Stossel's Shoddy Reporting on Government Waste

ABC's Free-Market Booster Needs Some Competition

It was hard to miss the theme of John Stossel's January 27 ABC News special, "Mr. Stossel Goes to Washington." Taxes are too high, the government squanders much of the money, and the "free market" provides the best alternative to the "central planning" of Washington bureaucracy.

The report is produced by ABC's news division, but it would be a stretch to call it journalism. Instead, Stossel strings together a collection of anecdotes and interviews with conservative journalists to support his overarching theme of the horrors of government waste and taxation.

First, Stossel tries to establish the fact that Americans are overtaxed, using some of the most widely debunked "facts" about the tax code. His expert source, conservative Wall Street Journal columnist Amity Shlaes, explains that "Americans pay more in taxes than we do in food, clothing and shelter combined." Then Stossel himself adds that workers work until the month of May just to pay off their taxes.

These figures come from a famously debunked "study" by the conservative Tax Foundation, a Washington think tank (see Washington Post, 4/25/96, Extra!Update, 10/96). The foundation simply assumed that almost all federal, state and local taxes are paid by median-income families at the same rate as the national "average." So if the corporate profits tax equals 5% of national income, the foundation assumed it also takes up 5% of a median family's income-- even though families do not pay corporate profits taxes. The same was true of gift, estate, and business payroll taxes-- none of which are paid by most families.

If Stossel were trying to be fair, he could have cited measures that show a decline in the median federal tax payment over the past 20 years, with increases coming from a slim portion of the population paying more taxes on their sharply rising incomes (Washington Post, 2/21/99).

Stossel also makes this claim: "America now spends about $ 40,000 a year on every family of four below the poverty line.... You could just cut them a check for that and they'd be out of poverty." As with most of Stossel's "facts," the source for this claim is not mentioned. When FAIR called ABC on February 2 to get clarification on this fact, we were told that all the producers who worked on Stossel's special were on vacation for several weeks.

But it appears the statistic comes from Heritage Foundation welfare analyst Robert Rector, whose numbers Stossel has cited in previous specials. In a 1995 book, Rector calculated that the government spent $324 billion on "welfare." When that number was divided by the number of families then below the poverty line, the result was about $40,000. The problem is that Rector's welfare number included vast amounts of spending that go to non-poor families as well as poor ones-- things like Pell grants, reduced-price school lunches, and health benefits like Medicare and Medicaid-- yet it was only divided by the number of families *below* the poverty line.

Throughout the rest of the report, Stossel's method is simple: document examples of government waste and neglect, and demonstrate how privatized, market-based solutions are more efficient.

Glaringly absent from Stossel's report is any mention of one of the biggest regulation-related stories of the year-- California's deregulation-induced energy crisis. Citizens who live in California towns with publicly owned utilities have been largely unaffected by the rolling blackouts and soaring rates that have crippled the rest of the state. Stossel's selective attention to the details is nothing new-- a few years ago, two producers quit working with him after being pressured to ignore research findings that undermined Stossel's claims (Extra! Update, 6/94).

Stossel's examples sometimes border on the absurd, like his suggestion to alleviate delays at airports: "Look at the sky. Even over an airport, there's lots of room. Why can't they fly more planes in this empty space?" At one point, he laments that a woman running a private charity providing food to the needy was forced to abide by health codes in her kitchen. Protecting people from food-borne illnesses may sound reasonable, but not to Stossel, who complains that the government "wouldn't leave her alone."

Stossel closes with these thoughts: "As Thomas Jefferson warned, the natural progress of things is for government to gain and liberty to yield. The choice is up to you." For viewers of ABC News, however, there's very little choice: Stossel's reports are often distorted, one-sided attacks from a right-wing libertarian perspective. Stossel himself does not claim to be balanced: In an ABCNews.com on-line chat (1/29/01), Stossel responded to viewer questions with comments like "I clearly do have a point of view" and "I also admit my report was one-sided." Taking Stossel at his word, it sounds like his ABC News reports should be labeled as commentaries.

Which leaves one question for ABC News: If the competition of the marketplace is what makes things work better, why don't they apply that principle to their programming, and provide some competition for Stossel's one-sided, factually challenged reporting?

ACTION: Tell ABC to provide John Stossel with some of the competition that he professes to admire so much. If he is allowed to openly and consistently advocate for his laissez-faire point of view, ABC should also provide comparable airtime to a critic of laissez-faire policies-- preferably one who does not have Stossel's extensive record of inaccuracies.

CONTACT: David Westin, ABC News 47 W. 66th Street New York, NY 10023

Phone: 212-456-7777 (ABC News general number) Fax: 212-456-4297 mailto:netaudr@abc.com (ABC News)

John Stossel mailto:stossel@abc.com

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