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Somebody Is Lying To Me!

Posted By Alan Partis on March 15, 2009

President Obama has published a book titled A New Era of Responsibility: Renewing America’s Promise. The President’s Budget and Fiscal Preview through the U.S. Government Printing Office and it contains a graph showing the share of total income accruing to the top one percent.  He uses this graph as the basis of his arguments to support higher taxes on the wealthy and income redistribution.

The trouble is, that graph is a fabrication!

My source of his graph is a column in the Wall Street Journal1 so I am assuming that they have simply copied it from the electronic version of the book with which they were freely provided (too bad the average taxpayer isn’t afforded the same deal). Obama’s graph is cited to economists Thomas Piketty and Emmanuel Saez at the Center on Budget and Policy Priorities.

In a column I wrote yesterday titled “How and When Did the Rich Get Richer”, I lamented the fact that Obama’s graph seemed truncated and caused me to be suspicious that further back data would not support his thesis as much.  Further research on my part has borne this out.  Piketty and Saez do have a graph that goes back 67 more years than the one Obama published2.  Here are those two graphs: the first one is Obama’s and the second one is from Piketty and Saez.

Top One Percent of Earners Have Been Increasing Their Share

Income Share of Highest Income Households Returned to Its Post-Depression High in 2005

It’s bad enough that Obama has eliminated all the back data from his graph, but if you look closely, you’ll see that Obama’s graph also raises the top one percent’s share by a full 2 percentage points!

It’s time for the American public to demand higher standards, especially from elected officials.  If Obama is reduced to having to publish outright lies in order to support his policy agenda, then his agenda ought not be supported by any self-respecting members of his constituency.  He should be held responsible for the things that are published in his name.  The American people deserve better than this.

From an analysis standpoint, the full graph still demonstrates very well the growth and strength of the middle class in the post WWII era until getting hammered as a result of President Clinton’s tax increases in 1994.


1“The Obama Rosetta Stone”, Daniel Henninger, Wall Street Journal, March 12, 2009.

2“NEW DATA SHOW INCOME CONCENTRATION JUMPED AGAIN IN 2005: Income Share of Top 1% At Highest Level Since 1929″, Aviva Aron-Dine, Center on Budget and Policy Priorities, October 24, 2007.


Comments

2 Responses to “Somebody Is Lying To Me!”

  1. John S says:

    Alan,

    Nice catch on the distortion and context issue! However, you ruin your own analysis with your closing remark:

    “From an analysis standpoint, the full graph still demonstrates very well the growth and strength of the middle class in the post WWII era until getting hammered as a result of President Clinton’s tax increases in 1994.”

    The graph only shows the top 1%; you can’t divine data about the ‘growth and strength of the middle class’ from this. If you are inviting rigorous analysis of Obama’s data, becareful of your own agenda being equally dependent on data not in evidence. The other 99% of tax payers is presumably made of middle and lower classes (not the top). Or, more simply, the top and everyone else. Invoking the term middle class (as is commonly used) can no more be used out of context than only referring to the top 1%. Your analysis must include ALL classes before you can conclude that there was strength in the middle class. While there may have been, these graphs don’t support that statement; it is a fabrication.

    Finally, the Piketty & Saez graph shows an abrupt change in slope at about 1980. How you can make any statement bout 1994 and Clinton policy are beyond me based on these graphs.

    I agree that you should contact the WSJ author and question where the extra 2% graph came from.

    The historical data is secondary anyway because Obama can’t tax past top 1%ers, only current 1%ers. Either way, you are allowing yourself to get caught up in a pointless arguement. As you declare yourself a student of economics and united states history I would rather have you focus your energy on the morality of why we have income taxes at all.

    John

  2. alan says:

    > The graph only shows the top 1%; you can’t divine data about the ‘growth
    > and strength of the middle class’ from this.

    You’re correct that the graph is silent about the middle class. However, we know from our history that the middle class grew in size and wealth in the post war period and you can infer that from the graph i.e. as the percentage of total income by the middle class grew, the percentage going to TOP naturally fell.

    >Finally, the Piketty & Saez graph shows an abrupt change in slope at about
    >1980. How you can make any statement bout 1994 and Clinton policy are
    >beyond me based on these graphs.

    I think you will find, if you compare historical tax rates to the Piketty & Saez graph, you will find that taxes began increasing again in 1980 as well as another increase in 1994. Conversely, you can also see big drops in slope coincidental with tax cuts by Kennedy, Reagan, and Bush 43.

    The topic of the morality or wisdom of an income tax is for another day.