Economic Principals

In a week when management failures at The New York Times were much in the news, I wanted to call attention to a series of stories that have appeared in that paper during the period of crisis, all of them written by David Firestone, one of the paper's beat reporters on tax policy.

The first appeared Thursday, May 29, the day after the tax bill was signed:

"Tax Law Omits $400 Child Credit for Millions"

Firestone reported that a last-minute revision by House and Senate leaders had eliminated a $400 per child credit for millions of minimum-wage-earning families whose children were over 16, citing a study of the fine print of the tax bill by a liberal think-tank. Some 25 million middle-income families would receive checks for $400 per child next month, he wrote. But by withholding the credit to families earning between $10,500 to $26,625, on grounds that they paid no income tax in the first place, the negotiators had been able to preserve an extra $3.5 billion in dividend and capital gains tax cuts for the well-to-do instead. Democrats said the last-minute decision underscored the fundamental unfairness of the tax cut. Republicans blamed Democrats for capping the tax cut at $350 billion.

The second story appeared the next day:

"Battle on Child Tax Credit Intensifies in the Capital"

The Bush administration defended Congressional negotiators' decision to cut child credits for minimum wage families out of the tax bill, Firestone reported, asserting that the tax bill was intended to help taxpayers, not those who were too poor to pay taxes. Democrats countered that the working poor did indeed pay payroll taxes of 7.65 percent even if they owed no income tax at the end of the year. And Senate Democratic leader Tom Daschle called for legislation to extend the child credit to those from whom it has been withheld.

Then on Sunday June 1:

"Second Study Finds Gaps in Tax Cuts."

Firestone reported that a second study corroborated the first, finding that 8 million mostly low-income taxpayers would receive no benefit from the new tax law, even though it had been widely advertised by the White House as containing some benefit for every taxpayer. The groups were identified as mainly low-income single people with no children and no dividend or capital gains income and low- and moderate-income single parents with children over 16.

Two days later, on Tuesday:

"Senate Bill Would Extend Child Tax Credit to the Poor"

Sen. Blanche Lincoln, Democrat of Arkansas, introduced a bipartisan bill cosponsored by 25 other senators to extend the $400 tax credit to minimum wage families. "I wasn't in the room during those negotiations in the dark of night,: said Sen. Lincoln, "and I understand that very few of my colleagues were." The measure was to be revenue-neutral, designed to pay for itself with some combination of business taxes and increased customs fees. Sen. Charles Grassley, Republican of Iowa and chairman of the Senate Finance Committee that made the cuts, said "Some tax relief is a no-brainer. Helping parents keep a little more money to raise their kids doesn't requite much analysis."

The next day, Wednesday:

"DeLay Rebuffs Move to Restore Lost Tax Credit."

House majority leader Rep. Tom DeLay called a press conference to say that the House would not consider a counterpart to the Senate bill providing the child cred to 6.t5 million parents of around 12 million children. "There are a lot of other things that are more important than that," said DeLay. "To me, it's a little difficult to give tax relief to people who don't pay income tax." The conference committee that dropped the credit had included no Democrats, Firestone reported.

Thursday:

"Senators Negotiate on Pact To Extend Child Tax Credit"

Senators engaged in "fierce negotiation" over Sen. Lincoln's bill to extend the child credit to the working poor, Firestone reported. At issue was Sen. Grassley's demand that if the credit were given to the 6.5 million families at the low end of the scale, it should be extended as well to married couples earning between $110,000 and $150,000 a year. "They are middle income families," said Grassley.

On Friday June 6, the story lead the paper in the right-hand column on Page 1:

"Senate Approves Child Tax Credit in Lower Bracket."

The margin was 96-2 -- with two Oklahoma Republicans dissenting President Bush was expected to signal the Republican leadership of the House that some short of compromise with the Senate should be reached. Firestone wrote, "Although almost every Senate Republican voted for the bill, some clearly were unhappy at having to do so under what they considered public pressure from liberal groups and Democrats. Senator Trent Lott of Mississippi voted for the bill, but as he did so, he stuck his tongue out, put his finger in his mouth and made a gagging sound, indicating his apparent distaste for the bill."

On Saturday, Firestone filed to The Times' Website:

Fight or Flight: G.O.P. Split over Tax Credits

House leaders had pledged to provide credits to low-income families only as part of a more encompassing bill, making permanent the credit for 25 million middle-class families and eliminating the customs fees that would pay for the Senate bill. The resulting House bill would cost the treasury as much as $100 million over the next ten years, as opposed to the Senate bill, which would cost nothing.

And on Sunday, June 8? You'll have to see for yourself.

Three key points. First, the power of Firestone's stories derive from the stark contrast between one of the Republican Party's central claims for the tax cuts -- that every taxpayer would benefit from it, that no child would be "left behind" -- and the facts. The story was surprising, illuminating, significant. The developments were, in short, news.

Second, Firestone's stories were much more subtle, balanced and wide-ranging than the summary I have offered here. The reporter played it straight down the middle, talking to both sides at each juncture, faithfully representing all views, filling in background as he went along, adding facts and refining language, never once overstepping the bounds of fairness.

Third, Firestone's stories elicited the sincerest form of flattery. They were followed by other reporters. (The Wall Street Journal ran a story (subscription required) the same day as his first story ("Critics Point Out Flaws in New Tax-Cut Package.") But only after a Washington Post editorial endorsed the increasingly dominant interpretation ("Stiffing these children was not a last minute oversight or the unfortunate result of an unreasonably tight $350 billion ceiling") did the drafting of the remedial legislation become a running story in the Post and the Journal.

Even the editorial page of The Wall Street Journal (subscription required) weighed in, if only to dismiss the other papers' concerns for the "lucky duckies" near the bottom of the income distribution who pay little or no tax. "Most Americans probably don't realize that it is possible to cut taxes beyond zero…. In more honest precincts this might even be called 'welfare.'"

What about that 7.65 percent payroll tax that so often has outraged the editorial page in other connections? The Earned Income Tax Credit was supposed to take care of that, the Journal editorialists said -- a $31.8 billion budget item. There was no mention of stimulus, or need, or living standards, or elementary justice.

In the superheated partisan atmosphere of Washington and New York, at a time when The New York Times is routinely accused by ideologues of "lying" and "slanting the news," Firestone's stories stand out as a shining example of what good newspapers are supposed to do. They uncovered an unexpected aspect of the ongoing truth of things.

It is also true that The New York Times occasionally has gotten out of line in recent years, disregarding the norms of evenhandedness in order to pursue its editors' enthusiasms and dislikes. But deep down, in the grass roots of the newspaper, it does its share of superb journalism, day after day.