Grading PolitiFact: Barbara Boxer and the freeloading top 400

To assess the truth for a numbers claim, the biggest factor is the underlying message.
--PolitiFact editor Bill Adair

The issue:

(clipped from PolitiFact.com)

The fact checkers:

Louis Jacobson:  writer, researcher
Martha Hamilton:  editor

Analysis:

PolitiFact's founding editor, Bill Adair, must fairly glow with pride when one of his PolitiFact teams cuts through the malarkey to identify the underlying point for a numbers claim.  The team of Louis Jacobson and Martha Hamilton pegged Sen. Boxer's underlying point in their opening paragraph:

During a Sept. 20, 2011, interview with Al Sharpton on MSNBC, Sen. Barbara Boxer, D-Calif., sought to highlight how America’s richest taxpayers have benefited economically in recent years.

PolitiFact provides all the context we're going to get without a subscription to Congressional Quarterly:

"The top 400 earners in this country are worth more … than half of the American people," Boxer said. "And since 1995, the top 400 wealthiest families have seen their incomes go up 400 percent and their tax rates go down 40 percent."

We checked the first part -- that the top 400 tax payers saw their incomes grow by 400 percent -- in March 2010, giving it a rating of True. But the second half of her statement was new to us, so we decided to look into it.

Apparently somebody watches MSNBC.  I'd like to know the full story behind the choice to grade this statement from Boxer.

PolitiFact:

When Boxer made her comments, the question of how much the wealthy should pay in taxes was at the top of the national agenda. In remarks on Sept. 19, 2011 about his plan for reducing the federal debt, President Barack Obama said that "middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett." (Buffett is the legendary investor who for years has placed high on the list of richest Americans.)

The premise of Obama's statement is very probably false, though PolitiFact apparently can't be bothered to question it here.  The rich pay more in taxes.  They pay the same or higher tax rates, with the caveat that some types of income are taxed at a lower rate and some of the rich make a high percentage of their income from capital gains and investments.  But a middle-class taxpayer pays the same rate on those types of investments.  And in terms of the effective overall federal tax rate the rich again pay more than those in the middle class.

But at least PolitiFact continues to sniff around Boxer's underlying point.

PolitiFact:

As we explored elsewhere, Obama is correct that it’s possible for a secretary to pay a higher tax rate than a very wealthy person, but it’s also not typical.

PolitiFact's analysis failed to take effective federal tax rates into account despite the availability of a CBO report making clear the higher rates paid by higher earners.  The story tabled the concept of double taxation on income derived from corporate profits, which the federal government already taxes separately.  It may yet be possible for a secretary to pay a higher effective tax rate if the secretary spends all disposable income on gasoline and cigarettes--both heavily taxed by the federal government--but clearly that wasn't Obama's point.

PolitiFact:

In general, wealthier taxpayers do in fact pay a higher percentage in taxes than less-affluent people. The main exceptions are people in Buffett’s category -- the richest of the rich, whose income comes mainly from capital gains and dividends, which are taxed at 15 percent rather than the maximum of 35 percent for wages and salaries, and hedge fund managers, who benefit from a tax code provision that also taxes their earnings at 15 percent.

Note the continued failure through this point to examine the picture in terms of effective tax rates.  PolitiFact allows that most high income earners pay a higher tax rate while at the same time alleging a certain class of exceptions.  But PolitiFact provides flawed evidence in favor of the existence of those exceptions and grants itself, President Obama and Warren Buffett an exception to its "burden of proof" criterion.

PolitiFact:

In her comment, Boxer explicitly focused on Buffett’s peers.

Her data comes from a periodic Internal Revenue Service report that looks at the income and tax data from the 400 tax returns with the highest adjusted gross income. (In case you’re wondering, these 400 titans aren’t named, and their data is aggregated.) Technically, these aren’t "families" necessarily, but for a comment made during a television interview, we think it’s close enough.

