maureen Dowd, David Brooks, and terrible coverage of state political and legislative news.

    Comment by Mark — August 21, 2007 @ 3:15 pm

  41. U.S. Incomes Are Falling … Nope, They’re Not…

    In US News & World Report, James Pethokoukis writes:”More Americans making ends meet with less money,” was the headline atop a Boston Globe story Tuesday morning. The newspaper went on to tell its readers that Americans in 2005 earned a……

    Trackback by Ed — August 21, 2007 @ 3:16 pm

  42. I have to comment on Mr. Johnston’s analysis about the under 100k numbers. What I believe he did was take the average for 2000 of under 100k earners and ADJUSTED IT FOR INFLATION and then compared that to an unadjusted 2005 number. If this is the case, and please set me straight if I am wrong, you analysis is not meaningful.

    If your going to adjust the average YOU MUST ADJUST THE 100K as well and include a broader NOMINAL range in 2005 than 2000. Conversely you could use unadjusted (nominal) 2000 dollars and compare them to (nominal) 2005 dollars.

    Comment by DaveP — August 21, 2007 @ 3:16 pm

  43. Thanks to David Cay Johnson for responding. He makes a point I disagree with and one I agree with.

    I Can Agree With:
    “Readers and reporters can reasonably disagree on what is significant and the choices in the limited space and time I had.”

    That’s true, and it’s probably wrong to ascribe to malfeasance what’s probably just a result of the “restriction of range” that comes from living in the narrow cocoon of the Times, in the narrow cocoon of lower Manhattan. Nobody at the Times could see the data any other way, or even knows how to reach anybody who would see the data any other way.

    BUT No One Rational Can Agree With:
    “We fire reporters who do that and we should.”
    No you don’t (although we agree you should, so maybe it’s a point and a half I agree with).

    Example 1: Charlie LeDuff, serial plagiarist. Never disciplined for copying from a Blake Gumprecht book for a 2003 story.

    Indeed, the Times hired him in the “Jayson Blair” affirmative action program (LeDuff claims to be part Indian… you know, like Ward Churchill) AFTER he was exposed as a plagiarist at another paper. There are also “some questions” about attribution in his master’s thesis.

    Example 2: Douglas Martin, who copied large parts of The Times (of London)’s obituary of WWII SOE hero Vera Atkins. Not fired or even punished, he explained to media critic Dan Kennedy that plagiarism is routine:

    Example 3. Fox Butterfield. Plagiarism AND fabrication AND libel (guilty in court, by the way. But never disciplined by the Times).

    Example 4. Walter Duranty. His 1930s reports are now understood to have been transcribed Soviet propaganda… but the Times still holds tight to the Pulitzer the fabrications brought in. That Duranty was not telling the truth was clear even in the 1930s, but the Times stood by him then as they stood by Butterfield in the 1990s and LeDuff today.

    Example 5. Hassan Fattah. Ran a two-hankie weeper about a victim of US troops in Abu Ghraib last year, who turned out to be, er, obviously bogus. But his bogus story fits the newsroom master narrative, so he’s back out there “reporting” — to NYT standards.

    I could go on and on, because these are not Times hod carriers, they are Times headliners; they set the tone and the culture on 43rd Street. The Times is chock full of liars, fabricators and plagiarists and they don’t care. The only one they ever fired was the black guy, Blair. (Rick Bragg resigned, and I don’t think Jack Hitt’s byline has showed up — but he was a freelancer, not a “made guy” in the Times crew). Make what you will of that, but don’t tell me that the Times demands honesty from its reporters. The evidence says otherwise.

    Comment by Kevin R.C. 'Hognose' O'Brien — August 21, 2007 @ 3:22 pm

  44. I have seen stuff all over the web this morning with people having trouble with the figures used in this article. I went back and looked at this source: Docid=458

    The Tax Policy Center, which is apparently a joint effort of Brookings Institution and the Urban Institute, not right wing outfits. I think this is the source Backtalk is using – I saw it in one of his posts a few months back.

    This shows the spread on family income by quintile. The numbers are all in constant 2004 dollars, with 2004 as the last year.

    It shows very different numbers. The average pre-tax family income is down 1.6% from 2000 – 2004: $80,000 to $78,700, but the average after tax family income is up .6% over the same period: $62,500 to $62,900.

    The after-tax income by quintile shows and interesting spread over that period too.

    $15,000 – $14,7000 -2%
    Second Lowest:
    $31,800 – $32,700 +2.8%
    $45,900 – $48,400 +5.4%
    Second Highest:
    $65,000 – $67,600 +4%
    $155,200 – $155,200 dead even

    After-tax is what’s going into your pocket. The lowest quintile is down, the highest is flat, and the middle is gaining most.

    Comment by Campesino — August 21, 2007 @ 3:26 pm

  45. I just used the Microsoft “Find” feature to scan the NY Times article for the words “household” and “house”. THEY AREN’T THERE. Mr. Johnston FAILED to DEFINE TERMS. He did not inform his readers that he was doing a comparison of AVERAGE HOUSEHOLD INCOME, not per capita income. In my view he is either incompetent or practicing slanted journalism, despite his assertions to the contrary.

