The Wall Street Journal - 13.03.2020

THE WALL STREET JOURNAL. Friday, March 13, 2020 |A

I

n Washington, few lines are as
hackneyed as Sen. Daniel Pat-
rick Moynihan’s aphorism that
“everyone is entitled to his own
opinion, but not his own facts.”
That’s true, but it’s also true that
pundits can sometimes twist a few
“facts” into a false narrative. Consider
three widely accepted misconceptions
about the Democratic Party—each of
them debunked by the outcome of the
primaries to date.
First, those who see the party as a
collection of self-interested identity
groups get it wrong. Many assume
that female candidates had a distinct
advantage with female voters, Afri-
can-American candidates with Afri-
can-American voters, Hispanic candi-
dates with Hispanic voters, etc. But

neither Cory Booker nor Kamala Har-
ris had a line on African-American
Democrats. Julián Castro failed to
dominate within the Hispanic com-
munity. Maybe most remarkable,
Elizabeth Warren didn’t win female
voters even in Massachusetts.
Let that be a lesson to everyone
pontificating about who our nominee
should pick as his running mate to
“balance” the ticket. I know plenty of
female voters who, while caring
about day care and early childhood
education, also worry about Amer-

Journalists need to start

explaining the world as

it is—not as it appears

to them on Twitter.

Democratic Voters Smash Media Myths

ica’s forever wars and climate

change. In the same way, Hispanic

voters don’t necessarily believe new

arrivals should immediately get free

health care. And as the African-

American community’s support for

Joe Biden reveals, not all African-

American voters rule out leaders

who have a history of being “tough

on crime.”

Among Democrats, demographics

are not destiny—they are informative,

not determinative. As Sen. John F.

Kennedy said nearly 60 years ago, “I

am not the Catholic candidate for

president. I am the Democratic Party’s

candidate for president, who happens

also to be a Catholic.”

Second, it’s time to reset the me-

dia’s obsession with money in poli-

tics. I got my start as a fundraiser,

so I’m well aware that candidates

need a certain level of support to

mount a successful campaign. More-

over, I’ve been horrified to see ex-

cessive sums of corporate money

pour into the process since the Su-

preme Court wrongly decidedCiti-

zens United.

But the conventional wisdom

about money’s role in American poli-

tics is overblown. The two billion-

aires in the race fell flat. Their abil-

ity to self-fund became a political

liability. Maybe even more remark-

able, the candidates whose cam-

paigns were fueled by armies of

small donors didn’t do much better.

In Democratic politics, biography,

ideas, character, message and organ-

ization all bear more heavily on a

candidate’s fortunes.

Third, it’s time to retire the ab-

surd notion that the Democratic

Party is beating a path toward Scan-

dinavian-style socialism. For reasons

that escape me, the media has come

to presume that one’s reach on Twit-

ter correlates with one’s influence in

the corridors of power and hold on

the progressive electorate writ large.

Gazing at social media is no way to

gauge the opinions of Democrats.

When it comes to politics, Twitter is

a funhouse mirror.

That has broader implications.

The results over the past two weeks

prove that many reporters and pun-

dits pay too much attention to a se-

lect few members of the Democratic

Caucus and too little to the elected

officials who actually established our

House majority. For every journalis-

tic inquiry to a young representative

who ran against another Democrat,

reporters should seek out a Demo-

crat who flipped a Republican seat—

members such as Lucy McBath of

Georgia, Elissa Slotkin of Michigan

and Lauren Underwood of Illinois. If

you want to gauge how the party has

evolved on the challenges of the

day—health care, climate change, so-

cial justice—ask one of them.

That leads to the most important

misconception. While the Republi-

cans have abandoned the center

right for the crazy angry populism

epitomized by President Trump, the

last two weeks have proven that the

Democrats are still a center-left

party, not a far-left party. That’s

been true for cycle after cycle, but

much of the media simply isn’t able

to differentiate what matters from

what doesn’t. Our Revolution, the

group born out of Sen. Bernie Sand-

ers’s failed 2016 campaign, didn’t

flip a single seat in the fight to give

Nancy Pelosi a House majority in

2018—not one. Why? Because only

half of their political analysis is

right.

