A Venal Little Story Sans Moral (and Some Predictions)

The series of events in this report was confusing until I followed them back near enough to the beginning to understand which hand was doing what…and when and to whom.

As I walk you through this story, I hope the details are clear. It took me a while to sort them out before I sat down to write.

As stories go, this one is not all that important. The only reason I’m telling you is because it seems to be emblematic of much larger issues with this President and his administration. So, yes, it’s a venal little tale, but this has become a venal little presidency and that in itself is disturbing:

When you go here, you get this [I have bolded the time because what you see quoted here is appearing four hours after the original, which is further down the page]:

Advisory: Backdoor taxes to hit middle class

Mon Feb 1, 8:07 pm ET

The story “Backdoor taxes to hit middle class” has been withdrawn. A replacement story will run later in the week

What th’ ??? Where’s the story??

The mystery was shortly explained, or explained away, depending on your point of view. Business Insider said:

The original link le[d] to an article posted on Monday, Feb. 1 at 4:09 p.m. which reads, in part:

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

[…]

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a “patch” that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

So that block of news was part of the Reuters’ report, the one which was pulled and replaced by the terse “withdrawn” notice after pressure by the White House. Where was the rest of it? Why did it come down?

This appears to be the chronology, still according to Insider:

The lead story at DrudgeReport.com as of 11:30 a.m. was “**REUTERS: Backdoor taxes to hit middle class.”

But Reuters withdrew the article last night. Drudge noted the change and wrote: “**REUTERS pulls tax story…”

then added another link to the top left margin: “Largest-ever federal payroll to hit 2.15 million employees…”

So what happened?

According to a Reuters rep, the was withdrawn “due to significant errors of fact.”

“The story was wrong on multiple points and should not have gone out,” she emailed us. A formal withdrawal will issued will address specific points that were incorrect later today.

UPDATE: A White House official told Talking Points Memo that administration aides appealed to Reuters to take it down.

Here’s the “Talking Points Memo” story on the disappearance of that “tax the middle class via the back door” Reuters report:
- - - - - - - - -

Obama administration aides appealed to the Reuters White House reporting team to kill a story by another reporter of the news service that suggested the president’s new budget blueprint included “backdoor” tax hikes.

A White House official told TPMDC the Reuters story was “falsely stating that the President’s budget raises taxes for middle class families, when in fact the opposite is true.”

The official said when the administration saw the story, published yesterday afternoon, they contacted one of the Reuters White House correspondents.

The White House pushed these points:

• Our budget explicitly calls for permanently extending the Bush tax cuts for households making less than $250,000.
  
• Our budget explicitly calls for allowing the top rate on dividends to increase to 20% for households making over $250,000.
  
• Our budget accounts for the cost of continuing the AMT “Patch”. The last administration’s budgets ignored these costs, but we explicitly account for them.
  
• Our budget extends expiring tax provisions through 2011.

The official said the Reuters White House team “worked to quickly remedy the situation and helped get the story completely withdrawn” last night.

Not everyone fell into line with Reuters, however. Michelle Malkin had a good link to the original Reuters story when she posted it so she’s leaving it there:

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 - though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a “patch” that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers).

But those are all the things the White House told its Reuters’ reporters were wrong, so the WH Reuters’ crew obediently leaned on the other Reuters staff to kill the story, which they did. Those details above simply disappeared.

Ah, transparency.

So now, clicking on the link to Michelle Malkin’s source, you get a 404 “Page not Found”. That terse “this story has been withdrawn” message is linked to by Malkin, with her own cryptic, “Hmmm…”

Hmmm, indeed. This administration leaned on Fox News and Fox News barked back. It leaned on Reuters and al-Reuters caved.

So in this latest episode, we’ve come full circle, from the first notice of the story being withdrawn to Malkin’s notice of its withdrawal but without comment.

Here’s the thing: the “backdoor” story was up on Drudge. Once something’s on Drudge, hang it up. Whatever he puts up goes galloping ’round the sphere like a stallion in springtime. Thus, any effort to pull the story just makes you look lamer than usual. And the poor sod that got his story squashed? Well, it looks like he had a little passive-aggressive revenge with that terse “withdrawn” statement.