    Comment by Stajack — August 21, 2007 @ 3:29 pm

  46. 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.

    Mr. Johnston in his comment above complicates matters by selecting an income threshold and talks about increases to that portion of the population and people shifting above and below the threshold… this is why they break the data into quintiles.

    Different household income values because the data hasn’t been through the meatgrinder of the IRS, but he could’ve developed his same conclusions with less effort. (Although average household income has to be calculated by the reader as the average of the five quintile means).

    It certainly seems to me that there is significant downward pressure on income growth as boomers start to retire or at least reduce work. In addition, bring in however many millions of illegal immigrants, and I’ll go out on a limb here, but I presume that they are going to overpopulate the lowest quintile rather than evenly distributed between the prior established quintiles. Can’t imagine how the IRS treats this latter group, but then I got confused when they showed that those with no income had an AGI of -$48,000, and those that made less than 5k actually had a tax liability…

    Comment by stomper — August 21, 2007 @ 3:40 pm

  47. That so much effort and emotion is being expended to deny a fairly basic set of numbers from the IRS which confirm the wage and salary numbers from the Dept of Labor surely speaks volumes. The simple fact is that that in no year between 2000 and 2005 were wages greater in real terms than they were in 2000. Period. In fact given the questions about the CPI underestimating real inflation this picture is probably relatively benign. I’m not sure whether the original posting is more odd in trying to minimize this information or some of the subsequent postings which seem want to talk about anything other than this real problem (including the Soviet Union in the thirties) which surely does explain a lot about the national mood on the economy. What these numbers confirm, yet again, is that for about 80% of Americans their incomes haved been flat or declining for the past six years. We can deny all we want, in fact denial of one sort and another seems to be becoming the major characteristic of the Republican party, but this problem is not going away and given that we appear to be at the end of an expansionary period the potential political consequences are dire.

    Comment by John — August 21, 2007 @ 3:50 pm

  48. Thanks, Chris. The check is in the mail. ;-)

    Comment by gator80 — August 21, 2007 @ 4:07 pm

  49. John, your analysis is plainly wrong. 2000 was the height of the boom, then the bottom fell out (see Bizzyblog’s graph, above). Incomes fall during recessions/economic downturns as people lose their jobs. But, as you can see in 2003/2004, incomes have been recovering, and recovering in very healthy terms. When the 2006 numbers come in, Johnston’s analysis will be rendered moot. By the way, CPI does not underestimate inflation; it OVERESTIMATES inflation, by 0.5 to 1% according to most economists. This overestimate would be sufficient to make 2005 incomes higher than 2000, but the good people here aren’t arguing that; they’re arguing that it’s dishonest to compare 2005 incomes to a recent peak and claim that the Economy sucks, which it doesn’t.

    Comment by J Bennett — August 21, 2007 @ 4:10 pm

  50. “Just curious. Do you ever get any email or comments from these bozos when you expose their bias?”

    Well, I guess the forgoing answered my question ;-)

    Comment by Jim in Texas — August 21, 2007 @ 4:12 pm

  51. It doesn’t have to be a specific political vendetta against this administration. It’s more likely to be a reflection of the ideological inclinations of most of those in Mr. Johnston’s position — those naturally inclined to think that the economy is never improving everyone’s lot, and is always in need of some progressive medicine.

    It was good of him to respond, but he spends most of his comment on an appeal to authority, and far too little on specific defenses of his use of 2000 as a reference point.

    Comment by brett — August 21, 2007 @ 4:18 pm

  52. Lowest:
    $15,000 – $14,7000 -2%

    Interesting number, so how do you interpret it? This suggests a full time hourly wage of approx. $7/hr. So let’s look at the BLS to see who is working at what occupation this wage. Please refer to the right hand side of the page and click the various job categories. Click Building and Grounds Cleaning and Maintenance Occupations which is among the lowest paid mean along with Farming, Fishing, and Forestry Occupations and Personal Care and Service Occupations. Do you notice anything interesting as to how many people or rather what percentile of the group work at or near $7/hr???? How about the total number of people employed in the workforce? Did you bother to look at the years 2000 to 2005 on numbers of people employed? Does this suggest anything to you Mr. Johnston (btw – sorry for misspelling your name earlier)? What does it suggest when the lowest quintile getting a -2% drop in aggregate income with an increasing number of people? Maybe one could conclude that entry level people who draw the lowest level of wages pull down the average for that category in an expanding economy???? Can one also draw the conclusion that those who get a raise above $7.50/hr are moving to the next quintile of the labor group? To draw a different conclusion is to assume that no one got a pay raise but got a pay cut, is such thinking realistic? I realize this must be hard for a Socialist to figure because you inherently only think in terms of a static labor force, a fixed amount of wealth and redistribution of wealth schemes.

    Comment by dscott — August 21, 2007 @ 4:23 pm

  53. There are not many excuses more shopworn than “Don’t forget 9/11 and the blow-up!” ones.

    As for the dot.coms, their impact on the markets and the overall economy is dwarfed by this decade’s bubble: the housing bubble. Today’s housing is yesterday’s on steroids: while both phenomena were engendered by the Fed’s easy money policies, housing is a far more extensive asset class and (up until a couple weeks ago) was inflated over and over again by many layers of specious credit, both at the consumer and institutional levels.