Mr. Sanders’s general theory was

that Democrats needed to turn out a

lot of additionalyoungvoters. While

he was right to note that our fate de-

pended on turnout, we needed more

than the young. To the far-left’s

shock, the Democratic base isn’t on

college campuses. While the surge of

young voters the Sanders campaign

predicted never materialized, we’ve

seen an explosion in suburban turn-

out. The party’s core is in a coalition

of urban and suburban areas we

should call the Metropolitan Major-

ity. Democrats’ long-term success

hinges on our listening to these vot-

ers and turning them out year after

year. Pundits whose job is to explain

the political sphere need to shake

preconceived ideas about the youth

vote and what comprises the Demo-

cratic Party.

Here’s the problem. The media’s

obsession with identity politics, the

role of money, and the views of poli-

ticians who flourish on Twitter pre-

vents citizens from getting a full pic-

ture of what’s going on at the heart

of the campaign. If voters are going

to regain trust in the world of jour-

nalism, journalists need to start ex-

plaining the world as it is—not as it

appears on an app.

This year’s Democratic primaries

remind us that beyond the fourth es-

tate’s role explaining politics to ordi-

nary citizens, pundits need to take a

moment for self-reflection, and ask:

What did I think I knew at the begin-

ning of this campaign—and what

have I learned?

Mr. Emanuel was a senior adviser

to President Clinton and chief of

staff to President Obama. He repre-

sented Illinois’s Fifth Congressional

District, 2003-09, and served as

mayor of Chicago, 2011-19. He is au-

thor of “The Nation City: Why May-

ors Are Now Running the World,”

published in February.

By Rahm Emanuel

JEFF KOWALSKY/AFP/GETTY IMAGES

Supporters line up for a Biden rally in Detroit, March 9.

OPINION

Europe’s Coronavirus Fate Is Already Sealed

Scientists around
the world have
worked overtime
to get a handle on
Covid-19, yet one
great unknown re-
mains. We still
don’t know for
sure whether this
is only a medical
crisis, or also a
medical system
crisis.
The distinction matters for the
novel coronavirus for the same rea-
son it matters for other “natural di-
sasters” that aren’t entirely natural.
It is now widely understood that
famines arise from local political
failures in the trade and distribution
of abundant global food supplies,
not from local crop failures. Floods
devastate communities not because
the local rivers are unusually watery
but because poor zoning and subsi-
dized flood insurance encourage
people to build homes in flood
plains.
This is the context for a conspicu-
ous feature of Covid-19: It is not un-
treatable, but many health systems
are struggling to deliver effective

treatment. Nowhere is this more so

right now than in Italy, where night-

marish reports are emerging from

hospitals in the hardest-hit areas.

Doctors in Italy know what to do

to treat severe cases, such as using

ventilators in intensive-care units.

But hospitals lack the beds and

equipment for the influx of pa-

tients and Italy doesn’t have

enough doctors even to make the

attempt. Ill patients languish in

hospital corridors for want of beds,

recovering patients are rushed out

the door as quickly as possible, and

exhausted (and sometimes sick)

doctors and nurses can’t even mus-

ter the energy to throw up their

hands in despair.

Is this more a result of the sever-

ity of Covid-19, or of long-term fail-

ures to invest in the Italian health-

care system? One starts to suspect

the latter.

Italy lags other large European

countries in provision of acute-care

hospital beds, furnishing 2.62 of

them per 1,000 residents as of 2016,

according to the Organization for

Economic Cooperation and Develop-

ment. In Germany it’s 6.06 and in

France and the Netherlands it’s 3.

and 3 respectively. That year, Italy

devoted around $913 per capita to

inpatient acute and rehabilitative

care, compared with $1,338 in

France, $1,506 in Germany, and

$1,732 in the U.S.

U.K. policy makers understand

what such analyses portend—be-

cause underinvestment in Britain’s

creaking health-care system is even

worse. The U.K. spent the princely

sum of $901.70 per capita on acute

care in 2016, according to the OECD.

