On the other hand

As many bloggers have noted over the years, one of the weaknesses of modern journalism is that in a political campaign journalists feel compelled to try and present an even-handed picture when evaluating the claims made by the leading candidates, even when one side is exaggerating while the other side is simply making things up. This “CNN/Money”:http://money.cnn.com/2004/04/12/news/economy/election_incomes/index.htm?cnn=yes article is a classic of the genre.

Here’s the lead paragraph.

bq. John Kerry says the nation’s household income situation is miserable. George Bush says it’s improving. Economists say the truth is somewhere in between.

When we get to the actual data, we find the following. Before tax, the median household income _fell_ 3.3 percent in real terms since 2000. That looks pretty miserable to me.

Ah, but there’s a twist. When you add in the tax-cut-and-spent policies of the Bush administration, the after tax fall is only 0.6 percent. Now it’s not clear why this isn’t a miserable situation, just as Kerry said. For one thing, real household income is supposed to _rise_. Remember, 0% GDP growth over any extended period of time is a disaster by almost any measure, so flatline household income is not, or at least should not, a neutral baseline. Flatline is a disaster, and even by tilting the playing field in their favour, the Bushies don’t rise to that level. Miserable, just as Kerry said.

Tilting the playing field? Well, yes, because there’s another twist. It’s hard to quantify (to say the least) but at some stage there is a cost to ordinary households in the increased deficits. If there wasn’t, we could increase median household income by a few percent by simply doubling the automatic deduction, and there would be no real cost to average citizens. (By the way, my back of envelope calculations suggest doubling the automatic deduction couldn’t have cost much more than the actual Bush cuts, and would have done a lot more good.)

To put this in some perspective, the budget deficit last year was approximately $4000 per household. If you assign that debt to each household, the median income has fallen by something like 10% since Clinton’s time. Now that is obviously unfair because that can’t be exactly how the deficit is made up, but it’s clear that on any reasonable assignment of the costs of deficit financing the overall performance is much worse than the 0.6% fall that CNN/Money is prepared to run with.[1]

In this case there was no need to split the difference between what the two camps were saying. Kerry was simply right. Economic performance under Bush has been miserable.

fn1. To be clear, I don’t oppose deficit financing in the right circumstances, if done correctly. Something like increasing the automatic deduction, or increasing the EITC, or increasing the amount for exemptions, would have been quite appropriate in 2001. I’ve never been a particularly strong deficit hawk. But the actual budgets that were passed, blowing an historically large hole in the deficit while not even increasing median household income over what it was under Clinton were unconscionable.