    Speaking of credit, not for a moment did a lack of it slow down this administration’s penchant for tax-and-spend profligacy. 9/11 disrupted consumer spending for what? 2 quarters? Time to move on from that lame excuse.

    As for distrusting government numbers, how willfully naive must one be to give them any credence when energy, food and housing (save rent) are excluded? The three most inflationary factors in household expenditures, miraculously vaporized by a bureaucrat’s eraser.

    Comment by Jay — August 21, 2007 @ 4:32 pm

  54. #40, the “Great” news is the part that\’s really “new” — i.e., the 2005 data showing 4.1% improvement from 2004.

    I’m not pretending to be ivory-tower objective, but Mr. Johnston and the journalism community is.

    I’m pointing that he’s falling much shorter of the standard than I am. I don’t have to be ivory-tower “objective” to be fair, and I can be fair while calling out someone and his publication who are indeed twisting the news.

    Comment by TBlumer — August 21, 2007 @ 4:35 pm

  55. Are Incomes Smaller in 2005 Than In 2000?…

    Now how hard would it have been for the NYT to run the same reports I ran and balance their article? …

    Trackback by Sensible Mom — August 21, 2007 @ 4:57 pm

  56. I read the same NYT piece and smelled a rat. The NYT quotes the Citizens for Tax Justice several times in the article, and I suspect they gave the NYT the data no doubt only quoting data in sync with their liberal agenda.

    I went to the Bureau of Economic Analysis and ran some reports to see if personal income was actually lower in 2005 than in 2000. I ran annual reports from 1998 through second quarter 2007 for Per Capita Disposable Personal Income (table 7.1) and for Personal Income and Its Disposition (table 2.1)and found that the DPI (chained to 2000) has increased every year since 2000.

    Now how hard would it have been for the NYT to run the same reports I ran and balance their article? If I can quickly run these reports than I would think a reporter who writes for their business section should be able to do the same.

    Comment by Sensible Mom — August 21, 2007 @ 5:00 pm

  57. Jay, that was clever of you to change the subject however, we are not buying into it. And your specious point had what to do with Johnston’s characterization of average national income as being worse than 2000??

    Do some homework, show us the employment and unemployment numbers for 2000 to 2005. Why don’t you find the wages of each employment category for each year and do an actual comparison??? Hint, it’s on the BLS website. If Johnston were merely reporting the facts he would have presented the BLS data, not some misleading interpretation of some income numbers. After 40 years of reporting on the economy one would think he has the smarts and experience to look up the facts instead of making unfounded assertions.

    Comment by dscott — August 21, 2007 @ 5:08 pm

  58. #53, dot-com and 9/11 remain valid causes of the economy’s problems in late 2000 through late 2002. Nobody’s assigning any blame to those two factors from that point forward. Repeating that statement isn’t shopworn; it’s factual. NOT mentioning 9/11 when discussing an aspect of economic performance during the period from 2000-2005 is demonstrably ignorant.

    As to comparing bubbles, there is no housing bubble (yet), and there’s a good chance that there won’t be. Home prices, when properly analyzed and regionalized, have NOT gone down:

    Not once has the quarterly OFHEO (Office of Housing enterprise and Oversight) report shown a downturn. Maybe it will in about a week when the next one covering 2Q07 is released, but I doubt it.

    The dot-com bubble was NASDAQ falling over 75% and companies supposedly worth a collective hundreds of billions either disappearing or falling 90% or more in value. If housing prices (not sales of houses, but actual selling prices of houses, fall more than 5%, I’ll be very surprised. I wouldn’t be at all surprised if they don’t fall at all. To think that all of this is in any way a bubble is delusional.

    Comment by TBlumer — August 21, 2007 @ 5:14 pm

  59. #30 Chris, let me modify your point a bit. Using this IRS data for the purpose employed is somewhat shaky. There IS 2006 data coming out VERY soon (I think before month-end) from the Censue Bureau, which will break things into quintiles, use medians instead of averages, and IMO be more on track that using tax return data.

    Census data will STILL be based on gross income and won’t include EITC, the beneficial impact of the Bush tax cuts, or (just as the IRS didn’t, and I didn’t even mention) the Wal-Mart/Target-driven fact that many people are having to spend less in real terms on many basic items. That’s a benefit that many run as high as four figures for people who consistently shop aggressively at those stores.

