WSJ , USA Today , AP ignored fact that GOP tax cuts outweigh spending cuts by $44 billion


In covering the House of Representatives' approval of extending tax breaks on investment income, The Wall Street Journal, USA Today, and the Associated Press did not mention that the cost of the tax-cut package far exceeds recent spending cuts.

In their December 9 coverage of the House of Representatives' passage of legislation extending tax breaks on investment income, The Wall Street Journal (subscription required), USA Today, and the Associated Press failed to note that the Republican-sponsored tax-cut package far exceeded recent spending cuts. By contrast, the Los Angeles Times reported, "The House-passed spending-cut bill would save $50 billion over five years, $44 billion short of the lost tax revenue." Not only did the first three outlets overlook this comparison, they entirely ignored the disparity between the tax cuts and the spending cuts, including only passing mention of Democratic complaints regarding the effect on the deficit.

Further, Fox News congressional correspondent Brian Wilson, in a report that also failed to note the spending cuts, described the House bill passed on December 8 as a "relatively modest $56 billion package of tax cuts." But while the legislation extending the tax cuts on capital gains and dividend income did represent $56 billion in tax relief, Wilson's description of the package as "relatively modest" ignored the fact that it was the fourth tax cut bill passed by the House in two days. All together, these measures amounted to $94 billion in tax breaks -- nearly twice as much as the spending cuts approved in November.

In contrast with the Journal, USA Today and AP's coverage of the tax bills, a December 9 New York Times article examined how the resulting loss in tax revenue compared to the corresponding spending cuts included in the budget passed by the House on November 18:

The House passed the last and biggest part of $95 billion in tax cuts on Thursday, a move that reflected the willingness to place tax cuts above the risk of higher deficits in years to come.

Voting 234 to 197, almost purely along party lines, the House approved $56 billion in tax cuts over five years, one day after it passed other tax cuts totaling $39 billion over five years. The biggest provision would extend President Bush's 2001 tax cut for stock dividends and capital gains for two years at a cost of $20 billion.

That was welcome news for a president whose tax plans looked all but dead a few weeks ago. All the maverick Republican conservatives in House, who had pushed party leaders to pass $51 billion in spending cuts, voted enthusiastically for tax cuts costing nearly twice as much.

As noted above, the December 9 Los Angeles Times article also addressed the disparity between the spending and tax cuts:

Democrats assailed the tax cuts for aggravating already large budget deficits. The House-passed spending-cut bill would save $50 billion over five years, $44 billion short of the lost tax revenue. House Democratic Leader Nancy Pelosi of San Francisco said it was "immoral of us to heap these deficits on our children."


Democrats also complained that the tax cuts were skewed toward the wealthy even as the spending-cut bill that the House passed targeted the poor.

The Journal and USA Today both noted Democratic objections to the tax cuts on the grounds that they would exacerbate the deficit. But neither article mentioned the exact effect the tax package will have on the deficit, nor did they directly address the spending cuts. The AP article referred vaguely to the Republicans' earlier efforts to cut spending and also mentioned concerns regarding the deficit without citing any specifics:

GOP leaders spent a good part of the fall marshaling support for their effort to shave the growth of federal programs like Medicare and Medicaid. Some moderate GOP lawmakers were less than enthusiastic about the prospect of cutting taxes amid budget deficits and emergency hurricane costs.

But again, the AP entirely ignored the comparative costs of the tax breaks and spending cuts.

On the December 8 edition of Fox News' Special Report with Brit Hume, Wilson's segment on the House bill similarly noted Democratic objections to the tax package while omitting any comparison to the spending cuts. Moreover, Wilson described the legislation as "relatively modest":

WILSON: Feisty debate on the House floor today as Republicans pushed through a relatively modest $56 billion package of tax cuts. Most importantly, the bill extends a capital gains cut passed in 2003. If Congress does not finalize action, the capital gains tax rate is scheduled to increase from 15 to 20 percent in 2008. House Republicans wanted to act now to provide stability in the market. Democrats attacked the measure with fury, arguing first the measure added to the growing federal deficit.

But Wilson's characterization of the tax bill as "modest" overlooked the fact that, one day earlier, the House had passed three additional tax cuts amounting to $38.4 million in reduced revenue, as a December 8 Washington Post article reported:

Under rules reserved for the least controversial bills, the House yesterday approved three tax bills in rapid succession. The first, at a cost of $31.2 billion, would slow the expansion of the alternative minimum tax, a parallel income tax system designed to prevent the rich from dodging taxation but that increasingly has affected the middle class.

The next, at a cost of $7.1 billion over five years, would provide an array of tax breaks to create President Bush's proposed Gulf Opportunity Zone in the region ravaged by hurricanes Katrina and Rita. Businesses could write off much of the cost of new structures and equipment, while the states of Louisiana, Mississippi and Alabama would be granted tax-exempt bond authority for their own rebuilding.

Bowing to pressure from Rep. Frank R. Wolf (R-Va.) and other social conservatives, GOP leaders exempted casinos, country clubs, hot tub facilities, liquor stores, massage parlors, golf courses, racetracks and tanning salons from the tax breaks, exemptions the administration initially opposed.

Finally, the House passed a modest, $153 million tax break that would extend a provision allowing members of the military to use their combat pay to claim the earned income credit.

Posted In
Economy, Taxes
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