The truth-finding experts at PolitiFact appear to misunderstand the data in the IRS report.  The top 400 earners are only "Buffett's peers" if Buffett himself appears on the list, and even then only in a sense perhaps too loose to float Boxer's point:

Over the 17 tax years a total of 6,800 returns were identified for the table. There were 3,672 different taxpayers representing the top 400 returns of each year. Of these taxpayers, a little more than 27 percent appear more than once and slightly more than 15 percent appear more than twice (see columns 2 and 3). In any given year, on average, about 39 percent of the returns were filed by taxpayers that are not in any of the other 16 years (see columns 4 and 5). In each year, 4 (or 1.0 percent) of the returns are for taxpayers who can be found in all 17 years. Thus, the data shown in the table mostly represent a changing group of taxpayers over time, rather than a fixed group of taxpayers.

IRS.gov

At least four filers, and probably no more than that, occur in the top 400 for the first year of data collected as well as for the the most recent year.  To the extent that Boxer's statement implies a particular group of people receiving the benefit of a lower tax rate, that impression is misleading.  PolitiFact takes no notice.

PolitiFact:

We’ll take Boxer’s two claims in order. The data we’re using, which goes back to 1992, is adjusted for inflation.

"Since 1995, the top 400 wealthiest families have seen their incomes go up 400 percent."

In 1995, the aggregate adjusted gross income for all 400 tax returns worked out to $17.4 billion, or an average of $43.6 million per return.

By 2008 -- the most recent year available -- the aggregate income for the top 400 soared to nearly $66 billion, or more than $164 million in adjusted gross income per return.

It actually took me a bit of time to figure out what PolitiFact was doing with the above.  The PolitiFact team uses the column from the report giving all figures in 1990 dollars.  The method succeeds in adjusting proportionally for inflation, but offers a distorted picture of what the top 400 were making in 2008.  Aggregate income for the top 400 exceeded $108 billion in 2008 rather than the $66 billion figure from the story.

PolitiFact:

That amounts to a 276 percent increase. If Boxer had been using data one year older, she would have been correct: Using 2007 data, the rise was almost exactly 400 percent. This illustrates how sensitive this measurement is to economic conditions.

Credit to PolitiFact for doing the math correctly.  Boxer's figure ends up inflating the actual figure by nearly 45 percent.  PolitiFact probably stresses too little the sensitivity of the measurement.  Boxer, after all, is trying to make the case that the richest taxpayers are getting an increasingly good deal in recent years.  Certainly the trend for income is up, but it's a rocky trend.

(IRS.gov, click image for enlarged view)

Here's what it looks like graphically:

The first peak comes from tax year 2000 at the tail end of the Clinton economic expansion.  The second peak occurs in tax year 2007, at the end of the Bush economic expansion.  Boxer could have chosen to compare 1995 with the tax year 2000 and ended up with an increase of over 200 percent.  This helps illustrate the degree to which Boxer is cherry picking her data.  Additionally, one might detect a correlation between increases in income for the highest earners and good economic times.

None of this particularly assists Boxer's underlying point, needless to say.

PolitiFact:

"Since 1995 the top 400 wealthiest families have seen … their tax rates go down 40 percent."

From the same IRS document, we can see that the average tax rate for the top 400 returns was 29.93 percent in 1995 and 18.11 percent in 2008. That’s a decline of 39 percent -- for our purposes, close enough to Boxer’s claim to be accurate.

"Close enough" again involves ignoring the effective federal tax rate in favor of the average rate of income tax paid on adjusted gross income.  And inside the numbers we can see that between 1995 and 2000 the decrease in the average rate was 25.5 percent.  From 2000 to 2008 the decrease in the average rate was 19 percent.

Does that support Boxer's underlying point?  If not, perhaps PolitiFact should keep it quiet.

Note again that the this is not primarily a statutory change in tax rates.  Clinton did decrease the capital gains tax and George W. Bush did institute a broad tax decrease that affected the tax rates of the top 400 earners.  But the average tax measurement varies primarily because the top earners increasingly receive a greater percentage of income from capital gains.  So, contrary to what Obama, Boxer and PolitiFact assert, the question isn't really what percentage of their earnings the wealthy ought to pay, but rather whether it is a good idea economically to tax capital gains at a rate roughly equal to the second lowest marginal rate on salary income.

Admittedly, putting it that way takes the fun demagoguery mostly out of the equation.