British data don’t distinguish acute-

care beds, but a comparison of avail-

able beds overall isn’t any more fa-

vorable to the U.K. (or to Italy). In

2017, when Germany provided 8 beds

per 1,000 residents and France of-

fered 5.98, Italy managed 3.18 and

the U.K. only 2.54.

As a result, British authorities

have adopted a very specific policy

goal in their approach to Covid-19.

The aim is not to prevent the virus’s

spread through the general popula-

tion, which is a foregone conclusion.

Rather, the name of the game is de-

lay. British authorities are desperate

to hold off on a mass outbreak until

the socialized National Health Ser-

vice has recovered from its chronic

winter crisis.

That’s right, the NHS, which now

will have to cope with a new and fast-

moving respiratory illness, already

falls to pieces every year with the

normal ebb and flow of cold-weather

ailments. Each winter crisis becomes

a bit more acute, and this year was no

exception. As of December, only 80%

of emergency-room patients were

treated within four hours of arrival,

down from 84% in the depths of the

previous two winters.

What accounts for these diver-

gences in health-care resources re-

quires more study than a single

newspaper column can provide,

but a few early hints emerge. One

is the observation that the U.K.

and Italy are significantly more

dependent on direct government

financing of health-care than is

France or Germany.

Government accounted for 79% of

total health-care spending in the

U.K. in 2017, according to Eurostat,

and 74% in Italy. Germany and

France both rely on compulsory in-

surance schemes with varying de-

grees of subsidy and government

meddling, but outright government

expenditure amounts to only 6% of

total health spending in Germany

and 5% in France. Covid-19 in this

sense is a test of how much one

trusts central health planners to

make wise long-term decisions that

boost resilience in the face of un-

usual dangers.

This is food for thought for voters

inclined to skepticism over the wis-

dom or efficacy of their politicians’

responses to the crisis. Those same

politicians already have made deci-

sions that may seal a country’s coro-

navirus fate, and it won’t have any-

thing to do with quarantines or

restrictions on travel or large gath-

erings. Rather, the important choices

may have already come in the guise

of technocratic health spending and

investment decisions made largely

out of public view over many years.

How lucky do Europeans feel?

One reason Britain and

Italy are struggling: Their

medical systems are too

dependent on government.

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The IRS Proves the Left’s Favorite Economists Wrong

‘T

he Rich Really Do Pay Lower
Taxes Than You” read a
headline in the New York
Times last fall. This astounding
claim, presented in the media as fact
and evidence of inequities baked into
President Trump’s 2017 tax cut, came
from two economists at the Univer-
sity of California, Berkeley. Emman-
uel Saez and Gabriel Zucman as-
serted that 2018 was the first year in
U.S. history that the average tax rate
on the 400 wealthiest income earn-
ers dipped below the rates paid by
the lower-middle class and poor.
Finally, we had proof the rich
weren’t paying their fair share. But
new data from the Internal Revenue
Service suggest it isn’t true.
The Saez-Zucman analysis raised
eyebrows among other economists
who study tax data, in part because
they claimed it reflected the first full

year under the new tax rates. At the

time they published their study, the

IRS had yet to release the data nec-

essary to make the calculations they

described. Preliminary numbers for

2018 income-tax returns, covering all

filings made by last year’s Oct. 15 ex-

tended deadline, came out only last

week. These data tell a very different

story: America’s wealthiest earners

still carry the lion’s share of the tax

burden.

Closer inspection reveals that

Messrs. Saez and Zucman imputed

the tax rates they claim for 2018

from records that predated the

Trump tax cut, and therefore didn’t

capture its effect on the measured

distribution of income. They built in

opaque assumptions that now appear

to have exaggerated the tax cut’s

benefit to high-income earners.

This wasn’t the only problem with

the Saez-Zucman statistics. Their al-

leged 23% tax rate paid by the high-

est earners—encompassing all fed-

eral, state and local taxes—fell below

the Congressional Budget Office’s es-

timates for the top income percen-

tile’sfederaltax rate alone. The two

economists’ tax rates for the poor

also looked suspiciously high. A 25%

rate for the lowest quintile of earn-

ers would be almost twice the level

found in other estimates, including

those using better-established data

from the Congressional Budget Of-

fice and the nonpartisan Institute on

Taxation and Economic Policy. The

discrepancy arose from Messrs. Saez

and Zucman’s exclusion of the

earned-income tax credit for low-in-

come households, artificially inflat-

ing the amount of tax the poor really

pay.