    Comment by TBlumer — August 21, 2007 @ 5:36 pm

  60. My single biggest beef (really my only ) against MSM Journalism is the inability or unwillingness to see that journalists are not neutral conveyors of truth, but report their viewpoints of realty. By its very nature any reporting has an agenda, viewpoint or prejudice. Ed Murrow was not objectively reporting about the Blitz, he had an agenda (an agenda I applaud, but an agenda nevertheless). You can have a viewpoint or agenda and can still be honest, and can still report fairly. My point actually is that you can only report honestly and fairly if you admit to yourself that you have a viewpoint or agenda. I prefer the blogosphere, because almost everyone wears their convictions and viewpoints openly. As a reader it is therefore a lot easier for me to judge and evaluate the reports, instead of having to guess or read between the lines with the MSM media.
    In engaging in a discussion on this blog Mr. Johnston has taken a step in the right direction, and I applaud him for that, but he needs to realize that questions, analysis and criticism is not a divine right of journalism, but belongs to all

    Comment by Uhlenspiegel — August 21, 2007 @ 5:56 pm

  61. Johnston claims in his bio that he “studied” graduate economics at the exclusive University of Chicago. Well, the guy may have paid for an exec course there, but in reality, Mr. Johnston doesn’t even have a bachelors degree.

    Some expert.

    Here’s a defunct blog on the subject a year or so ago

    Comment by ken — August 21, 2007 @ 6:08 pm

  62. Mr. Johnston,

    The real problem is that even though you could probably justify every fact and omission in detail, with ostensibly non-partisan intent, it is ultimately useless. Many of us have observed over many years the consistant bias against the Bush adminstration, and the under-reporting of any news that might possibly raise their public support. Errors in reporting consistantly favor Democratic talking points.

    You cannot constantly roll sixes, and claim that the dice are fair. You may disagree with this statement – persuading someone of something over the internet is a fool’s errand. But understand that this is the attitude I and many others take towards NYT reporting.

    Comment by altoids — August 21, 2007 @ 6:13 pm

  63. This may seem oblique, but bear with me.

    We use blogs at work to flesh out pre-decision analysis. The blogger typically writes a post that has a 70% solution to the problem and then invites comments to further refine the idea. Anyone taking a 70% solution to a decision meeting would be shredded by the audience. However, the decision reached after taking the blog comments into account rarely gets attacked.

    In this case, David Johnston, stuck in the world of the dead tree media, is forced to bring out a story that will be attacked from either side, depending on which way he tells the story. Imagine the hoots of derision from the lefty econ blogs if he had taken 2002 as his baseline data.

    What we’re observing here may or may not be David Johnston pushing an agenda, but it most certainly is another nail in the coffin of non-interactive, declarative writing.

    Kevin O’Brien and Jason Van Steenwyk can come over to my blog and offer course corrections any time they’d like. Unfortunately for David Johnston, their analysis and observations seem to be lost in a world where once the ink dries, all you can do is defend your writing as best you can.

    Comment by K T Cat — August 21, 2007 @ 6:26 pm

  64. I was interested in reading about the credit crunch and nearly bought the Sunday NYT, then it occurred to me that anything written there would be slanted in an effort to game 2008 toward the Democrats, and I realized that the NYT had finally burned their credibility with me irretrievably.

    If Mr Johnston is so offended that people would question the motives of his newspaper, I suggest he begin reading it with an open mind.

    Comment by TJA — August 21, 2007 @ 6:45 pm

  65. [...] Big attention today given to Bizzyblog’s post  (and updated here) about the NYT’s slanted reporting of the personal income news.   I say slanted (and I dont use the word lightly) because given the same set of facts, one could have reported the same exact story about how the Bush administrations policies have guided the American economy out of what could have been a terrible recession.  That would have been a slanted story as well, but from the opposite direction.   Same set of facts, different story.  So… slanted, yes. [...]

    Pingback by » Reporting on Personal Income — August 21, 2007 @ 9:41 pm

  66. It’s a common problem with all those who wish to use stats to write a story — they run the risk of having their asses handed to them by people who understand stats.

    The easiest, and most bias-free way to run a trend is to compare it to a “baseline” — just not the kind of baseline this reporter chose. Instead, you try to create a “flat” baseline (eg. in the above analysis, a 5-year average for the years ’93-’97), and plot the chart from that starting point. Only then is comparison meaningful. Plotting current income against a “random” (uh huh) year inside the period being analyzed leaves one open to the questions as posed above — ie. “why choose year X instead of year Y?” — because whatever year one picks, the analysis is going to be flawed.

    Someone remind me: have they ever taught Stat 101 in Journo School? If not, that would explain the stupid analysis and clumsy propaganda article.

    Comment by Kim du Toit — August 21, 2007 @ 11:15 pm

  67. Mr Johnson simply lacks the statistical, accounting (and actuarial) education to be in the position he is. He is simply unqualified and would never be hired by an accounting firm nor an academic institution. That the times keeps him on when there is a wealth of real talent out there says a lot about the emphasis they place on credentials and education. You don’t learn statistics by doing, and the whole field of statistics has changed dramatically in the last 20 years with the advent of computer iteration modelling. Mr. Johnston is a bit weak in his explanation of who fact checked his work. I am guessing it wasnt. You think he might have run it by some professionals.

    The other very significant point is that the NYT, as indeed all the major media, is now fact checked by the experts and laypersons represented by the comment in this thread. Kudos to you all for your efforts and participation.

    Comment by rarango — August 22, 2007 @ 9:28 am

  68. The better comparison would have been comparing 2001 (the last year of the Clinton budget/policies) to 2005 – an increase of 4.4%!


