Alan Reynolds

Sen. Kerry's last-minute campaign pitch claims that "over the last four years ... wages of the average family have fallen $1,500." Yet that figure does not refer to wages, or to four years, or to families, or to any average. Four serious errors in one sentence.

 The source of Kerry's $1,500 was a pre-election paper from the Economic Policy Institute (EPI). Although it was called "Less Cash in their Pockets," the $1,500 figure ignores the Bush tax cuts, which put a larger sum in family pockets.

 The EPI report says, "Pre-tax incomes fell for three years in a row, leaving the typical household   with $1,535 less income than in 2000, a drop of 3.4 percent." The figure refers to pre-tax income and to three years rather than four. And the Kerry campaign's misnamed "average family" actually refers to households (including singles) in the middle fifth of the income distribution, as though excluding the other 80 percent could be called typical.

 Newsweek columnist Robert Samuelson explained why this matters: "The median household was once imagined as a family of Mom, Dad and two kids. But 'typical' no longer exists. There are more singles, childless couples and retirees. Smaller households tend to have lower incomes. They drag down the overall median. So do more poor immigrant households."

 By starting with the year 2000, Kerry implicitly blames the president for an industrial recession that began in August 2000 and the terrorist attack on Sept. 11. By ending with 2003, he excludes the president's best year so far, 2004. Besides, income never leaps from a recession trough all the way back to the previous cyclical peak in just two years. In 1997, median household income was barely higher than it had been in 1989.

 For married couples with children in the middle fifth of the income distribution ($66,904), the same EPI paper estimates that inflation-adjusted income fell $2,119 from 2000 to 2003 before taxes, but by only $83 after taxes. This "average family" received a $2,036 tax cut, even after adjusting for inflation and accounting for higher state and local taxes. Kerry obviously prefers to talk about a $1,500 decline in pre-tax "wages."

  Kerry has not just been hand-picking bogus statistics to make the president look bad, he has also been making bogus statements to make himself look bad. He claims, the president's "own policies make it illegal to get low cost medicines from Canada."


Alan Reynolds

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