The new IRS numbers now pro-

vide reason to doubt Messrs. Saez

and Zucman’s entire narrative of a

regressive U.S. tax system designed

to favor the rich at the expense of

the poor. The IRS reports effective

income-tax rates on the adjusted

gross incomes of different groups of

earners. That’s the percentage of in-

come that people actually pay to the

government, as distinct from the

statutory tax rate.

According to the IRS, the top

0.01% of earners—those with in-

comes above $10 million—paid a

24.8% effective federal income-tax

rate in 2018. This isn’t very differ-

ent from the 25.3% the group paid

in 2017, and is higher than the aver-

age rate of 22.5% on the same

group during the George W. Bush

administration. As these rates only

encompass federal income taxes,

most filers can expect to add an-

other 8% to 12% of income from

other forms of taxation, placing

their total burden well above the

Saez-Zucman numbers.

How does that affect the claims of

regressivity? It’s true the remainder

of the top 1% (those with incomes

between roughly $500,000 and $

million) paid a slightly higher effec-

tive rate, at 26.5%, than the top

0.01% did. But tax rates drop rapidly

from there, with filers in the $50,

to $75,000 reporting bracket (ap-

proximately the median U.S. family

income) facing an average federal in-

come-tax rate of 8.4%.

People who earned between

$15,000 and $40,000 paid an average

federal rate of merely 4% of their ad-

justed gross incomes in 2018. And

thanks to the earned-income tax

credit and others like it, the poorest

earners paid very little if any federal

income tax at all.

In short, the federal income-tax

structure still places the unambigu-

ous bulk of its burden on the highest

earners. The Trump tax cut hasn’t

changed that. In 2018, the top 1% of

U.S. earners paid roughly 37% of all

federal income taxes. The top 5% paid

around 58%. This suggests that policy

makers wishing to mitigate regres-

sive features of the tax system should

look elsewhere. State and local sales

and property taxes may be a more

promising area for reform.

The IRS’s preliminary data also

suggests that the needle on income

inequality—the motive force behind

the Saez-Zucman research and the

wealth-tax proposals it has been

used to support—hasn’t moved

lately. The share of adjusted gross

income that went to the top 1% in

2018 was essentially the same as it

was a decade earlier, at least going

by the IRS numbers. The same is

true of the top 0.1% and even the top

0.01%, the ultrarich so often targeted

in political rhetoric from the left.

The full economic effects of the

Trump tax cut extend beyond per-

sonal income-tax rates, and will be

seen in the data only when future

statistical releases become available.

The corporate income-tax cut, for

example, will likely prompt high

earners to shift income from their

personal returns to corporate re-

turns, further lowering the measured

income shares of the top 1%. Ironi-

cally, the reduction in the corporate

tax rate could lead to a statistical re-

duction in income inequality.

In their rush to embrace a conve-

nient political narrative last fall,

much of the press and political

classes never considered the possi-

bility that the data would undermine

theirstory.Itdid.

Mr. Magness is a senior research

fellow at the American Institute for

Economic Research. Mr. Miller is an

associate professor of economics at

Troy University.

By Phillip W. Magness
And Stephen C. Miller

New data contradict Saez

and Zucman’s celebrated

claim that the rich pay

lower rates than the poor.

Bill Press, writing for the Hill,

March 10:

They’ll never not admit it, but Bi-

den and Sanders actually agree on

far more than they disagree. Both

champion universal health care, rais-

ing the minimum wage, raising taxes

on the wealthy, wiping out student

debt, making college affordable, if

not free, and leading the fight

against climate change....With

only slight variations on a theme,

every single Democratic candidate in

2020, left or center, ran on the Sand-

ers platform....Whateverthey

choose, revolution or evolution,

they’re both paths to the same pro-

gressive goals. And those goals were

first set by Sanders in 2016. That’s

why I argue that Sanders has already

won the Democratic primary.

Notable&Quotable