We near PolitiFact's conclusion:

On the data, Boxer is right for one claim and wrong for the other, though on the one for which she’s incorrect, she would have been right using data from one year earlier.

More broadly, even the smaller, 276 percent increase supports her underlying point -- that for the richest of the rich, incomes have grown by leaps and bounds while average tax rates have declined for the same group by 40 percent.

More precisely, Boxer's numbers are correct for one claim but not the other, and neither set of numbers supports the underlying point that "America’s richest taxpayers have benefited economically in recent years" from tax policy except under a fairly loose concept of "benefit"--earning a higher percentage of their overall income from capital gains and investments.  That seems like a dubious measure of benefit.  The statutory rates haven't changed all that much.

As we’ve noted, extrapolating tax-burden patterns from the super-rich (like these 400 tax-paying units) to the merely very rich, the rich or the plain old affluent should be done with care. As the Congressional Budget Office has determined, the tax system is generally progressive, despite the lower tax rates for Buffett and his peers. The poorest one-fifth has an effective tax rate of 4.3 percent, the next fifth has a rate of 10.2 percent, the middle fifth has a rate of 14.2 percent, the second-highest has a rate of 17.6 percent, and the top fifth has a rate of 25.8 percent. And the rates keep going up the higher you climb. The top 10 percent of earners had an effective tax rate of 27.5 percent, the top 5 percent had a rate of 29 percent, and the top 1 percent had a rate of 31.2 percent.

In other words, the top 400 have a distinctly different tax pattern than even the richest 1 percent of American taxpayers, a much larger group that includes about 1.1 million households with an average pre-tax income of $1.7 million.

Ladies and gentlemen, we have a howler.

The PolitiFact team distorts or misunderstands the import of the CBO study it finally got around to citing.  The CBO report refers to the effective tax rate, which includes the estimated impact of corporate taxation.  Apply the impact of corporate taxation to the richest 400 earners, which the IRS report doesn't touch, and it will probably boost the effective tax rate up very close to the rate paid by the rest of the top 1 percent because corporate taxes have a greater impact on investment and capital gains income.  It's the old double taxation issue.

Compare PolitiFact's attitude on this fact check to the one exhibited in a fact check of Michele Bachmann from not too long ago:

Bachmann would have been right if she’d said, "the top 1 percent of income earners pay about 40 percent of all income taxes into the federal government." But she didn’t say that -- and even if she had, her decision to focus on income taxes, rather than looking at the whole federal tax picture, would have presented the numbers in such a way that wealthier Americans would look more heavily taxed than they are.

Likewise, Boxer and Obama find it more favorable to talk about income tax "rates" without mentioning that they are averages and while ignoring data on effective tax rates.  PolitiFact did the same thing before finally taking notice of the CBO report on effective tax rates--and then reporting on it so inaccurately that it might as well have been ignored.


The grades:

Louis Jacobson:  F
Martha Hamilton:  F


Why does the PolitiFact team give Boxer a pass on her stinker of an underlying point?  Probably because they believed that point with relative confidence prior to doing the fact check.  That's how ideological bias works when it manifests unintentionally.  The troublesome facts receive a faulty interpretation that helps them jibe with the accepted view.

Grading PolitiFact: Barbara Boxer and Medicare overhead

To assess the truth for a numbers claim, the biggest factor is the underlying message.
--PolitiFact editor Bill Adair

The issue:

(clipped from PolitiFact.com)

The fact checkers:

Louis Jacobson:  writer, researcher,
Bill Adair:  editor

Analysis:

I favor an examination of context no less for liberals than for conservatives (transcript mine; source video below):

BOXER:
And this is something people should never forget:  You know, Newt Gingrich said, 15 years ago, let Medicare wither on the vine.  Bob Dole, when--I went back into the 60s when Medicare was put into place--said something like it's socialism and it's horrible and it's the worst thing in the world.  And the fact of the matter is, it works.  There's a 1.5 to 2 percent overhead in Medicare.  The insurance companies have a 20 to 30 percent overhead.  What are these boys doing on the other side.

The video version:




I would identify four propositions in Boxer's statement.

1)  Medicare carries an overhead of 1.5 to 2 percent.
2)  Private insurance companies carry an overhead of 20 to 30 percent.
3)  Medicare is at least 10 times (20 divided by 2) more efficient than private insurance in terms of overhead.
4)  Medicare operates more efficiently than private insurance (the underlying message).

