MediaWatch: April 1992

Janet Cooke Award: CBS on CBO: Numbers Fumblers

The media's class war continues. On March 5, The New York Times topped its front page with an article headlined "Even Among the Well-Off, the Richest Get Richer." According to the Times, the top one percent of earners garnered 60 percent of the income gains in what it called "the 80s," from 1977 to 1989. But the Times took five paragraphs to cite their source, the Democrat- appointed Congressional Budget Office (CBO). CBS took the Democrats' study and created another one-sided, emotion-loaded, hate-the-rich commentary in the guise of a news story, earning the April Janet Cooke Award.

The New York Times story, by economics reporter Sylvia Nasar, at least included conservative economists and reported that the rich declared more of their income to the IRS in the '80s and paid more taxes because of lower tax rates. All nuance was lost on the March 5 CBS Evening News. Dan Rather introduced the story: "In America in the 1980s, what former President Reagan and those who support him call the Reagan revolution put more money in the pockets of the rich. We already knew that. But a new study indicates that those who did best of all by far were the very richest of the rich."

Bob Faw began: "The new figures compiled by the Congressional Budget Office show that in the 1980s, for Americans of privilege, the music was very sweet." To support the CBO, Faw aired soundbites of Robert Greenstein of the liberal Center for Budget and Policy Priorities and Bill Clinton waving around the front page of The New York Times.

Faw attempted to appear balanced by including Pat Buchanan, who decried the politics of envy, but this is how he introduced Buchanan: "But today, when toes were being lovingly tended to on Miami's Gold Coast, and where shopping bags were bulging on Beverly Hills' Rodeo Drive, there were voices which argued good times for the rich can mean good times for others, too." Faw ended by showing video of a debutante ball: "The issue of tax fairness will be front and center in the presidential campaign, even though it wasn't on the agenda here."

Faw explained: "The numbers show the rich did get richer, while the bottom 40 percent of families saw their income decline during the Carter-Reagan years, and the typical American family saw its income creep up just four percent. For that top one percent, incomes exploded, up 77 percent."

Wrong. Census Bureau data shows that average family income grew in every fifth of earners from 1977 to 1989, except during 1979-80, when every fifth declined. The CBO's tall tales of trickle-down aren't even close to the Census data. From 1980-89, the middle fifth of earners gained 8 percent, according to the Census numbers. CBO found a 0.8 percent decline for the middle fifth.

But according to the CBO's numbers, the middle fifth (or third quintile) of earners, a truly middle-class group, saw their after-tax incomes decline 5.3 percent from 1977 to 1989. Those same numbers say 4.5 percentage points of that number (or 85 percent of the decline) occurred from 1977 to 1980. So the study Clinton is touting on the campaign trail really proves that the last time Democrats held both the White House and the Congress, the middle class went in the tank. CBS and The New York Times avoided that interpretation.

On March 27, CBO Director Robert Reischauer issued an eight-page memo claiming its data were misinterpreted. Reischauer backed away from the claim about the top one percent getting 60 percent of the gains, saying it was not a CBO statistic, but an analysis of CBO data by economist Paul Krugman. Instead, he claimed that by the most accurate measure, the top one percent actually gained 44 percent of the income gain from 1977-89, meaning the Times front-page chart reveals at least a 36 percent error. The Times didn't report the CBO's back-pedaling.

But Chris Frenze, a Republican economist for the Joint Economic Committee, told MediaWatch that according to the CBO's own memo, the top one percent received 44 percent of the income gain from 1977-89, but only 38 percent of the gain from 1980-89. "For there to be a six-point discrepancy between those two numbers, the top one percent would have had to make something like 63 percent of the income gains in the Carter years," Frenze concluded. Frenze later discovered that CBO's own data suggested that the top one percent got 100 percent of the income gains from 1977-80, since no other group gained. Will CBS correct its story? Repeated phone calls to Faw and CBS press representative Donna Dees went unreturned.

The CBO is becoming the statistician's equivalent of the corrupt House Post Office and House Bank. But instead of treating CBO claims to scrutiny or balancing them with other statistics, major media outlets burnish their credibility by passing them along unquestioned, while their statistical screw-ups have been covered up or ignored. This latest fraud may get as much press as the CBO's ridiculous errors in projecting capital gains, missing in its estimates by more than 100 percent. The major media have yet to report that.

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