MediaWatch: December 1991

Janet Cooke Award: Philadelphia Inquirer or National Enquirer

On October 20 The Philadelphia Inquirer launched a nine-part series, "America: What Went Wrong." Reporters Donald Barlett and James Steele promised they would prove that "we are in the midst of the largest transfer of wealth in the nation's history. It is a transfer from the middle class to the rich, and from the middle class to the poor." For providing little more than a sea of specious statistics, the series, which has since appeared in numerous other papers (including the Detroit Free Press and Arizona Republic), earns the December Janet Cooke Award. A few of the Inquirer's arguments:

Assertion: A dramatic front page chart showed a 13-inch high stack of dollar bills labeled "Increase in the salaries of people earning more than $1 million: 2,184 percent." In contrast, a quarter-inch high stack reflected the 44 percent growth in salaries of those making $20,000 to $40,000.

Reality: Barlett and Steele's numbers reflected the total, non- inflation adjusted, dollars earned by everyone reporting an income over $1 million, not the "increase of salaries of people earning more than $1 million." Translated: In 1983, 10,800 households reported an income of over $1 million, for a total of $24 billion. By 1988, millionaires reported $172 billion in income. But that's because the number of households reporting a $1 million-plus income soared six-fold to 65,300. As Joint Economic Committee economist Chris Frenze explained to MediaWatch, the 1986 tax reform cut the marginal rate from 50 to 31 percent, leading the wealthiest to take money out of shelters and report it as income.

Assertion: "Once upon a time, membership in the middle class was open to everyone. Now it is severely restricted. And existing memberships are being revoked." Their proof: "The middle income group accounted for 35 percent of all tax returns showing income from a job in 1989. That was down from 39 percent in 1980."

Reality: Economics columnist Warren Brooke told MediaWatch that the greatest drop in per capita personal income, even worse than in the Great Depression, occurred between 1979 and 1981. In constant 1989 dollars, Census figures show the percent of families earning $15,000 to $50,000 fell from 58 percent in 1981 to 53 percent in 1989, but Brookes explained that's because many got richer -- the number of those earning more than $50,000 jumped from 21 to 29 percent.

Assertion: A large table heading declared "Fewer rich pay the minimum tax." The table below showed the number of $200,000 to $500,000 taxpayers fell 70 percent, from 46,874 in 1986 to 14,112 people in 1989. The accompanying table showed that for the same income category the average tax paid dropped 61 percent, from $23,237 to $9,037.

Reality: The table reflected the "alternative minimum tax." Fiscal Associates Vice President Gary Robbins explained to MediaWatch that the tax was meant to get money from those avoiding income taxes. So when the 1986 reforms lowered the top rate from 50 to 31 percent and eliminated loopholes, the rich started paying regular taxes. As Brookes noted in the Oct. 7 National Review, "revenues from the rich soared at their fastest rate in history. In 1988, total income taxes rose a surprising 12.7 percent, or nearly $7 billion. Of that increase, $36 billion, or 77 percent, was paid by the top 2.3 percent of all taxpayers." 

MediaWatch asked Barlett why he failed to make Brookes' point or note that the share of income tax collections paid by the top one percent of taxpayers grew from 18 percent in 1981 to more than 27 percent in 1988. Barlett responded with a non sequitur: "If you follow that to the logical extent at some point they [the top one percent] will account for 80 percent of the tax revenue because all the rest of the people won't have any money to pay taxes.... that's not a plus, that's a terrible thing. Is that the kind of society you want, in which 80 percent of the population doesn't have enough money to pay taxes and the other 20 percent does?"

Assertion: During the 1980s "the job growth was centered in the retail trade and services sectors, which pay the lowest wages. Higher-paying jobs in manufacturing disappeared at a rate unmatched since the Great Depression."

Reality: Commerce Department figures reveal the manufacturing share of the GNP grew from 21 percent in 1980 to 23 percent in 1990. Since 1983, Marvin Kosters showed earlier this year in American Enterprise, nearly half of new jobs have been "professional and managerial." Compare that to the 1970s, when just 23 percent fell in this category.

Assertion: Part 5 was headlined "The High Cost of Deregulation: Joblessness, Bankruptcy, Debt." Barlett and Steele claimed "Competition would create jobs, drive down prices and benefit consumers and businesses alike. That's the theory. The gritty reality...is a little different." The duo concluded "deregulation has meant fewer airlines and higher air fares, more unsafe trucks on the highways, and your tax money diverted to pay for the S&L debacle." Instead of exploring the conservative view that a lack of deregulation made the S&L crisis worse (i.e., continued federal insurance no matter how poorly the S&L is run), the reporters returned to the theme laid out in part one, concluding: "There are more rich people than ever before. There are more poor people than ver before. And the ranks of those in between are shrinking, their standard of living falling."

Reality: More poor than ever? The poverty rate is less than half what it was after World War II. Barlett stood by his assertion: "I don't think there's any doubt about that....The numbers are clearly up." As Census figures prove, real pre-tax incomes of all classes rose from 1981 to 1989, it's just that top groups did better than the middle.

Assertion: Using a soaring airplane for dramatic effect, a chart shows the price of an airline ticket from Philadelphia to Pittsburgh has risen from $86 before deregulation in 1978 to $450 today. The chart included "prices of other goods, had they risen as steeply as the plane ticket," such as a pound of coffee at $14.59 and 19" TV set at $1,977.

Reality: Prices have risen 110 percent since 1978, so an $86 ticket should now cost $185. In small type the Inquirer chart noted a ticket bought 14 days in advance now costs $118. That's half the inflation rate. A seven-day advance purchase costs $178 to $198, or about the same, adjusting for inflation. The Air Transport Association (ATA) reports that more than 91 percent of all airline passengers buy a discounted ticket.

Assertion: "More than 50,000" airline "employees lost their jobs."

Reality: Many did as inefficient carriers went bankrupt. But many more jobs were created by the expansion of other airlines. ATA figures show 329,000 Americans were employed by the commercial airlines in 1978. Today, 545,000 are.

Barlett told MediaWatch "there are different ways to look at things and you're looking at it a different way. I don't have any trouble with that. I obviously just don't agree with it." He insisted: "We don't set out to prove a point. We didn't spend two years trying to prove a point....We go out and collect information, the information we collect we just follow that, whatever it shows." That's not what his series shows.

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