Small business, big spin (8/25)

By Bryan Keefer

[Update: All the President's Spin has reached the main New York Times bestseller list for the Sept. 5 edition at #14. Thanks!]

Recently, the Bush campaign has grown fond of suggesting that Kerry's tax proposals would raise taxes on small businesses. On August 18, for example, alluding to Sen. Kerry's proposal to repeal tax cuts for filers with incomes above $200,000, Bush cited a member of the audience, saying "He is a sub-chapter S corporation. You know what that means? He pays taxes at the individual income tax rate. So when you hear somebody saying, tax the rich, I want you thinking about small business owners."

The only problem: While Bush might want you to think of small business owners as the target of Kerry's plans, very few of the country's small business owners would actually be affected by the Democrat's proposed tax increases.

According to an analysis by the Urban-Brookings Tax Policy Center, less than 3 percent of filers with positive business income actually fall into the top two tax brackets (that is, they have income of $175,000 or more). And while many of those who would be affected by the proposed increases do have business income, 97 percent of small businesses overall would not be affected by Kerry's proposal.

Yet, as Liz Cox Barrett pointed out on (where I work), the press has frequently let the misleading talking point slide by, or reported the claim as a "he said/she said" claim without clarifying the issue for readers. Victims include a number of regional papers such as the Milwaukee Journal Sentinel, as well as the Cleveland Plain Dealer and the Albuquerque Journal - all papers covering local stump speeches by the President and his surrogates.

This tactic is the mirror image of one the Bush team used to sell its tax cut in 2001. (For more, see chapter four of our new book). During his sales pitch, Bush repeatedly suggested that many or most small businesses would benefit from reducing the top marginal income tax rate - when in fact, according to the Tax Policy Center, only 1.4 percent of small businesses with positive incomes paid at that rate. The President has now come full circle, going from selling his own tax plan with deceptive statistics to denigrating his opponents' with the same misleading spin.

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8/25/2004 03:57:45 PM EST |

CBO report spun by both sides (8/24)

By Ben Fritz

A recent report by the Congressional Budget Office on the distributional effects of President Bush's tax cuts has been misrepresented by both the Bush and Kerry campaigns.

As numerous articles noted, the report (1.7MB PDF), which was requested by congressional Democrats, found that the share of total federal taxes paid by the wealthiest quintile of Americans has decreased since 2001, while it has increased for the middle 60%. Effective total federal tax rates have declined more for the top quintile than other groups, although all five quintiles saw reductions in the federal taxes. By comparison, when counting only federal income taxes, the wealthiest 20% pay a greater share of the total burden now than they would have without the tax cuts passed by President Bush.

Democrats, led by presidential nominee Senator John Kerry, seized on the report's finding that the nation's tax burden has shifted toward the middle class under President Bush. Republicans responded by claiming that the nation's income tax system has actually become more progressive under President Bush.

The Kerry campaign has been dishonest, however, in some of its criticisms. At an August 13 campaign event in Springfield, Oregon, Kerry said, "They came out with a study that documents what I and others have been saying over these past months. That over the last four years, the burden of taxes has shifted from the wealthy to the middle class. The middle class is paying more taxes." But as Josh Benson noted in The New Republic's &C blog, the CBO report on federal taxes to which Kerry referred showed that the middle class is paying less in federal taxes this year than they were in 2001 or they would have this year without the Bush tax cuts.

The candidate's advisors have offered a number of more carefully phrased insinuations along the same lines. For instance, a spokesman claimed in a statement responding to the report that "[b]y putting more of the tax burden on them... the Bush policies are exacerbating the squeeze that working families have been feeling for the last four years." Kerry advisor Michael Forbes also said on MSNBC on August 17th that his candidate "is prepared to give cuts in taxes to the middle class," which he suggested contrasted with President Bush, who, he claimed, "has come up with a program, has shifted a greater burden of taxes onto the middle class. Last week, the Congressional Budget Office came out with a report that verified that the Bush tax benefit plan for the wealthy actually has imposed a greater burden on the middle class." While the relative federal tax burden of the middle class has increased, the phrase "squeeze" and the comparison to Kerry's support for middle class tax cuts inaccurately imply that Bush has raised taxes for the middle class.

Republicans quickly responded. In a conference call set up by Bush's campaign on the day the CBO report was released, Rep. Bill Thomas (R-CA), said, "So it's kind of ironic that Kerry said that the tax breaks have forced the middle class to pay a bigger share of America's tax burden. No. The system is more progressive -- progressive meaning the more you make the more you pay as a percentage of the federal income tax liability, which is I think the fundamental question that you ought to ask."

Talk radio host Rush Limbaugh also claimed to counter Democratic criticisms of Bush's tax record based on the study on his August 13 broadcast. "While many characterize the CBO report as evidence that the tax cuts shifted the burden of taxation to the middle class, the CBO data show precisely the opposite effect," Limbaugh asserted. "The tax cuts actually made the tax system more progressive. The highest 20% of earners now pay a larger share of federal income taxes than they would have without the tax cuts."

But neither Thomas nor Limbaugh actually rebutted Kerry's claim that the CBO report showed a shift in the distribution of the overall federal tax burden. Instead, they subtly changed the terms of the debate from share of the total federal tax burden to share of the federal income tax burden, which excludes federal payroll, estate, and other taxes. By this measure, the wealthiest 20% do pay more of the burden than now than they would have without the Bush tax cuts. But that's not what Kerry was talking about, as evidenced in his campaign's press release on the topic. Thomas and Limbaugh weren't responding to Kerry - they were changing the topic.