    Family income – “annual earnings from wages, salaries, bonuses, tips, commissions; business and farm gains and losses; unemployment and workers’ compensation; interest and dividends; alimony, child support, and other private cash transfers; private pensions, IRA withdrawals, social security, and veterans’ payments; supplemental security income and cash welfare payments from public assistance, Temporary Assistance for Needy Families, and related programs; gains or losses from estates, trusts, partnerships, S corporations, rent, and royalties; and “other” income. Family income excludes tax refunds and capital gains.”

    Comment by Joe C. — August 22, 2007 @ 10:34 am

  69. It is good of Mr. Johnston to check in. However, it is strange that he considers it significant that the real AGI of people with incomes below $100,000 fell over a 5-year period. Well, of course it did! Because $100,000 in 2005 dollars is less, in real terms, than $100,000 in 2000 dollars. Since the ceiling for inclusion in the group has fallen in real terms, it is not at all surprising that the average real income of the group has fallen as well.

    Mr. Johnston wrote:

    Not in my report today was this finding from my analysis, which in light of your closing comments you may want to ponder:

    Among the under $100,000 income group, comparing 2005 to 2004, the number of taxpayers rose 0.5%, total real AGI fell by -$73 billion, or -1.9 percent, and average AGI incomes declined by -$801 from $33,847 to $33,046.

    In the year 2000 the average AGI (in 2005$) of those making under $100,000 was $35,286. That means, compared to 2005, that average incomes in this group are down -$2,240 or -6.3 percent from the peak year of the economic expansion.

    The figures are not directly comparable because some people moved up and out of that bracket. However, in 2000 this group comprised 90.7% of all taxpayers and it is now 88% of all taxpayers.
    But that is also not a large change in share of taxpayers.

    I cite this to show the care I take to analyze the data fully before I wrote about it and to make sure anomalies are not treated as substance

    Comment by William Jockusch — August 22, 2007 @ 5:08 pm

  70. #69, I am at loss as to whether Mr. Johnston even understands that True AGI (last line on Page 1 of long-form return) is not a good benchmark for comparing income between years. “AGI less deficit” (IRS’s weird term) is. Since 2000, there have been several additional above the line deductions and adjustments to AGI that make comparing True AGIs that many years apart pretty dangerous, and possibly meaningless.

    Comment by TBlumer — August 22, 2007 @ 6:52 pm

  71. [...] Our friend and past guest on Pundit Review Radio Tom Blumer of Bizzyblog got in a little dust up with a certain NY Times Reporter this past week named David Cay Johnston who wrote a very questionable and suspect piece entitled: “Average Incomes Fell for Most of 2000-2005.” Our friend Tom looked a little deeper into the numbers and came up with a very different conclusion. Seems as though Mr. Johnston conveniently omitted some fairly significant pieces of information from his calculations. [...]

    Pingback by Pundit Review » Blog Archive » And the N.Y. Times Wonders Why Circulation Continues to Decline? — August 24, 2007 @ 12:46 am

  72. The fact is average Americans are hurting. There is no doubt that the average person is not doing great under the current government and whose fault that is debatable.

    The underlying article can be argued about in terms of a couple hundred dollars per year but the FACT is costs are rising. Health care costs are hurting the average American. Something needs to be done to change it so income is rising by thousands over a 5 year period.

    The people who put idealogy ahead of the facts disgust me on both sides. Any one who claims America is doing great is a liar.

    Comment by RealityCheck — August 24, 2007 @ 12:45 pm

  73. #72, I’m not claiming we’re doing GREAT, but we’re doing a LOT better than the NYT and Old Media would make you think.

    Causes will have to wait for another time.

    Comment by TBlumer — August 24, 2007 @ 1:03 pm

  74. To the many people who have commented here, it has been my practice for almost 40 years to engage virtually all readers who have a question or criticism about my work.

    Now, to the numbers, the questions and the complaints.

    The official IRS numbers are what they are. I report often on these datasets, just as other reporters do on BLS, Census and other datasets. Whatever I find that seems most broadly relevant or significant report, which is my judgment call and about which people can reasonably disagree without resorting to vitriol.

    I used apples-to-apples comparisons.

    The calculations in my piece are correct and anyone who doubts it can check the numbers themselves by going to the Table 1.4 series,,id=134951,00.html

    Why did I choose the year 2000 as the key year for comparison? The answers is in the first sentence of my article (capitals used to provide focus):

    *** Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than AT THE PEAK OF THE LAST ECONOMIC EXPANSION, new government data shows.***

    It is a standard convention to measure from the peak of the last economic cycle. It does not matter who is in the White House, much as many people want to draw some venal conclusion. It is a standard convention.

    I also cited data back to 1945, giving historical context that further explains the reason I choose 2000:

    *** Total income listed on tax returns grew every year after World War II, with a single one-year exception, until 2001, making the five-year period of lower average incomes and four years of lower total incomes a new experience for the majority of Americans born since 1945. ***

    Further, after my 2006 and 2005 articles on the same datasets I heard complaints from readers that I should have taken a multi-year perspective. So I did that this year– and now all of this criticism for doing so.

    That said, as I have written elsewhere, in retrospect I should have given more attention to the 2004 to 2005 increase in adjusted gross income. I felt that the chart took care of that, but I have concluded that they made a good point.

