July 15, 2011

David Cay Johnston’s Utterly Humiliating, Totally Incorrect Anti-Murdoch Adventure

DavidCayJohnston0808I’ve been trying to resist taking satisfaction in David Cay Johnston’s utter humiliation in his first assignment at Reuters. Y’know, there but for the grace of God, etc. I do wish him well, though I question whether the feeling is mutual. More important, I hope he recognizes the need to go into journalistic rehab. My guess is that he doesn’t.

The former New York Times journalist/reporter (whatever, David) and yours truly had an extended online dustup four years ago when I demonstrated Johnston’s in my view sloppy, foundation-limited, and biased reporting at the Old Gray Lady (graphic of first few paragraphs as originally presented; current link) in an item about what had happened to Americans’ incomes between 2000 and 2005 (errors summarized here in “Top Six Errors Committed by David Cay Johnston and/or the New York Times in Their Income Growth Report”; I noted a seventh later).

Let’s go through the development and destruction of Johnston’s maiden effort at Reuters.

Johnston believed that he, unique among all human beings on earth, had found that Rupert Murdoch’s News Corp., while earning billions, was not only not paying income taxes, but somehow “making money off the tax system.” As excerpted from the TaxProf blog (Reuters has pulled Johnston’s original story; the headline is apparently the one Reuters used), Johnston’s anti-Murdoch, anti-Fox animus could not be more obvious:

It Pays to be Murdoch. Just Ask US Gov’t

Rupert Murdoch may not garner as much attention for his financial savvy as he does for his journalistic escapades, which last week led to the shuttering of Britain’s oldest tabloid. But that doesn’t make his money management any less impressive.

Indeed, when it comes to taxes, instead of rendering unto Caesar, Murdoch has Caesar rendering unto him.


Fox News, the editorial pages of his Wall Street Journal and other Murdoch outlets often rail against taxes. Their attacks on government benefits for the elderly, the sick, the jobless and children focus attention on the uses of tax dollars and away from his aggressive efforts to enjoy the benefits of civilization without paying for them.

Many other companies may follow similar practices but most of corporate America doesn’t own one of the country’s most powerful newspaper editorial pages.

How does Murdoch make money off the tax system? There are three basic elements, disclosure statements show.

One is the aggressive use of intra-company transactions that globally allocate costs to locations that impose taxes — and profits to areas where profits can be earned tax-free.

… Buying companies with tax losses is a second way Murdoch can pocket, rather than pay, taxes.

Third, Murdoch’s tax lawyers are expert at maximizing the benefits of deferrals. Incurring a tax today, but paying it by-and-by can be profitable.

Imagine how well Jesus might have done if he had put a corporate jet at Caesar’s disposal. Or if he had a tabloid like the News of the World to put Caesar in fear of him.

Keep in mind that this is the same David Cay Johnston who, in 2007, in comments at BizzyBlog (here and here) and in e-mail exchanges, in essence insisted that he plays it straight and lets the data lead him to his conclusions.

This is the same David Cay Johnston who, after he took a buyout from the Times in 2008, continued to in essence insist that he plays it straight and lets the data lead him to his conclusions even after he agreed in August of that year to appear with an “all star and diverse line up of progressives, labor, and working class speakers” at the “BuzzFlash Sep. 27 Philly Conference.” Also addressing the group: Richard Trumka, then second in command at the AFL-CIO, now its head. In January of this year, as reported at the Blaze, Trumka asserted that, in the Blaze’s words, his “main goal is using unions to fundamentally change American into his progressive vision — not (to) negotiate member salaries.”

Now, the same David Cay Johnston who likes to think he’s an “investigative reporter” (or “investigative journalist”; whatever, David), when confronted with what he should have been seen as likely nonsensical information, has admitted that he didn’t actually contact someone at News Corp. to make sure his revelations, unique among all human beings on earth, were correct (in his mea culpa, he writes that he tried but got no response) before releasing his report.

Finally, this is the same David Cay Johnston who has been forced to admit (and to his partial credit, has done so forthrightly) that he was completely and utterly wrong. News Corp. didn’t “make money on taxes”; rather it paid in billions in U.S taxes from 2007-2010. First there was an Atlantic item by Adam Martin, followed by a lengthy apology and explanation by Johnston which appeared later at Reuters after the wire service’s official withdrawal of the story:

(From The Atlantic’s write-up)

… Because of a change News Corp. made in its annual reports during the seven year period Johnston reported on, his calculations on Rupert Murdoch’s tax bills showed a negative number where there should have been a positive one. “This is particularly painful,” Johnston told The Atlantic Wire via telephone. “I have been at this for 45 years. I have never, until now, had to do anything like this. I am assiduous about correcting the record.”

