Someone might want to stage an intervention and explain The First Rule of Holes to CNBC’s John Harwood: when you’re in one, stop digging.
If you watched the Republican presidential primary debate on CNBC last night, you know what a trainwreck it was. The lowlight of the evening came when moderator John Harwood attacked Sen. Marco Rubio (R-Fla.) for offering what Harwood says is a tax plan that’s heavily tilted towards the rich. When Rubio corrected Harwood and told him that his facts were wrong, Harwood dug in. Here’s the transcript of the exchange:
HARWOOD: Senator Rubio, 30 seconds to you.
The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.
Since you’re the champion of Americans living paycheck-to- paycheck, don’t you have that backward?
RUBIO: No, that’s — you’re wrong. In fact, the largest after- tax gains is for the people at the lower end of the tax spectrum under my plan. And there’s a bunch of things my tax plan does to help them.
Number one, you have people in this country that…
HARWOOD: The Tax Foundation — just to be clear, they said the…
(CROSSTALK)
RUBIO: …you wrote a story on it, and you had to go back and correct it.
HARWOOD: No, I did not.
RUBIO: You did. No, you did.
(APPLAUSE)
(CROSSTALK)
HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent.
RUBIO: Well, you’re talking about — yeah.
HARWOOD: And people in the middle of the income spectrum, about 15 percent.
RUBIO: Yeah, but that — because the math is, if you — 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money…
HARWOOD: (inaudible)
RUBIO: …numerically, it’s gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan, and here’s why: because in addition to a general personal exemption, we are increasing the per-child tax credit for working families.
We are lowering taxes on small business. You know, a lot of business activity in America is conducted like the guy that does my dry cleaning. He’s an S corporation. He pays on his personal rate, and he is paying higher than the big dry-cleaning chain down the street, because he’s paying at his personal rate.
RUBIO: Under my plan, no business, big or small, will pay more than 25 percent flat rate on their business income. That is a dramatic tax decrease for hard-working people who run their own businesses.
(CROSSTALK)
RUBIO: …The other thing I’d like to make about our plan, one more point, it is the most pro growth tax plan that I can imagine because it doesn’t tax investments at all. You know why? Because the more you tax something, the less of it you get.
I want to be in — I want America to be the best…
PAUL: …John…
RUBIO: …in the world for people…
HARWOOD: Senator, thank you.
Be sure to read through that whole exchange, because it’s fascinating to see what Harwood tried, but completely failed, to accomplish. Right out of the gate, Rubio correctly pointed out that Harwood already had a bit of a history of botching the facts of Rubio’s tax plan. Rubio was referring to this October 14 tweet from Harwood, in which Harwood admits that he got his facts wrong. The tweet is important because it establishes that Harwood at one point knew the actual facts:
CORRECTING earlier tweet: Tax Foundation says Rubio benefits lowest 10% proportionally more (55.9) than top 1% (27.9%). Avg for all: 17.8%.
John Harwood (@JohnJHarwood) October 14, 2015
Harwood’s mischaracterization of Rubio’s plan during the debate was so brazen that the president of the Tax Foundation himself felt compelled to correct John Harwood:
Rubio was right about his plan. Poor get larger tax benefit than the rich. #CNBCGOPdebate https://t.co/GOkJyYpdfw
Scott A. Hodge (@scottahodge) October 29, 2015
Instead of doing the honorable thing–promptly admitting the error, apologizing for it, and correcting it–John Harwood this morning went Full Dan Rather on Twitter and doubled-down:
@seanmdav by accurately citing Tax Foundation analysis?
John Harwood (@JohnJHarwood) October 29, 2015
Dude. Stop. You are not helping yourself. You did not accurately cite anything. To prove this (not that Harwood appears to be even remotely interested in proof given his apparent dismissal of the Tax Foundation’s correction of him) let’s take a closer look at Harwood’s characterization of Rubio’s tax plan:
HARWOOD: The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.
Two immediate problems with Harwood’s sloppy characterization should spring to mind: 1) he never defines “in the middle of the income scale,” and 2) he never specifies in that characterization whether he’s focusing on the dynamic or the static analysis conducted by the Tax Foundation.
The first is a problem because “the middle” could mean a lot of different things, especially in light of the fact that the Tax Foundation scores by income decile–in increments of 10 percent. Is “the middle” the middle one-third (people who fall in the 33 percent to 66 percent income distribution)? Is it the middle 20 percent? (40 percent to 60 percent in the distribution)? Is it the middle 40 percent (30 percent to 70 percent)? Or is it the middle 80 percent, leaving out the richest and poorest 10 percent?
The dynamic vs. static component is also important, because those scores are wildly different. Thankfully, Harwood actually provided some clarity on both points, because he specifically referenced two figures from the dynamic score portion of the Tax Foundation analysis:
HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent.
RUBIO: Well, you’re talking about — yeah.
HARWOOD: And people in the middle of the income spectrum, about 15 percent.
Here’s the Tax Foundation table Harwood referenced:
Remember Harwood’s original assertion: that Rubio’s tax plan “give[s] nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.”
In order for that to be true based on the Tax Foundation number, John Harwood has to believe that “the middle” is comprised of precisely one single income decile that by mathematical definition is not in the middle of the income distribution. Because we are dealing with John Harwood here, I feel compelled to provide the dictionary definition of the word “middle”:
at an equal distance from the extremities of something; central.
You simply cannot take a single income decile in a decile-based distribution and call it “the middle” of anything. That is a mathematical absurdity. Instead, you have to use multiples of 20 percent in order to define a middle in a decile-based distribution, hence my specific question above about which deciles Harwood included in his definition of “the middle.”
So let’s look at the facts: the middle 40 percent (i.e. those between 30 percent and 70 percent of the income distribution), according to the Tax Foundation analysis, will see increases in after-tax income of 17.2 percent (30-40 percent decile), 15.7 percent (40-50 percent decile), 15.3 percent (50-60 percent decile), and 15 percent (60-70 percent decile) under Rubio’s plan.
The middle 60 percent (20-80 percent deciles) will see an average after-tax income increase of 16.2 percent. The middle 80 percent (10-90 percent deciles) will see an average increase in after-tax income under Rubio’s plan of more than 17 percent. As Rubio and the Tax Foundation president noted, the bottom 10 percent does much, much better, proportionally, than the top 1 percent. That’s why the distributional effects even out as you include lower income deciles in the analysis. And as Rubio noted, whenever you offer a percentage tax cut, people who make more will get a higher benefit, period. That’s because people at the top of the spectrum pay a ton and taxes, and people at the bottom pay very little.
This is why Rubio jumped on him. Marco Rubio knew that Harwood’s facts were wrong. This is why the Tax Foundation president jumped on him. As the actual publisher of the study in question, he knew that Harwood’s facts were wrong.
Proving once again why he had no business whatsoever moderating the GOP presidential primary debate, John Harwood is apparently the only person in America who doesn’t understand he was wrong. It’s bad enough to aggressively argue with a presidential candidate after being repeatedly corrected on live television. But doubling down and refusing to admit error 12 hours later, after you’ve been repeatedly pantsed by everyone with a basic grasp of the facts?
That’s just sad. It’s also vintage John Harwood.
[NOTE: This post has been updated to correct a rather embarrassing mathematical error by yours truly. Corrections: so easy even a non-moderator can do them!]
