CBS ignored evidence undermining "double whammy" small-biz attack

During the July 15 edition of the CBS Evening News, host Katie Couric claimed that "there is growing opposition from small-business owners, who would pick up a big part of the tab" for health care reform, and correspondent Chip Reid claimed that a small-business owner "who has 25 full-time employees, worries about getting hit by a double whammy," and that "[t]he second part of the double whammy is a surtax of at least 1 percent." Neither Couric nor Reid noted that Democrats dispute the suggestion that most small-business owners would be subject to the proposed surtax; Rep. George Miller (D-CA) said on The Huffington Post that "according to the non-partisan Joint Committee on Taxation, only 4.1 percent of all small business owners will be affected by the health care surcharge."

The House tri-committee legislation, the America's Affordable Health Choices Act, would establish on taxpayers filing joint returns a 1 percent tax on income exceeding $350,000 but not exceeding $500,000 per year, a 1.5 percent tax on income exceeding $500,000 but not exceeding $1 million per year, and a 5.4 percent tax on income exceeding $1 million per year, with married individual filings and other filings subject to a surtax of 50 percent and 80 percent of those amounts, respectively. In his July 15 post, which went up in advance of Reid's report, Miller stated of attacks on the proposal by "Republicans and right wing commentators":

Before you adopt their rhetoric, remember that nearly half of the cost of the House Democrats' health plan would be paid by tight cost controls and forcing down the expense of the health care system. That's a top priority. And as for who will pay higher taxes and who won't under our plan, here are the cold facts.

Only the highest earning 1.2 percent of American households will pay a surcharge for health care reform. That leaves 98.8 percent of American households who will not pay any surcharge at all.

As for small businesses, according to the non-partisan Joint Committee on Taxation, only 4.1 percent of all small business owners will be affected by the health care surcharge. The remaining 95.9 percent of small business owners will be completely unaffected by the surcharge.

Under our bill, a family making up to $350,000 in adjusted gross income (AGI) will not owe any surcharge at all, as President Obama has promised. A family making $500,000 in AGI will contribute $1,500 to help reduce costs and provide access to affordable health care for all Americans -- 0.3 percent of their annual income. And a family making $1 million in AGI will contribute $9,000, or 0.9 percent of their annual income.

Who are the highest earning 1.2 percent of all households? They are the same households who over the past 20 years have seen a massive shift in wealth in their favor and who over the last 8 years received the lion's share of President Bush's tax cuts.

In not reporting Miller's statement, CBS echoed media figures and outlets who have previously allowed conservatives to characterize Obama's and Democratic proposals to increase income taxes on wealthy individuals as a tax on small businesses, without noting the small percentage of small businesses that would actually be affected by the proposal.

From the July 15 edition of the CBS Evening News with Katie Couric:

COURIC: A number of proposals are making their way through the House and Senate this week, but chief White House correspondent Chip Reid tells us there is growing opposition from small-business owners, who would pick up a big part of the tab.

[begin video clip]

REID: President Obama praised Congress today for taking their first small steps toward health care reform, then pleaded with them to pick up the pace.

OBAMA: We can't kick the can down the road any longer. Deferring reform is nothing more than defending the status quo.

REID: Democrats on a key Senate committee passed the first piece of their reform plan today with no Republican support. Yesterday in the House, Democratic leaders introduced their bill.

Both plans would extend coverage to the vast majority of the 50 million uninsured, require those without insurance to buy it, and give subsidies to low-income Americans to help them afford it.

OBAMA: Both proposals will offer stability and security to Americans who have coverage today and affordable options to those who don't.

REID: The White House says most Americans would come out winners. But try telling that to Chris Warner, who owns a small mountain climbing business in Maryland. He's climbed the two tallest mountains in the world, Everest and K-2, but says surviving health reform could be his toughest challenge yet.

WARNER: We really could find ourselves in a position where a lot more small businesses are going to go bankrupt.

REID: Warner, who has 25 full-time employees, worries about getting hit by a double whammy. First, under the House bill, businesses with payrolls of more than $400,000 -- Warner's is $1.4 million -- must either provide health insurance for their employees or pay a penalty of 8 percent of their payroll. That could add over $100,000 to Warner's tax bill.

WARNER: Do we do it by not giving employees a raise? By not reinvesting back in our company? You know, we're -- it's just that classic catch-22 of small businesses.

REID: The second part of the double whammy is a surtax of at least 1 percent. Warner would have to pay it because his business earnings exceed the threshold of $280,000 a year, even though he personally takes home much less than that.

WARNER: Is the, you know, greater good for me to take that capital and pay taxes for it, or is the greater good for me to create more jobs?

REID: In an interview today with CBS News medical correspondent, Dr. Jon LaPook, the president said the money for health care reform has to come from somewhere, and he prefers getting it from those at the high end of the income scale.

OBAMA: If you can afford it, either give your employees health insurance or pay into the pot so that we're not subsidizing it.

[end video clip]

REID: The president today, again, ratcheted up the pressure on the House and the Senate to get their initial bills passed before they go home for the August recess. The plan is then they would come back in the fall, work out the differences between the two Houses, and then get a bill to the president's desk before the end of the year.

Today he said he wants the signing ceremony in the Rose Garden -- Katie.

COURIC: Meanwhile, Chip, at a time when the president is really trying to resuscitate the economy, will the potential burdens on small businesses be addressed or lessened?

REID: Well, I think so, Katie. I've been going through some of his speeches. He has put himself forth as the best friend in this town of small business. He said small business is the heart of the American economy, the heart of the American dream, the job creators; they're responsible for more than two-thirds of jobs over the last 10 years.

And on Capitol Hill the lobbying operation of small business has really kicked into gear, so the thinking is that, in the end, small business won't be hit as hard as the House bill might suggest.

COURIC: All right, Chip Reid at the White House tonight. Thank you, Chip.