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Census Says Income is Down, but Some Republicans Claim it's Up
Did the Bush tax cuts make up for income lost to the recession? No - but watch out for Republicans who claim it did

December 5, 2003
Modified: December 22, 2003

Summary

In September the Census Bureau issued its annual figures on income and poverty, and to nobody's surprise poverty rose and U.S. median income went down in 2002 as a result of the economic downturn. Furthermore, Census said that its official measure of after-tax income also went down by nearly a full percentage point, despite lowered federal income-tax rates.

On the same day, however, the Republican staff of the Joint Economic Committee issued a news release claiming that after-tax income went up - and citing Census figures. What the release did not say is that the numbers being quoted were not the official Census measure of after-tax income, but an obscure, unpublished "experimental" measure that (among other things) does not take account of income from capital gains. The JEC Republicans had even issued a different release earlier in the day, saying that after-tax income was down, and laying blame on the Clinton administration.

Analysis

There was little comfort for Republican political hopes in the income and poverty figures released by the Census Bureau on September 26. They showed that 1.7 million more Americans fell into poverty in 2002, while income of the typical household declined by $500. And while tax cuts had clearly eased the pain some, for the typical household it was not enough -- even after-tax income declined by $310.

But that did not stop House Republicans on the Joint Economic Committee from putting out a news release claiming Census figures showed tax cuts had produced an after-tax income gain of $249. "This is the first increase in after-tax median income since 1999," said the committee's vice chairman, Republican Rep. Jim Saxton of New Jersey. Without the Bush tax cuts, Saxton said, "there is no doubt that middle income households would have suffered reductions in take-home pay in 2002."

Actually, middle income households did suffer reductions in take-home pay by every measure that the Census bureau published. It publishes 16 different measures of before- and after-tax income, some of which attempt to count such things as the value of Medicare or the paper profit from rising home values. All 16 went down in 2002, including definition 1b, the bureau's official measure of money income minus federal, state and local income taxes.

The Republican release was based on an obscure statistic not included in the official publication, "table RD-1", which Census calls "experimental." It is a less comprehensive measure than definition 1b, as it does not attempt to count income from capital gains or losses (actual profits or losses from sale of property such as real estate, stocks or bonds). Since 2002 was a poor year for the stock market, ignoring capital gains and losses gave a more favorable picture than did the official after-tax income measure.

Footnote: Before they dug up the RD-1 statistic, JEC Republicans issued a news release minimizing the decline in median household income and laying blame for it on the Clinton administration. It focused on Census definition 14, an after-tax measure which counts as income such non-money items as the value of school lunches and employer-sponsored health insurance. Even that measure went down $133, but the draft release quotes Saxton as saying this was "essentially unchanged, with the apparent decline falling within the margin of error."

But Saxton later issued a different release claiming an increase when Census officials provided his staff with the unpublished, experimental figures.

Note: This article was modified Dec. 22, 2003 to reflect that Census publishes 17 definitions of income, not 16 as originally stated. All 17 went down.

Sources
US Congress, Joint Economic Committee House Republicans, Progress in Household Income Stalled in 2000, news release 26 Sept 2003.

US Congress, Joint Economic Committee House Republicans, Income Increased in 2002 After Taxes, news release 26 Sept 2003.

Carmen DeNavas-Walt, Robert Cleveland and Bruce H. Webster, Jr., U.S. Census Bureau, Current Population Reports, P60-221, Income in the United States: 2002, U.S. Government Printing Office, Washington, DC, 26 Sept. 2003.

Dr. Daniel H. Weinberg, Chief, Housing and Household Economic Statistics Division,U.S. Census Bureau, Press Briefing on 2002 Income and Poverty Estimates 26 Sept. 2003.