Lies, Damn Lies, And The Heritage Foundation

December 19, 2011 3:15 pm ET — Jamison Foser

If you've paid any attention to congressional Republicans over the past several years, you may have noticed that they have a remarkable tendency to be wildly, almost unbelievably wrong. Not just wrong in their judgment — wrong about basic facts. One reason they're so wrong so often is, of course, that they just don't care about being right: When a United States senator like Tom Coburn (R-OK) has no idea what the federal government's annual budget is, that's a pretty good indication that factual accuracy just isn't a priority. But another factor is that the conservative movement's most respected and influential think tank is fundamentally dishonest. 

The Heritage Foundation describes itself as "a research and educational institution—a think tank" and boasts of "performing timely, accurate research on key policy issues and effectively marketing these findings to our primary audiences: members of Congress, key congressional staff members, policymakers in the executive branch, the nation's news media, and the academic and policy communities."

But, without even getting into its thoroughly absurd economic projections, Heritage is comically dishonest. It credits tax cuts with economic growth that preceded them. It claims a reduction in tax rates isn't a tax cut. It suggests nobody claimed the Bush tax cuts would pay for themselves, when in fact both the Bush administration and Heritage itself made exactly that claim. Again and again, Heritage crosses the line between "wrong" and "dishonest."

Have a look, for example, at Heritage senior policy analyst Curtis Dubay's recent attack on Senate Majority Leader Harry Reid (D-NV):

Senate Majority leader Harry Reid (D-NV) drifted off to fairy-tale world this week and dreamed up some statistics as he did.

Dubay was responding to Reid saying: "Many of our job creators are like unicorns—they're impossible to find and don't exist. That's because only a tiny fraction of people making more than a million dollars, probably less than one percent, are actually small business owners and only a tiny fraction of that tiny fraction is a traditional job creator."  

"This claim," Dubay wrote, "is wildly off base":

Senator Reid's statistical confusion on small businesses and job creation could be understandable. The statistics were once notoriously difficult to find, because there was no objective definition of small business. But the Treasury Department rectified this with a recent study. It contains firm data that refute Reid's unsubstantiated and implausible claim.

Now, here's how the Treasury Department itself describes that same study:

Specifically, a recent discussion paper by Treasury's Office of Tax Analysis shows that only 1 percent of all small business owners have adjusted gross income over $1 million and would be affected by this surcharge. Not only will the remaining 99 percent of small business owners be protected from paying this surcharge, they will receive a net benefit from the employer-side payroll tax cuts.

Reid said very few small business owners would be affected by the surcharge. The Treasury Department said very few small business owners would be affected by the surcharge. In short, according to the Treasury Department, the study Dubay cites substantiates the Reid statement Dubay describes as "unsubstantiated." Whoops.

Dubay continues directly:

According to the new Treasury report, 50 percent of the income earned by businesses that pay their taxes through the individual income tax code and employ workers would be subject to the millionaire tax that Senator Reid demands to "pay for" an extension of the payroll tax holiday (see table 15 of the report).

Some "unicorn." Half of all small-business income is a lot higher than 1 percent, Senator!

That clears things up nicely: Dubay is lying.

See, Reid's comment was about the number of affected small business owners. Dubay responded by pointing to the amount of income in question, claiming that disproves Reid's statement about how many business owners would be affected. It doesn't. It's like saying a tax increase on the richest 1 percent of taxpayers would raise taxes on a lot more than 1 percent of taxpayers because the people affected hold 40 percent of the nation's wealth. After all, forty percent of the nation's wealth is a lot higher than 1 percent! This may come as a shock to the unofficial think tank of the one percent, but money isn't people.

Dubay could argue that the portion of small business income affected is more important and relevant than the number of small businesses. Such an argument might or might not have merit, but it would at least be honest. Instead, Dubay pulls a fast one, comparing apples (few small business are affected) with oranges (a lot of income is affected).

Dubay has a master's degree in economics, has worked as a senior economist for the Tax Foundation and a senior associate at PricewaterhouseCoopers, and is currently senior policy analyst for tax policy at Heritage. It is, in short, pretty much inconceivable that he doesn't understand the difference between the number of millionaire small business owners and the amount of income generated by millionaire small businesses. The conclusion, then, is obvious: By conflating the two concepts, Dubay is lying.

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