Two days ago I fisked a false report from CNBC that said more than a third of all wages and salaries are now government handouts.
That kind of a report, based on a study by an outfit called TrimTabs Investment Research, is genetically engineered to go viral. I closed my post with this pessimistic note:
This one will presumably be bouncing around the message boards and chain emails for years.
And it will. But here’s a list of more prominent outlets that have spread this garbage just in the last two days:
CNN, The Wall Street Journal, the New York Post, Dow Jones, Investors Business Daily, The Atlantic, the Las Vegas Review-Journal, the Michigan Live, WLS Chicago, Rush Limbaugh, The Daily Mail, The Daily Caller, NewsMax, Moneynews.com, Pajamas Media, Newser, TheStreet, The New American. And, of course, Fox News.
And it’s now in the Congressional Record, courtesy of Representative Cliff Stearns, Republican of Florida. God bless America.
For these folks, this story was too good to check.
Hard to imagine grumpy ol’ Jack Cafferty of CNN being credulous, but there he was on Wednesday spreading the falsehood:
Government social welfare programs like Social Security, Medicare, Medicaid and unemployment insurance made up 35% of all public and private wages and salaries last year.
Naturally, Cafferty didn’t credit quasi-competitor CNBC on this one and he flat accepted that folks on Social Security (who make up a disproportionate share of his viewership, I might note) are welfare recipients.
What did he get wrong? Read my original post for the full debunking, but here’s a synopsis: So-called personal current transfer receipts like Social Security payments, Medicare, and unemployment benefits are not included in the Bureau of Economic Analysis’s wages and salaries numbers, which totaled $6.4 trillion last year.
How’d they get that 35 percent handout number then? By erroneously dividing the $2.2 trillion of transfer receipts into wages and salaries. You can’t do that. They also included health care payments like Medicare and Medicaid in the numerator but didn’t include them in the wages and salaries denominator. That makes no sense, and it ought to be obvious to any halfway numerate person (which I’ll admit excludes many of my fellow journalists) that it doesn’t.
The study also excluded capital income. If you add all that together, the “handouts” percentage comes to 18 percent of personal income. But that’s only if you accept that things like Social Security and veterans disability payments are welfare. I don’t and neither do most people. All workers pay into Social Security and get money out according to how much they (or their immediate family member, in the case of a widow or orphan) have paid in. You don’t pay, you don’t get. That’s insurance, not welfare.
Take out Social Security and veterans benefits (which they earned, after all, serving our country) and you drop down to about 10 percent of personal income, and that 10 percent includes things like Medicare, which is also something of a social-insurance program with taxes taken out during working years explicitly to fund it. Here’s the BEA numbers. Look at them yourself:
Rush Limbaugh couldn’t even get the false report right, saying repeatedly that 35 percent of people live off handouts, when the report says falsely that 35 percent of wages and salaries are.
One-third of us don’t earn anything. One-third of us live totally on handouts.
The incredible thing about Limbaugh is that after ranting on and on about welfare laziness and handouts, he got two calls from conservatives on disability and Social Security and exempted them both from their inner conflicts over taking checks from the gubmint. Read Andrew Sullivan on that.
(Picking at Limbaugh for being wrong about facts could be a full-time job, but it’s worth noting the falsehoods here:
Yeah, and look at Europe. Are they a world power, a leader in anything? They have lost their countries. They’ve lost their borders. They’re losing their cultures. They have all these cradle-to-grave programs. They’ve got 14% unemployment. They’ve got rampant poverty. They’ve got people that cannot get treated for months in line for simple medical procedures.
For these folks, this story was too good to check.
Oh, @Ryan. Talk about credulous. You are presuming that your list of media are engaged in doing good-faith journalism. No. These media organizations actually serve as semi-mainstream outlets for the conservative media to disseminate their "packages".Of course they wouldn't "check." That would be a function of journalism, and these people aren't journalists. They are hucksters.
Unfortunately, too few people realize that fact.
#1 Posted by James, CJR on Fri 11 Mar 2011 at 03:09 PM
I think people are confusing "handouts" with the proportion of the federal budget that goes toward entitlement spending. Social Security, Medicare, and Medicaid account for over 40% of the budget. Throw in other means-tested entitlements, interest payments, and other mandatory spending, and you're looking at two-thirds of the budget. No one will report that. Are they afraid to confront the elephant in the room?
Looks like your debunking is as bad as their fact-checking.
#2 Posted by C. Andrews, CJR on Fri 11 Mar 2011 at 04:57 PM
This should also be considered when you talk about these figures "35%? So what? It should be higher. Near 10% unemployment, under employed and individuals completely dropped out of the job market excluded, means there's a ton of unutilized labor out there. Unproductive labor means extra load on the welfare and extra tight on tax receipts and salaries. If you're using figures from a wounded and slowly recovering economy to make a point about its general structure, you're using bad figures."