    Bloggers on the left criticized my article for not focusing on the fact that of total income gains from 2000 to 2005 almost half went to the very narrow slice of taxpayers (one in 500) who earn $1 million or more per year.

    Next, Mr. Blumer wrote of an “obvious omission” from my report — the earned income tax credit.

    The earned income tax credit (which grows out of an idea proposed by Milton Friedman and was championed by President Reagan) is not market income, as are wages, dividends, etc.

    The EITC is a tax-refund program that is inherently a redistribution scheme. This non-market income is not included in the data and because it is nonmarket income it doe snot tell us anything about returns to labor and capital.

    Mr. Blumer’s critique relies on statements that do not stand up under examination. He wrote:

    *** Total EITCs claimed increased from $19.5 billion in 2000 to $42.4 billion in 2005, largely because of the credit’s expansion in the Bush tax legislation of 2001 and 2003. Spread over the annual average of roughly 132 million tax returns filed during that period, the $22.9 billion increase in the EITC ($42.4 bil minus $19.5 bil) amounts to over $170 per return.***

    First, the EITC in 2000 was $37.8 billion in 2005 dollars ($33.4 in nominal dollars) and grew to $43.1 billion in 2005, an increase of $5.3 billion or $39 per taxpayer, less than a fourth of the unsourced numbers Mr. Blumer cited.

    My data comes from Historical Table 1 at:,,id=117514,00.html

    Almost identical numbers are in the OMB public database.

    Second Mr. Blumer – who is a CPA — wrote that “total EITCs claimed increased . . . largely because of the credit’s expansion in the Bush tax legislation of 2001 and 2003.”

    President Bush did not propose an increase in the EITC, as shown in the Blue Book, the official report of the President’s tax proposals, issued in April 2001. However, there is at Page 3 a discussion of a minor reduction in the earned income tax credit affecting anyone who claims it and who is subject to the alternative minimum tax (few if any taxpayers).

    The document is at:

    And there is no revenue estimate for this earned income tax credit expansion that Mr. Blumer asserts. The Joint Committee’s official revenue estimates for 2001 and 2003 are at


    However, these documents do refer to a speeding up and expansion of a different tax break, the child credit, which President Bush did champion in both 2001 and 2003.

    We all make mistakes. I correct quickly and fully every mistake of mine that is brought to my attention.

    I hope Mr. Blumer will correct the record and, given the mercurial nature of the blogosphere, also draw his errors to the attention of those who have relied on what he wrote.

    Poster #5’s question is a good one – “does the date (sic) permit presentation of median results.”

    It does not. You can guessstimate pretty well, but the data is rank ordered in batches by income groups that grow in dollars size as income grows. A good source of breakdowns by income groups, by the way, are the historical tables that the Tax Foundation posts at its website, It is a group that favors lowering tax burdens.

    Averages can indeed be misleading, which is why I prepared so many spreads sheets to look at the numbers from different perspectives, in different income groups, etc.

    Going to the question raised by DaveP, #42, if you had read my article you would know the answer to your question.
    On the broader point, while fixed thresholds have different values due to inflation, you can analyze the steps in the income ladder and in consolidated groups to see what is taking place as a test. In addition, the IRS publishes tables that adjust for inflation, but they have not yet done them for 2005.

    Poster #20, an actuary, attributes to me something I did not write and asserts I did not explain a term when I did.

    My article specifies average, which is the mean. If I had reported the median I would have written median. (That word, median, appeared in the The Times on average 1.8 times per day in the past two years, FYI.)

    Bgates raises an interesting question about returns using ITINs. I will ask the Statistics of Income division about this, but I see nothing their latest report, 165 pages long, that alerts people to a problem with the data because of this.

    Poster 23 evidently also did not read what I actually wrote because he writes of my “Not mentioning 9/11 and the dot-com bubble burst” when in fact I wrote two relevant paragraphs, one near the top:

    ***The White House said the fact that average incomes were smaller five years after the Internet bubble burst “should not surprise anyone.”****

    ***Tony Fratto, a White House spokesman, attributed the drop in average incomes to “the significant wrenching hits that our economy took in 2001 and 2002, so no one should be surprised that what a bubble economy created in the late 1990s and 2000, where economic data were skewed, would take some time to recover.”****

    Worrierking asks about health care costs. They are not included in the data I reported on. However, I did note in my article:

    “Many Americans are also paying a larger share of their health care costs and have had their retirement benefits reduced, adding to their out-of-pocket costs.”

    Ironman asks about people whose business are flow-through entities. That income is included in the data.

    The Ace, #28, seems not to recognize that all institutions have people in their midst who turn out to be dishonest. The FBI, for example, had agents who were on the Soviet payroll for years and years and despite signs that their income and lifestyle was inconsistent with their jobs, they were minimally challenged and thus kept on spying. Banks, hospitals, even churches find crooks and corrupters among their staffs.

    The issue is what do you do when you discover such people in your midst. We fired young Mr. Blair as soon as his lies were uncovered, wrote a 14,000 word report played at the top of the front page on a Sunday, adopted a whole new set of ethics codes.