… “I probably read that disclosure and just didn’t realize what it was reporting,” Johnston said. “This is very finely detailed stuff. I missed that they switched the number. It isn’t common practice, and I shouldn’t have missed it. At the end of the day, the fact is, I shouldn’t have missed it.”

(from Johnston’s retraction and apology column)

Rupert Murdoch’s News Corp did not get a $4.8 billion tax refund for the past four years, as I reported. Instead, it paid that much in cash for corporate income taxes for the years 2007 through 2010 while earning pre-tax profits of $10.4 billion.

For the first time in my 45-year-old career I am writing a skinback. That is what journalists call a retraction of the premise of a piece, as in peeling back your skin and feeling the pain. I will do all I can to make sure everyone who has read or heard secondary reports based on my column also learns the facts and would appreciate the help of readers in that cause.

No excuses.

… The other facts I reported remain:

* Among the 100 largest companies in the United States, News Corp has the third largest number of subsidiaries in tax havens, a Government Accountability Office study found in 2009.

* On an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, its disclosures show.

* Murdoch has bought companies with tax losses and fought to be able to use them, which reduces his company’s costs.

* News Corp lawyers and accountants are experts at making use of tax deferrals, though the company’s net tax assets have shrunken from $5.7 billion in 2007 to $3.3 billion last year as the benefits were either used or expired.

In other words, Johnston is admitting that News Corp’s tax peeps are aggressively doing their jobs within the laws as they exist, from all appearances without violating them.

In other words, there was no story here — only a “reporter” who thought he could make a big initial splash by piling on a company tainted by a hacking scandal at its (now former) News of the World publication. Face it, David: You wanted to believe, and let that desire get in the way of your supposed pursuit of the truth. I maintain that it’s far from the first time you’ve let this happen — just the most obvious.

The big story here, besides the obvious journalistic failure (my opinion, of course), is that David Cay Johnston can no longer pretend that he plays it straight and lets the data lead him to his conclusions. Those days are over, pal.

Oh, I almost forgot — According to the Atlantic, part of Johnston’s apology tour apparently includes an appearance on NPR and the issuance of a statement on The Ed Show. Really venturing into the lion’s den, aren’t you, David?

I seem to recall that a reporter named Terri Cullen wrote an item for Reuters in February 2010 about the impact of tax laws which the White House jawboned the wire service into retracting. A few days later, Cullen “resigned,” which for those who don’t know it is corporate-speak for “told to leave to avoid getting officially fired.”

I’m not a big fan of people having to leave their jobs because of a mistake, but if Cullen “resigned,” shouldn’t David Cay Johnston? Just askin’.

Cross-posted at NewsBusters.org.

Young Girls’ Lemonade Stand Shut Down in Ga.; Can Anyone Take Money For or Even Borrow Food Without Risking Arrest?

LemonadeBigMidwayGeorgia0711Can anyone in Midway, Georgia take money for or even borrow food without risking arrest?

If you’re in Midway, you’d better not let your neighbors reimburse you for any homemade food you cook or grow, or you might get busted for not having “a business license, peddler’s permit, and food permit to set up shop, even on residential property.” Heck, you may have to worry about even giving your output away.

That’s where you have to go with the “logic” of a story from Maura Kennedy at TV station WJCL (HT AP; bolds are mine; video is at link, where, in an unusual choice of priorities, this was apparently the lead story):

Midway Police Shut Down Girls’ Lemonade Stand

Midway police bust none other than a lemonade stand, because the three girls running it didn’t have a business license. The three girls thought if they sold enough lemonade, they could make money to go to the water park Splash in the Boro. Well they thought wrong. Midway police say, they’re breaking city law and have to go.

“It’s kind of crazy that we couldn’t sell lemonade. It was fun, but we had to listen to the cops and shut it down,” 14-year-old Casity Dixon said.

The girls had only been opened for one day before Midway’s police chief and another officer cruised by and saw the stand.

