Misleading Statistics? It's Election Time
THE approach of congressional elections has dragged out a long-standing, unsavory practice - partisan economics.
Both parties abuse the statistics to present an incomplete, one-sided, distorted analysis of the economy.
For example, earlier this month, two Republican members of the Joint Economic Committee (JEC) of Congress, Rep. Dick Armey of Texas and Rep. Jim Saxton of New Jersey, released a study prepared by the Republican staff of the JEC on the ``Top 10 Clinton administration policies hurting the middle class.''
Here are some of the charges, plus rebuttals, provided by Lee Price, chief economist for the Democratic majority on the JEC. Mr. Price says as a staff member, he is freer to make technical corrections than political statements.
1. During President Clinton's first year of office (1993), median family income - the annual income level where an equal number of families had more income as had less income - ``plunged'' 1.9 percent, or by $709, the Republican report holds.
Price says the change between 1992 and '93 was ``not significant'' in statistical terms. ``You can't be confident there was any change,'' he says. In addition, the numbers were gathered in a different way in 1993 than in '92.
Average income (total income divided by the number of those with incomes) did rise, indicating that the well-to-do were getting wealthier. This continued a trend toward income inequity that began in the 1980s.
``You don't turn that around overnight,'' Price says.
2. ``Candidate Clinton promised middle class Americans a tax cut. Instead, they got a tax increase,'' the Republican study says. The Clinton tax bill raised taxes on Social Security benefits for 6.1 million middle-income senior citizens. It increased gasoline taxes 4.3 cents per gallon and extended an existing 2.5 cents per gallon tax scheduled to expire in 1996 - together $250 per household.
Price notes that the tax increases reduced the budget deficit, and that the prosperous were taxed much more than others. Those with incomes over $200,000 saw taxes go up $20,000. The poor saw taxes decrease with a hike in the earned-income credit.
The extra tax on gasoline was almost offset by a decline in the price of oil. And, he says, the change in taxing Social Security payments didn't affect couples with incomes under $40,000.
3. ``The so-called `Clinton recovery' is one of the weakest on record,'' the report says.
Price denies this, saying the 3.3 percent real growth rate in the 18 months since Clinton took office is ``not spectacular, but a little bit better than average.'' In the previous 22 months of the recovery under President Bush, growth was subnormal.
At the time the Clinton tax bill passed, Rep. Armey said: ``Clearly this is a job killer in the short run. The deficit will be worse. The impact on job creation will be devastating.''
In the 18 Clinton presidency months, 4.6 million jobs have been created. That exceeds the 3.9 million jobs created in the corresponding months of the recovery from the more severe 1981-82 recession when President Reagan was in office. However, the earlier months of that 1980s recovery saw even faster job growth, Price says.
4. ``As interest rates have crept upward, the Administration has had to revise its economic growth forecast down to 2.8 percent in 1995, 2.6 percent in 1966, and 2.5 percent in 1997 and 1998 ... admitting that its economic plan did not live up to its claims.''
Price says this is ``a complete distortion,'' perhaps because the Republican economists do not understand the reason for the revisions. Future growth rates were marked down because current growth rates are higher than anticipated when the budget was drawn up in late 1993. This means that full employment will come sooner, output will be greater, and there will be less room for growth in the future without kicking up inflation.
Despite the improved recovery in terms of new jobs, many incumbent Democrats face hard times at the polls, political analysts say. That, Price suspects, is because average hourly earnings for people outside of management have been stagnant. ``If they are not seeing real gains, they are not going to be completely happy,'' he says.