Furthermore, you can expect more "welfare" as the population ages because American demographics have to swallow the aging boomers. So? What's the solution to that problem?
Ps, you only get close to a 35% figure if you multiply total governments spending 2010 figures:
http://www.usgovernmentspending.com/
6.037 trillion State and Federal
Multiply it by the percentages for Welfare, Health, and Pensions
http://www.usgovernmentspending.com/piechart_2010_US_total
(12% + 16% + 15%) * 6.037 = 2.596 trillion
and then divide that by compensation of employees received:
http://cjrarchive.org/img/posts/personalincomeBIG.jpg
2.596 / 7991.3 = 32.5%
If you use any other metric the numbers come to about 20%. As analysis goes, these figures look like number salad (is a medicare expense counted as part of your payroll income? Are cancer patients rich because, in order to afford their chemo, their salary must be huge? Why are we mixing all social net expenses with payroll instead of GDP?)
Too many people are going to hear about government "welfare" and think it's Federal only, deadbeat supplements only, and a feature of the permanent state of the economy. None of which are true, but these figures play into the existing anti-government prejudices.
#3 Posted by Thimbles, CJR on Fri 11 Mar 2011 at 10:04 PM
This should also be considered when you talk about these figures "35%? So what? It should be higher. Near 10% unemployment, under employed and individuals completely dropped out of the job market excluded, means there's a ton of unutilized labor out there. Unproductive labor means extra load on the welfare and extra tight on tax receipts and salaries. If you're using figures from a wounded and slowly recovering economy to make a point about its general structure, you're using bad figures."
Furthermore, you can expect more "welfare" as the population ages because American demographics have to swallow the aging boomers. So? What's the solution to that problem?
Ps, you only get close to a 35% figure if you multiply total governments spending 2010 figures:
http://www.usgovernmentspending.com/
6.037 trillion State and Federal
Multiply it by the percentages for Welfare, Health, and Pensions
http://www.usgovernmentspending.com/piechart_2010_US_total
(12% + 16% + 15%) * 6.037 = 2.596 trillion
and then divide that by compensation of employees received:
2.596 / 7991.3 = 32.5%
If you use any other metric the numbers come to about 20%. As analysis goes, these figures look like number salad (is a medicare expense counted as part of your payroll income? Are cancer patients rich because, in order to afford their chemo, their salary must be huge? Why are we mixing all social net expenses with payroll instead of GDP?)
Too many people are going to hear about government "welfare" and think it's Federal only, deadbeat supplements only, and a feature of the permanent state of the economy. None of which are true, but these figures play into the existing anti-government prejudices.
#4 Posted by Thimbles, CJR on Fri 11 Mar 2011 at 10:06 PM
By the by, not to change the topic but the usual regulatory capture topics (OCC) don't update on the Recent Comments list.
This has got to be the most ridiculous article on the Federal Reserve I've read in some time:
http://emptywheel.firedoglake.com/2011/03/10/the-folks-who-run-our-economy-believe-in-the-easter-bunny/
"'A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday'...
And they’re not releasing the report–they’re keeping it totally secret! I can only presume that the logic and data (based on just 500 loan files) behind it is so laughable that releasing it would be more damaging than simply issuing this claim with no proof.
Nevertheless, as my list above makes clear, it is simply impossible to state that there have been no wrongful foreclosures and still claim to have even a shred of grasp on reality."
It reminds me of the Mishkin interview from Inside Job "You can't be serious. If you would have looked, you would have found things."
http://www.youtube.com/watch?v=FzrBurlJUNk (1:35 in)
And yeah, that was in reference to his time at the Federal Reserve.
#5 Posted by Thimbles, CJR on Fri 11 Mar 2011 at 10:24 PM
So a more accurate description would be "Government wealth transfer payments are now equivalent in size to 35% of all wages and salaries earned in the US"?
The author seems to find this idea comforting.
I can't say I agree.
#6 Posted by CTD, CJR on Fri 11 Mar 2011 at 11:04 PM
I have on occasion, for instance a sick-day home from work when the remote was across the room and I didn't want to move, watched broadcast news. I have never seen or heard Glen Beck, and I once listened to Rush until his whining voice snotty demeanor drove me back to listening to Pink Floyd's Dark Side of the Moon.
Observation: At least 50 percent of the population in the U.S. is below average in intelligence as measured on the WAIS. Given that fact...
Question: Does anyone in the upper 50 percent believe that this stuff is anything more than "entertainment?"
Despair: Next you're going to tell me that people read the National Inquirer because their inquiring minds want to know!
#7 Posted by BK, CJR on Mon 14 Mar 2011 at 09:30 PM
"Government wealth transfer payments Income from the poor to the rich are now equivalent in size to 35% of all wages and salaries earned in the US"?
Fixed
#8 Posted by El, CJR on Thu 17 Mar 2011 at 09:20 AM
Should read Income from the poor to the rich
#9 Posted by El, CJR on Thu 17 Mar 2011 at 09:25 AM