“They told us to shut it down,” 10-year-old Skylar Roberts said.

“We had told them, we understand you guys are young, but still, you’re breaking the law, and we can’t let you do it anymore. The law is the law, and we have to be consistent with how we enforce the laws,” Midway Police Chief Kelly (actually, Kelli — Ed.) Morningstar said.

By a city ordinance, the girls must have a business license, peddler’s permit, and food permit to set up shop, even on residential property. The permits cost $50 a day and a total of $180 per year. City officials said it’s their job to keep everyone safe and healthy, and there can be no exceptions to the rules.

“We were not aware of how the lemonade was made, who made the lemonade, of what the lemonade was made with, so we acted accordingly by city ordinance,” Chief Morningstar said.

… So the law wins, and what started out as three girls’ dream of a fun summer business is now just a piece of plywood.

Since the lemonade stand was shut down, the girls have been doing extra chores and yard work to make money for the water park.


IBD: Green, Schmeen

Filed under: Economy,Environment,Taxes & Government — Tom @ 8:26 am

In a Thursday editorial:

Even after fudging numbers and ignoring the huge subsidies, a liberal think tank reports that growth in the alternative-energy sector lags the rest of the economy.

… Brookings Institution with a report touting the fact that nearly 2.7 million people brought home paychecks in 2010 working in the “clean economy.” That’s a 3.4% increase in “green jobs” since 2003, and it sounds terrific until you realize the economy as a whole grew at a 4.2% rate over the same period.

As the folks at HotAir.com duly note, Brookings got to its conclusions by including, for example, all mass transit workers regardless of the actual energy source. They also lump in people such as organic farmers and nuclear energy workers, though the greenies have never touted nuclear energy as “clean” or nuclear jobs as “green.”

… A 2008 report by the Energy Department’s Energy Information Administration reported that in 2007, while the average subsidy per megawatt hour for all energy sources was $1.65, the subsidy for wind and solar was about $24 per megawatt hour. On the nonelectricity generating side, ethanol received a subsidy of $5.72 per million British thermal unit.

… energy policy … is based not on the free market and supply and demand, but on ideology and crony capitalism. Energy prices then “necessarily skyrocket,” causing job loss and consumer pain as money that might be spent to buy stuff goes just to keep the lights on.

As we have noted, the focus on green jobs comes at the expense of other jobs. An oil industry study says that 190,000 jobs could be created by 2013 if offshore development permits in the Gulf of Mexico were returned. Just finishing the Keystone XL pipeline to bring Canadian tar sands oil to Houston-area refineries could net hundreds of thousands of jobs.

Alternative energy cannot survive without mandates and subsidies, and cannot compete in the free market with proven and plentiful sources like petroleum.

The Brookings report may have been meant to tout the green economy, but it only serves to underscore its failure and the opportunity costs it imposes on the American people and economy.

If President Obama and his administration really cared about an economic recovery, they would abandon this green madness. The administration from the President on down is dominated by true believers who think they can eventually will a genuine recovery on their authoritarian terms. They can’t.

Going further, it is clear that, like FDR in the 1930s, they won’t accept an economic recovery which isn’t achieved on their statist terms. Advancing their statism more important than the well-being of the American people. FDR never achieved a genuine economic recovery until World War II came along. The overwhelming odds are that this bunch won’t ever take us to a genuine recovery.

Positivity: New poll shows young people believe World Youth Day changes lives

Filed under: Positivity — Tom @ 8:06 am

From Madrid, Spain:

Jul 14, 2011 / 06:15 pm

A recent study in Spain showed that nine out of every ten young people who participate in a World Youth Day believe the event “is an experience that changes lives.”

The results of the poll were published July 11 by WYD 2011 organizers and features responses from 1,800 young people under the age of 30 from all five continents who are following the event.

Analysis showed that 92 percent of respondents said the main reason for attending a WYD is to spread the message of Jesus Christ. Ninety-three percent of young people said they’re attending to have a new experience with 90 percent saying their attendance will express their commitment to the Church. Eighty-eight percent said it was to be with other people who think like them.

The poll also showed that one out of every four young people interviewed has already attended a WYD. Of these, 61 percent attended WYD in Cologne, Germany, in 2005. Forty-four percent attended WYD in Sydney in 2008. Eighty percent of those who attended both events said the experience was very positive. …

Go here for the rest of the story.