This time, PolitiFact is not blind to the underlying message:

Boxer’s comment cuts to the core of whether a government-run program like Medicare has advantages over one in which private insurers take a primary role.

The term "advantages" might easily turn out a weasel-word.  Boxer asserts better efficiency, using as her representative example the claim that overhead is at least 10 times greater for private insurance.  If correct, Boxer's assertion would constitute an important evidence of Medicare's overall greater efficiency.  Individual advantages one way or another carry modest importance except where one model has an overall advantage over the other.

Weighing the evidence?

Grading PolitiFact: Boxer vs. Rice

The issue:

The fact checkers:

Robert Farley:  writer, researcher
Bill Adair:  editor

Analysis:

Right out of the chute, I'll acknowledge a little surprise that PolitiFact rated this statement from Sen. Boxer (D-Calif.).

Boxer, in the midst of a campaigning for re-election, made an appearance before the editorial board of the San Francisco Chronicle and was asked about comments she addressed to then-Secretary of State Condoleezza Rice.

Specifically, board member included as the premise of a question to Boxer that Boxer had criticized Rice for sending troops to war without paying "a personal price."

PolitiFact's Farley, picking up from there:

In the editorial board meeting, Boxer, a California Democrat, sought to set the record straight about her comments, but then added a bit of revisionist history, saying she was criticizing Rice because she didn't know how many American troops had died in Iraq. In fact, Rice never said that.

It's an editorial judgment to declare that Boxer "sought to set the record straight," and Farley achieves a bit of a mismatch between Boxer saying Rice didn't know the number of troops killed and Rice not saying that.  Boxer could be right that Rice didn't know the answer even if Rice didn't address the question at all.

We find Farley dealing with a pair of loosely intertwined issues, Boxer's explanation of her "personal price" remarks and Boxer's associated claim that she was asking Rice how many troops had died in Iraq.  I will subsequently treat the latter as the primary claim and conduct separate analyses.


Primary Analysis:

PolitiFact quotes Boxer at length, but for the primary analysis only the first sentence is relevant:  "I asked her how many people had died and she did not know the answer to that question."

Farley serves up an appropriate number of relevant quotations in support of the obvious conclusion:

Boxer asked Rice for a projection on how many American troop casualties might be lost in the surge, and Rice essentially answered that that was unknowable.

PolitiFact gave Boxer a "Pants On Fire" rating.  To me (and to most, I suspect) that suggests a deliberate attempt to mislead.  By PolitiFact's definition, at least, the rating seems correct in that it applies to "ridiculous" claims.  Boxer's recollection of the exchange with Rice was ridiculous regardless of whether she was out to trick people.


Secondary Analysis:

What are we to make of Boxer's comments to Rice?

Barbara Boxer may be even worse than you think

A few days ago, Ed Morrissey at the Hot Air blog posted a video of Sen. Barbara Boxer claiming that carbon pollution and the associated problem of global warming would be the big national security problem in the near future.

The video:



The Congressional Record version:

"I am going to include for the Record a host of quotes from our national security experts who tell us that carbon pollution leading to climate change will be, over the next 20 years, the leading cause of conflict putting our troops in harm's way. That is why we have so many returning veterans who want us to move forward and address this issue so we can create the new technologies that get us off this foreign oil. Every time we import oil, we hurt ourselves. We have to get off these old energy sources. It is a transition. It is not going to happen overnight. But if we do things such as the Murkowski resolution, we will create chaos. We are going to see jobs lost. We are going to see us continue in an economic situation that has no new paradigm for economic growth, as we have learned from our venture capitalists, as we have learned from analysts, such as Thomas Friedman, who are so clear on this point.

The question before us is this: Will we protect the people we represent from dangerous pollution or will we choose to reject science? Will we choose to ignore the findings of the scientific community, the public health officials, and national security experts?"

Unfortunately, I have not located the documents that Boxer vowed to add to the record.  It will be interesting to see whether she was even in the ballpark with her representation of what security experts are saying.