    So would you dismiss the whole FBI because of Miller, Smith and Hanssen? Would you ban Catholicism because some priests were predators? Get some perspective. Nobody and no institution is perfect.

    (Exposing corrupt journalists is something I have done for years. For example, six broadcast stations were forced off the air in 1981 after I exposed the owner’s use of news blackouts and manipulations for political and economic gain in 1973 to 1976. I have written many articles over the years about misconduct by reporters, publishers and broadcasters, as well as cops, executives, doctors and government officials.)

    Gator, No. 32, says I provide no support for my line about many Americans feeling economic stress. No, I do not, nor would I attribute to anyone a statement that the sun is expected to rise in the East tomorrow. Some things are common knowledge – the Yankees are a baseball team, the law requires you to pay taxes and, as I wrote, “many Americans report feeling economic stress despite overall growth in the economy.” Beyond all the many news reports and surveys documenting this, and mountains of official data on rising debt-to-income, bankruptcy filings and more this point doe snot require attribution.

    Dscott, #33, makes so many illogical statements it is amazing. But one issue is factual. The IRS tables break income down by type and do so in fine detail. It does not just mix all the components of income together, as he or she guesses. I invite Dscott to test his or her ideas in the Table 1.4 and other series whose URL I provided.

    Gekkobear, #36, has a basic logic flaw in his criticism of my work. If the data had shown that – just to make up examples — that all of the income gains had gone to those making under $100,000 and the incomes of everyone above that were down in both total dollars and average dollars then the story would have been about that. If it had shown incomes overall rose 10 percent or that everyone in the $25,000 to $40,000 range had a huge increase, but no one else did then that is what I would have reported.

    My point? The numbers are what the numbers are. My report showed that the number of people with very small incomes fell and that the number with incomes in six and in seven figures grew, that overall average incomes were still below the peak, but total income finally rose above the peak because that is what the data showed.

    And, by the way, reporters do not write headlines, which are supposed to accurately convey the gist or the key point or make an intriguing point about the article. This one was a good summary of what I decided was the most broadly significant fact in the data “2005 Incomes, On Average, Still Below 2000 Peak.”

    The full article is at

    Stajack, #45, did not read my article, he scanned it looking for two terms not relevant to what I wrote about and then, not finding these irrelevancies, declares that I am incompetent or slanted. Pardon me while I take a break to roll on the floor and laugh.

    My article clearly describes the basis of my report as newly released tax data, it cites as its source the IRS in both the text and the chart and it specifies that in 2005 there were 134 million taxpayers, that 11,433 of them made $10 million or more…..

    But to know this article measures not by households but by taxpayers does require actually reading the article.

    BTW, Stajack, if you use your technique to search our Constitution, which is all about freedom and limiting the power of the state to ensure our freedoms, you will not find the word “freedom” in it, either.

    JBennett #49 is quite right that when the economy swoons income falls. But there is no period from 1945 to 2000, as I reported, when total incomes were below the peak for four years as there was 2000 to 2004.

    SensibleMom assumes I did not look at the Table 2.1 data. I check it often and we report on that data.

    But why should I imbue that table with total significance?

    All data sources have strengths and flaws. The overwhelming majority of the IRS data is verified by the payer (wages, dividends, interest, pensions), while none of the survey data cited by SensibleMom carries this verification. That is why we write stories on many different sources of data, which measure things differently and in different ways.

    Again, the IRS data as reported shows exactly the numbers I reported.

    And SensibleMom is wrong about Citizens or Tax Justice. They did not come to me. I do my own computations. This group posted its calculations before I was done with mine so I attributed the calculations they did to them.

    But if this group had brought me the data, all of it, and that is somehow bad then is it bad when Cato and Heritage and the Independent Institute pitch something to me?

    Would you like to give me your politically correct list of those whom you think I should listen to and those I should ignore?

    Journalism is not abot reinforcing what you think is true, it is about checking out the facts and reporting what you find that was not known. That is the fascination in it because things are seldom as they seem and often not as you imagine.

    #61 Ken’s post is also flawed. I did not pay for any executive course at the University of Chicago, as he imagines. I was awarded a highly competitive two-semester fellowship with tuition and a sizeable stipend. I was also the youngest person ever admitted to that fellowship, by four years of age or so.

    And not only did I do not graduate from college, I went to night high school to get my diploma. Eh gads!

    Of course it may also be relevant that I took six years of credits, mostly upper division, and did not graduate because I skipped the lower division general education requirements since I had taught myself. File that under autodidact.

    And it may be relevant to Ken that for eight years I taught at the University of Southern California, where one semester my class was rated in a student publication No. 1 in terms of its value for the tuition.

    I also taught for pay at UCLA extension for a semester and Baruch (three classes) and have lectured at Harvard, Monroe Community College, Yale, Brockport State, Fordham, Geneseo State, Temple, AMU, NYU, the U of Kansas, Reed, Oregon State……. And my last book is used as text at many colleges, as I expect my next will be, also.

    I don’t “claim” things in my bio, I state accurate facts which I can document, including specifying that I do not have any degree and also that I studied economics at the University of Chicago’s graduate school, which you can verify by calling them or reading about me in the alumni magazine.

