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The deceptive advocacy of Stephen MooreBy Brendan Nyhan and Ben Fritz Among the many opinion journalists writing about economics, Stephen Moore stands out - and not for good reasons. A prominent conservative anti-tax activist in Washington, Moore is president of the Club for Growth, a senior fellow at the Cato Institute and a columnist and contributing editor to National Review. As such, he appears frequently on TV and in print arguing on behalf of tax cuts and against increased government spending. However, his career has been marked by a pattern of errors, deception and falsehood, many of which have been exposed by print and online commentators. As The New Republic's Jon Chait demonstrated in a 1997 article, Moore has been all too willing to "torture the data" for some time now. While serving as the then-director of fiscal policy studies at Cato, Moore wrote an op-ed in the Wall Street Journal arguing that lower federal taxes produce greater revenues, contrary to Clinton officials who touted growing revenues in the wake of a1993 increase in the top federal tax rate. In his zeal to make this case, however, Moore engaged in a number of statistical tricks. Moore compared tax revenues from 1982-1989 under Reagan to the period of 1990-1997 when the top tax rate "rose from 28% to 31% after the 1990 budget deal and then to 42% in 1993 as part of President Clinton's first budget" (a curious statistic, since Clinton actually increased the top rate to 39.6%). But as Chait showed, these periods aren't comparable. Moore omits 1981, the first year of a recession under Reagan and the year his tax cuts were passed (in August). According to the National Bureau of Economic Research, the economy began to contract in July 1981 and stayed in recession until November 1982. By starting his analysis in 1982, in the midst of recession, Moore sets a deceptively low baseline against which he measures the success of the Reagan tax cut. By contrast, he begins his analysis of the Bush years in 1990, even though the tax increase was not passed as part of a deficit reduction agreement until November of that year. This has the fortunate effect of beginning the comparable period just before recession hit in July 1990, thus comparing future tax revenues to a high point in the economy. In addition, Moore purports to be discussing the relationship between income tax rates and receipts, but then compares total tax revenues between the two periods, not just income tax revenues. This is especially misleading, Chait points out, because it includes all the additional revenue from a payroll tax increase under Reagan. When Moore finally gets around to comparing income tax collections under the two presidents, he claims the story is "not much different," but then writes: From 1982 to 1989 income tax receipts climbed from $298 billion to $446 billion--a 50% increase. From 1990 to 1997 the income taxes rose from $467 to an estimated $710 billion--a 52% increase. In these two sentences, Moore concedes that income tax receipts increased more during the 1990 to 1997 period despite his stacking of the deck - and then goes on as if nothing had happened! And, as Chait argues in yet another devastating point, Moore switches from inflation-adjusted to non-inflation-adjusted numbers here (without informing his readers) to make things close. When you strip out higher inflation under Reagan, Chait writes, "income tax revenues from 1982 to 1989 rose just 16.5 percent, while from 1990 to 1997 they rose 24 percent-- half again faster." In addition, UC-Berkeley economist Brad DeLong, a former Clinton administration official and one of the most prominent critics of Moore and his National Review colleagues Lawrence Kudlow and Donaald Luskin, has exposed similar tricks in a book Moore co-authored with Julian Simon titled It's Getting Better All the Time: 100 Greatest Trends of the Last Hundred Years. DeLong notes two highly misleading passages from a cursory review of the book: Page 59... in "the broadest measure of a nation's overall economic performance" they headline total GDP rather than GDP per capita. GDP per capita has multiplied more than sixfold over the century, but GDP has grown by more--more than twentyfold. But is total GDP a good measure of overall economic performance? No. A country where population quadrupled and living standards halved would see its total GDP double.... Page 65... oh this is an absolute beauty: "The Millionaire Next Door... less than 5000 Americans, or less than 0.1 percent of households, were millionaires in 1900.... Today there are almost 8 million millionaire households in the United States [or 7.7% of households." The problem is that a dollar back in 1900 had about 20 times the purchasing power of a dollar today. If you want to answer the question "How many people today are as wealthy as a 1900-millionaire?" you need to look at the people today with wealth more than $20 million--about 0.4% of households. Now it's not that Moore is confused about the statistics--it's just that he would rather give you the (phony) number that an American today is 77 times more likely than an American in 1900 to be a "millionaire" than the (real) number that an American today is 5 times more likely to have the purchasing power of a 1900-era-millionaire than an American in 1900. Then last year, while appearing on the August 1 edition of CNN's "Crossfire," Moore misstated the facts of the Boston Tea Party, asking, "Do you think Thomas Jefferson and Thomas Paine were being unpatriotic when they dumped the tea into Boston Harbor because they didn't want to pay excessive taxes?" As The American Prospect's weblog Tapped showed, Paine had not even arrived in America at the