While searching for the portion of the record that matched Morrissey's video, however, I stumbled over another statement from Boxer that might even better exemplify cluelessness:

"The Murkowski resolution threatens jobs, jobs that we need, that are made in America for America.

Our hearts break every day that we look at what is happening in the Gulf. It seems to me more than ironic that Senator Murkowski is advocating repealing the scientific finding that too much carbon pollution in the air is dangerous, at the same time every American sees graphic evidence on television every single day of the deadly carbon pollution in the Gulf of Mexico.

We see here in the saddest pictures what too much carbon -based pollution does in water, what it does to our shorelines, what it does to our beaches, what it does to our wetlands. I will show a couple of other photographs. They are almost too painful.

But what we do here has consequences. And for someone to come to this floor and say too much carbon is not dangerous, then I am sorry, we are going to have to look at these pictures even though we do not want to. We know the devastation this causes. Our eyes do not deceive us.

This horrific spill in the gulf has disrupted the lives of hundreds of thousands of people employed by fishing industries, tourism industries, recreation industries along the gulf coast. So, yes, this resolution, this Murkowski resolution, is about jobs."

The Murkowshi resolution attempted to restrain the power of the EPA to regulate carbon emissions after the EPA published a finding that carbon dioxide was harmful because of its role as a greenhouse gas.  The Supreme Court ended up backing the EPA.

Boxer hilariously uses the oil spill as an example of the the dangers of limiting the EPA's power to regulate greenhouse gases.  The oil in the gulf is "too much carbon," as she puts it.

It's not even as close as a comparison as apples and oranges.  We might as well let the EPA deal with terrorists and enemy soldiers, since they are carbon-based life forms that may threaten the environment.  For that matter, the EPA might even have the power to thin out the human population ("too much carbon") based on the threat to the environment posed by the growing population.

That's your senator, California.

Grading PolitiFact: Carly Fiorina on Barbara Boxer's national security priorities

I recently finished grading PolitiFact for an entry that granted Chris Matthews "artistic license" for saying that Dick Cheney got a "signing bonus" ("cash check") from Halliburton for running for vice president.  It makes for a powerful contrast in standards.

The issue:

The fact checkers:

Robert Farley:  writer, researcher
Louis Jacobson:  writer, researcher
Bill Adair:  editor

Analysis:

Removing any suspense regarding the "Truth-O-Meter" rating given to Carly Fiorina, PolitiFact gives her the "Pants On Fire" rating reserved for "ridiculous" claims.

Can Farley, Jacobson and Adair back it up?

The latest ad from California Senate candidate Carly Fiorina -- who is running in the Republican primary to take on incumbent Democratic Sen. Barbara Boxer -- mocks Boxer for saying in 2007 that "one of the very important national security issues frankly is climate change."

After playing a clip of Boxer's statement, Fiorina faces the camera and responds, "Terrorism kills, and Barbara Boxer's worried about the weather."

No one doubts that Boxer made the comment. But we wanted to check the context of Boxer's remark and see if Fiorina was quoting it accurately.

Short of altering the audio (and video) there could be no doubt that Boxer was quoted accurately.  The only question would be whether the quotation was taken out of context.

The PolitiFact story picks up by drawing attention to three elements of the story.  Oddly enough, none of those elements includes the context of Boxer's statement.

The rest of the PolitiFact entry relates directly to those three elements, however, so it makes sense to list them:

• How well-accepted is the idea of climate change as a national security threat?
• Is it fair to say that Boxer's concern about climate change amounts to being "worried about the weather"?
• By focusing on the threat of climate change, did Boxer somehow ignore the issue of terrorism?

I'll add a question of my own:  Are any of these three points particularly relevant to the truth content of the ad?

The most hopeful sign so far that the Democrats will be serious about militant Islam ...

Not counting Joe Lieberman.

Dec. 29, 2006 - In a highly unusual move, Sen. Barbara Boxer of California has rescinded an award to an Islamic activist in her home state because of the man’s connections to a major American Muslim organization that recently has been courted by leading political figures and even the FBI.
(MNBC/Newsweek)

CAIR, indeed, has a dicey reputation. If only Boxer's reaction were more symptomatic of the Democratic Party on the whole.

Hat tip to Powerline.