    I have never asserted that I am economist and in lectures and interviews I explicitly state that I am a reporter, author and lecturer (and at times I have been a smalltime landlord and I am also a businessman, father of eight and fan of romantic comedies).

    You set up a straw man with your “some expert” statement. The only thing on which I hold myself out as an expert is how to report. This may alarm you, but typically at my talks every chair is occupied and so is every space on the floor.

    #63, K T Cat, I am not David Johnston. He covers the FBI.

    #65, NixGuy, this was not a story about how well the Bush administration played the economic cards that it was dealt, it was about what the numbers state. That is a good and important story and it has been examined in many ways by many reporters, including me. But this was just the new hard numbers, which is also a legitimate and important story.

    #68, Joe C, like many others here, cites data that I did not write about. Capital gains are included in the data I did write about. Frankly, using 2001, as suggested, as the base makes zero sense. It is neither a peak nor a low point and the last third of that year’s numbers are complicated by 9/11 and the expansion ended the year before.

    #68, William J, is quite right that the ceiling of the income groups is fixed, which is why I did not use that data in my article, but I did use it as a test.

    If you look at all of the data it is clear that income growth 2000 to 2005 is highly concentrated at the top and that there is a huge block of negative numbers for total income and average income. Next year, whatever the numbers are and assuming I am still walking around, I’ll report whatever they show, too.

    Comment by David Cay Johnston — August 25, 2007 @ 2:59 am

  75. P.S. On “freedom,” you will find it, once, in the Bill of Rights, but not the Constitution as adopted.

    Comment by David Cay Johnston — August 25, 2007 @ 3:22 am

  76. #74 and #75: Thank you for following up David. One of the more misleading memes in recent years is the so-called growth in income inequality in the U.S. While this is more properly measured by the Gini coefficient, many media outlets focus upon the IRS’ tax data, frequently missing the fact that many individuals do pass through their business’ income, as you confirm.

    The difference, of course, is that individuals only carry through their business’ income taxes this way when there is an advantage to do so – otherwise they would file their business’ income taxes separately. Simply counting $1 million dollar plus income tax returns without noting the presence of business income being passed through can present a misleading picture of how personal income is actually distributed among individuals.

    Referring to #27 above, you noted a 64,032 increase in the number of $1 million+ individual income tax returns from 2000 to 2005 and suggested that this represents a growing concentration of income at the top of the income spectrum.

    The Center for Tax Policy data shows that from 2000 to 2005, an additional 71,706 $1 million+ income tax returns were filed for those passing through their business’ income on their personal returns. This actually suggests that the number of individuals with actual personal incomes greater than or equal to $1 million has declined from 2000 to 2005.

    If it helps put things in better context, consider than in 2000, a lot of people with $1 million+ returns saw a very good portion of their income come from the stock market. The popping of both the Internet and stock market bubbles sharply reduced the ranks of the millionaires’ club.

    The Gini coefficient confirms that there has been very little in the way of a meaningful increase in income inequality for the U.S. in the years from 2000 to 2005 (0.462 to 0.469, an increase of 0.007), particularly compared to when it grew at a much faster rate from 1990 to 2000 (0.428 to 0.462, an increase of 0.034).

    There simply isn’t a significantly growing concentration of income at the top end of the income spectrum in the U.S., certainly in the years from 2000 through 2005.

    Comment by Ironman — August 25, 2007 @ 12:04 pm

  77. OH puh-leez, DCJ. If only you would have taken the same care and detail in the original article as in your 2 explanatory comments, you wouldn’t of had to be shown up by a bunch of amateurs.

    Your convention of using the last peak would have been valid if the rest of the article wasn’t about the tired and debunked talking points about Bush’s economic policy. By not providing the proper context that we were able to provide with a couple of clicks and keystrokes, the convention you extoll is an obfuscation for an thinly-veiled agenda.

    I understand that you don’t write the headlines, but what are the odds that a more neutral headline like: “Wages rebound to peak levels” would have survived. Or a lede such as:

    “Despite a recession, the worst terrorist attack and natural disaster in history, a war, and accelerated government spending, the moderate pro-growth tax-cuts had brought wages back to their pre-bubble peak in only 3 years. With continued strong growth, low unemployment, and inflation in check, why do people still have a seemingly irrational concern about the economy?”

    may have provided the context for a real “analysis”. Then your “convention” would have been meaningful.

    Also, I just provided the definition of what is included in family (household) income to help round out the completeness your “story” lacked. We’re not the dupes to whom the NYT markets its “journalism”.

    Comment by Joe C. — August 25, 2007 @ 6:05 pm

  78. Joe C., You spend half your post talking about headlines yet again, we have already he did not write the headline?

    The fact is just about every point made in the comments here have well and truely been debunked by David Cay Johnston. I for one think there are numerous people here with egg on their face.

    Comment by SallyJ — August 28, 2007 @ 9:54 am

  79. #78 Sally, maybe a healthy number of the comments, but the main post.

    See the August 25 corrections above, and consider them in the context of these whoppers:

    Comment by TBlumer — August 28, 2007 @ 11:57 am

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