In addition, they're misusing the word "progressive." Both men claim to be providing evidence that the Bush tax cuts "made the tax system more progressive," as Limbaugh stated. A statement by Republican congressional members quoted in a UPI wire story did the same thing, saying, "[W]ealthy taxpayers generally are paying a greater percentage of all federal income taxes than they were before the 2001, 2002 and 2003 tax cuts. This change makes the income tax system more progressive."

But while the point about share of the federal income tax burden is accurate, that's not what "progressive" means. Merriam-Webster Online, for instance, defines progressive as "increasing in rate as the base increases." But President Bush's tax cuts have had the opposite effect. The highest quintile had a greater reduction in their effective federal income tax rate and total federal tax rate this year compared to their rate without the Bush tax cuts than any other quintile, according to the CBO report. The Bush tax cuts have made the tax system less progressive by the definition of the term.

Rather than stick to facts in the CBO report that support their case, neither side can seem to avoid overstating and misinterpreting the data.

Update (8/26): Part of this post was used in our Philadelphia Inquirer column today.

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8/24/2004 03:42:21 PM EST |

The myth of Kerry knowingly volunteering for dangerous duty lives on (8/24)

By Brendan Nyhan

The myth that Democratic presidential nominee John Kerry volunteered for swift boat duty in Vietnam knowing it was particularly dangerous continues to spread despite clear evidence to the contrary.

As we have written before, Kerry actually volunteered at a time when swift boats were engaged in relatively safe coastal patrols. They were redeployed to the rivers of Vietnam -- a far more risky mission -- after Kerry's decision. Kerry himself has admitted as much, writing in 1986 that "When I signed up for the swift boats, they had very little to do with the war. They were engaged in coastal patrolling and that's what I thought I was going to be doing."

Yet Kerry's campaign website, vice presidential nominee John Edwards and former president Bill Clinton have all suggested Kerry knew the risks. As Edwards put it, "He volunteered to go to Vietnam and to captain a swift boat, one of the most dangerous duties you could have."

Kerry's campaign continues to encourage this misperception. Spokesman Tad Devine said on CNN's "Paula Zahn Now" on August 18 that Kerry "volunteered to serve on one of the most dangerous assignments in Vietnam, on a swift boat." And on August 20 on Fox News Channel's "The Big Story with John Gibson," he told guest host Andrew Napolitano virtually the same thing:

DEVINE: Well, first, I would like to say that John Kerry served two tours of duty in Vietnam. After the first tour of duty, which was a year that he served and was awarded a ribbon for being in the theater, he served in a second tour of duty. He volunteered for it.
NAPOLITANO: That's the controversial one.
DEVINE: One of the, you know, most -- the most dangerous assignments of anyone in Vietnam, a casualty rate of more than 50 percent.

Reporter and commentators have picked up the talking point. Knight Ridder's Joseph L. Galloway wrote recently that "The attacks by the group Swift Boat Veterans for Truth have called into account Kerry's conduct during the war, when he volunteered for one of the most dangerous duties -- the so-called Brown Water Navy." Michael Tomasky, executive editor of The American Prospect, embellished Kerry's decision as well, writing in an online article that "John Kerry volunteered for the Navy, volunteered to go to Vietnam, and then, when he was sitting around Cam Ranh Bay bored with nothing to do, requested the most dangerous duty a Naval officer could be given." Others have made vaguer but equally misleading claims. On Slate, executive editor Jacob Weisberg wrote that Kerry "volunteered to go to Vietnam and, once there, volunteered for dangerous duty." And San Jose Mercury News columnist Dan Gillmor wrote on his weblog that "Kerry, unlike Bush, volunteered for dangerous duty in a war zone."

There is much debate about and confusion over Kerry's war record, but on this issue, the facts are especially clear. The media should start getting them straight and holding Kerry's campaign to the same standard.

Update 8/25 10:19 PM EST: Gillmor has posted a gracious clarification on his website.

Update 8/31 8:49 AM EST: An alert reader points out that Kerry's second choice when volunteering for swift boat duty was for PBR (Patrol Boat River) duty, which was quite dangerous (124K PDF).

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Related links:
-Kerry's service record distorted (Brendan Nyhan, 8/5/04)

8/24/2004 01:40:52 PM EST |

From technically true to blatantly false (8/24)

By Brendan Nyhan

George W. Bush rarely says things that are completely untrue; instead, he has made the use of technically true but misleading claims an art form. That's why his campaign's new commercial attacking John Kerry's record on taxes is so unusual - it contains a blatantly false claim.

Previously, Bush has attacked Kerry numerous times with the claim that he "voted over 350 times for higher taxes on the American people," as he put it on March 20. This construction suggests Kerry voted 350 times to increase taxes. But the Bush campaign admitted to that "these are votes for higher taxes, not necessarily tax increases, meaning it includes votes against tax cuts." In fact, the statistic even counts votes for Democratic tax proposals that were smaller than Republican alternatives.

The campaign used the same tactic to attack Kerry's record on gasoline taxes in an ad released March 30, which claimed Kerry "supported higher gasoline taxes 11 times," a figure that included a number of votes against reductions or suspensions of the tax - not just votes to increase it.

But in its newest ad, Bush's campaign abandons these tactics and contradicts its previous spin. Rather than using the tortured "higher gasoline taxes" phrasing, the campaign cites the same group of votes to claim that "John Kerry's voted to raise gas taxes on the middle class ...10 times..." (our emphasis)

Unfortunately, that's just not true. Will the press - so easily baffled by Bush's more subtle claims - notice the difference?

Update (8/26): A version of this post appeared in our Philadelphia Inquirer column today.

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8/24/2004 01:34:22 PM EST |