E-Mail This Article to a Friend TAX LIES Bad times for the middle class BY DAVID S. BERNSTEIN

The Bush tax cuts of 2001 — the majority of which went to wealthy Americans — cost the US government $73.8 billion in the first year alone, according to the Tax Foundation. Now, based on newly revised figures released by the Census Bureau, it appears they also did little good for the middle class. In 2002, a year of economic expansion, median middle-class after-tax income actually dropped by about one percent from the previous year, even though taxpayers got to keep a higher percentage of their earnings.

"Recovery ought to mean more income for families," says Jared Bernstein, a senior economist at the left-leaning Economic Policy Institute. "Here is some real data, that is finally correct, that shows that the Bush tax cuts of ’01 had no positive impact on median household-income growth."

This was not what the bureau said when it first released its annual income and poverty data in September. "The Census Bureau put in its headline last year that incomes didn’t fall in most of its measures," says Arloc Sherman, a senior researcher for the Center on Budget and Policy Priorities, in Washington, DC. "It’s an honest mistake, but things are worse than the Census Bureau said, to an embarrassing degree."

And the bureau still has not come entirely clean, releasing only three of the dozen or so data tables that need revising. Worse, the bureau has not taken down from its Web site the reports containing the incorrect numbers, or the press release that falsely touts, "three of four alternative income definitions show no change in median household income."

There are more bad omens for how the data — officially known as the Current Population Survey (CPS) — will be handled this election year. The Census Bureau announced last month that the 2003 "alternative measures" for income and poverty, which include after-tax figures, will be released separately during the fall, in dribs and drabs "as they become available," rather than as part of the official CPS report. That official report will be released a month earlier than its traditional late-September date, during what Bernstein calls the "sleepy time in DC" of August, and will be presented simultaneously with the results of the American Community Survey, which has in recent years painted a rosier picture of poverty than official bureau figures do.

These attempts to dilute the report’s reception have led two member of Congress, William Lacy Clay Jr. (D-Missouri) and Carolyn Maloney (D–New York), to send a letter to the bureau expressing their "concerns with the politicization of the Census Data." They have also introduced legislation aimed at ensuring the CPS data’s "integrity."

The bureau’s recent revision corrects errors, first reported by the Phoenix (see "The Politics of Poverty," News and Features, October 10, 2003), stemming from the use of incorrect tax rates. Last month, a Phoenix report (see "Release Me!", This Just In, April 23) that the bureau was sitting on the revised data prompted an inquiry from the Commission on Government Reform’s Minority Office, and the bureau finally posted the revised figures six days later.

Chuck Nelson, assistant chief for the Census Bureau’s Housing and Household Economic Statistics Division, says that to his knowledge, it was purely coincidental that the revised figures were released so quickly after the Phoenix’s follow-up report and the congressional commission’s inquiry.