I don’t understand how a group of Cook County tough guys can look so dumb sometimes. But they do, and this is one of those times.

Meanwhile, how about that other Drudge headline? The one that says:

“Largest-ever federal payroll to hit 2.15 million employees…”

If you’d been on Drudge last night and clicked the link, you’d have gotten to a Washington Times story:

The era of big government has returned with a vengeance, in the form of the largest federal work force in modern history.

The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that “the era of big government is over” and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.

Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010.

The expansion could provide more ammunition to those arguing that the government is trying to do too much under President Obama.

[…]

From 1981 through 2008, the civilian work force remained at about 1.1 million to 1.2 million, with a low of 1.07 million in 1986 and a high of more than 1.2 million in 1993 and in 2008. In 2009, the number jumped to 1.28 million.

Including both the civilian and defense sectors, the federal government will employ 2.15 million people in 2010 and 2.11 million in 2011, excluding Postal Service workers.

Notice that the number drops in 2011. Maybe there’s some hope as the Boomers continue to leave the scene (but lining up for those federal benefits).

Meanwhile, on the municipal side, budgets are being trimmed with a vengeance. Take a look at Colorado Springs:

More than a third of the streetlights in Colorado Springs will go dark Monday [February 1st]. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops - dozens of police and fire positions will go unfilled.

The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter.

Neighbors are encouraged to bring their own lawn mowers to local green spaces, because parks workers will mow them only once every two weeks. If that.

Water cutbacks mean most parks will be dead, brown turf by July; the flower and fertilizer budget is zero.

City recreation centers, indoor and outdoor pools, and a handful of museums will close for good March 31 unless they find private funding to stay open. Buses no longer run on evenings and weekends. The city won’t pay for any street paving, relying instead on a regional authority that can meet only about 10 percent of the need.

[…]

Colorado Springs’ woes are more visceral versions of local and state cuts across the nation. Denver has cut salaries and human services workers, trimmed library hours and raised fees; Aurora shuttered four libraries; the state budget has seen round after round of wholesale cuts in education and personnel.

The deep recession bit into Colorado Springs sales-tax collections, while pension and health care costs for city employees continued to soar. Sales-tax updates have become a regular exercise in flinching for Mayor Lionel Rivera.

“Every month I open it up, and I look for a plus in front of the numbers instead of a minus,” he said. The 2010 sales-tax forecast is almost $22 million less than 2007.

Voters in November said an emphatic no to a tripling of property tax that would have restored $27.6 million to the city’s $212 million general fund budget. Fowler and many other residents say voters don’t trust city government to wisely spend a general tax increase and don’t believe the current cuts are the only way to balance a budget.

It’s getting tougher every day to run a city this size. And here is the crunch that feeds resentments:

Community business leaders have jumped into the budget debate, some questioning city spending on what they see as “Ferrari”-level benefits for employees and high salaries in middle management. Broadmoor luxury resort chief executive Steve Bartolin wrote an open letter asking why the city spends $89,000 per employee, when his enterprise has a similar number of workers and spends only $24,000 on each.

Businessman Fowler, saying he is now speaking for the task force Bartolin supports, said the city should study the Broadmoor’s use of seasonal employees and realistic manager pay.

A prediction: as the economy worsens, as unemployment increases or stagnates, as Obama continues to employ big government measures for small business problems, even as he kills off small enterprises, the number of The Dissatisfied will increase as the warm weather returns.

The contrarians who joined the Tea Party brigades haven’t gone away, though their focus may be broadening:

• Not just smaller government, but smaller government wages and benefits.
  
• Not just tax reform, but tax revolution across the board.
  
• Not just legislation, but the transparency Obama reneged on after he was elected.
  
• Not just health care reform, but reform of Big Pharma and its snug arrangement with the FDA, and tort reform we can believe in.
  
• Not just ethics investigations, but timely criminal proceedings against the wrong-doers serving in Washington.
  
• Real service from our political leaders, not just lip service.

This is just the beginning of the ground swell. People are cynical when they hear Michelle and Barack Obama talk about ‘service’ yet can plainly see the only folks these two have served have been themselves.

It’s going to be a long, interesting Summer followed by a raucous Autumn.