time of the Boston Tea Party, Jefferson did not participate and the Tea Act did not impose new taxes. Moore has come under criticism recently for a glaring mathematical error in one of his columns and a deceptive passage in another, among other things. Kevin Drum, a blogger known as Cal Pundit, showed that Moore made an embarrassing mathematical error in a May 13, 2003 column: The company must pay a 35 percent tax on the profits that it earns and then if that after-tax money is paid to the shareholders in a dividend, they get smacked with a tax as high as 38 percent. That's a 73 percent tax on dividends. Of course, cumulative taxes like this are not calculated by addition. A 38% tax added on to a 35% tax amounts to a 60% tax on the original profits. The next day, the column was corrected to say that "This works out to a 60 percent tax." In addition, in a February 28, 2003 column, Moore suggested three people as alternatives to Gregory Mankiw, who had just been nominated by President Bush to be chairman of his Council of Economic Advisors: "Brian Wesbury of Chicago, Richard Vedder of Ohio University, and David Malpass of Bear Stearns." But as blogger John Quiggin wrote, this phrasing potentially misleads readers by implying Brian Wesbury is an economist at the University of Chicago, the home of a leading economics department. Wesbury is actually chief economist of an investment bank in Chicago. If Moore did not intend to mislead writers, he could easily have stated this rather than a generic and obviously misleading reference to the city in which Wesbury works. More recently, Moore claims in an article in the September 15 Weekly Standard that "By pledging to repeal the entire Bush tax cut--a move that would raise the average tax burden on middle income families with three kids by about $2,500 a year, [Democratic presidential candidate Howard] Dean is attempting to prove that voters will swallow higher taxes to get more government largesse." But Brookings Institution data shows that for most voters, taxes would not increase by nearly as much as Moore indicates. In fact, 81 percent of households would save $1,000 or less from the Bush tax cuts after passage of the most recent law. And in a recent column about efforts (which have since failed) by Alabama Governor Bob Riley to convince voters to approve a tax increase, Moore wrote, "Today, the average household pays roughly 38 cents of every dollar earned in taxes at all levels of government. That is, we are already paying almost 4 times what the Bible declares is necessary to be charitable individuals." However, the conservative Tax Foundation reported last spring that in 2003, taxes at all levels took out 30 percent of every dollar in the economy, not 38 percent. In addition, by using a misleading average figure (a statistical mean) instead of a median, Moore exaggerates the taxes paid by the typical household (due to the higher taxes paid by families at the upper end of the income distribution). Moore also continues to use misleading statistics to defend Reagan's economic record. In a July 24 National Review Online column, he pulled a version of the trick in his 1997 column, writing that "the economy responded" to Reagan's tax cuts "with 4 percent annualized growth and 15 million new jobs." However, as the liberal Center on Budget and Policy Priorities' Richard Kogan wrote back in 1996, these figures depend on Moore once again measuring the growth of the US economy from 1982-1989 - an economic trough to an economic peak. When measured from economic peak to economic peak, which strips out the effects of the business cycle, the non-partisan Congressional Budget Office found that the underlying rate of economic growth in the 1980s was 2.7 percent, which was slower than the 1970s. And finally, Moore exaggerates the rate of growth of federal discretionary spending by denouncing the aggregate growth of the federal budget - from $1.8 trillion when Bush entered office to $2.2 trillion, as he wrote in the Sept. 15 edition of National Review. In the July 24 column, he wrote: Rather than tax cuts, [The Nation's William] Greider favors a huge explosion of new government spending on "public investments" to get Americans back to work. But there are three problems with the Greider quick-fix: First, Bush and the Democrats have already tried this. The federal budget has gone through the roof in recent years, with spending up nearly $400 billion in the last two years. Actually, though spending has increased significantly in the last two years, these aggregate figures include both inflation (though it is currently very low by historical standards) and automatic increases in spending on federal entitlement programs such as Social Security and Medicare that take place without legislative actions in Congress (due to an aging population, increasing health care costs, etc.). Accurate numbers would measure inflation-adjusted increases in discretionary spending - the "public investments" to which Greider is referring. Moore could offer honest advocacy of the tax cuts in which he so strongly believes. Instead, his shoddy, misleading work has made him one of the most deceptive economic pundits in print. Correction 9/23 1:24 AM EST: The column above originally stated that the correction of Moore's error in calculating the effective tax rate on dividends was not disclosed. While no disclosure appears in the column in question, his next column did include such a disclosure, and National Review Online editor Kathryn Jean Lopez also posted about it on the NRO blog The Corner. [Email this to a friend] [Subscribe to our email list] Related links: Home | Columns | Posts | Topics | Email list | About | Search
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