Paul L. Caron

Thursday, July 14, 2011

David Cay Johnston Apologizes

Johnston Following upon my prior posts (here and here):  Reuters: How I Misread News Corp’s Taxes, by David Cay Johnston:

Readers, I apologize. The premise of my debut column for Reuters, on News Corp’s taxes, was wrong, 100% dead wrong.

Rupert Murdoch’s News Corp did not get a $4.8 billion tax refund for the past four years, as I reported. Instead, it paid that much in cash for corporate income taxes for the years 2007 through 2010 while earning pre-tax profits of $10.4 billion.

For the first time in my 45-year-old career I am writing a skinback. That is what journalists call a retraction of the premise of a piece, as in peeling back your skin and feeling the pain. I will do all I can to make sure everyone who has read or heard secondary reports based on my column also learns the facts and would appreciate the help of readers in that cause.

No excuses. But I will explain how I made such a bonehead error. ...

The first suggestion I had erred came in the middle of the night when a post at taxprofblog (I teach at Syracuse University College of Law) said I had made an error. I checked the disclosures and then wrote back that the poster was in error. Still, the note troubled me and before dawn I was reviewing every document. As I was rechecking my work, Robert S. McIntyre of Citizens for Tax Justice, who is respected across the political spectrum for the care he takes with numbers, sent me a note saying I had it wrong. News Corp, he said, was using negative numbers to report outflows, rather than tax inflows, starting in 2007. ...

I often write tart notes at the Romenesko blog for journalists, the Columbia Journalism Review, Nieman Reports and elsewhere about what I consider flawed reporting by others. I lecture to young reporters around the world on the duty of care they need to take with facts and teach how to check and cross check. Until now I have never made a big mistake, but this is a painful reminder that we all put our pants on one leg at a time. The measure of character, I say in my posts and lectures, is whether when an error is found you forthrightly and promptly correct.

So I hope readers will trust that while I made a whopper of a mistake, it has been corrected forthrightly and promptly.

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Honestly, I really do hate bringing up new things on this, but I can't help myself, given Johnston's past snarky remarks to those who challenge him. I followed a link to his Facebook page, on which he bragged about his article, but for which he has failed to make a retraction there.!/davidcay?sk=wall

My first column for Reuters, on how Ceasar renders onto Murdoch rather than the other way around...

COLUMN - It pays to be Murdoch. Just ask US govt: DCJohnston | Reuters

On the Ed Show tonight and on NPR's Morning Edition Wednesday, both on MINUS 46% tax rate of Murdoch's News Corp., revealed in my debut column today for Reuters. [END]

I wonder if he'll be my Facebook friend.

Posted by: Woody | Jul 14, 2011 7:01:26 PM

There's a bonus for Johnston's mistake. Ed Schultz of MSNBC, a total least on the air, had to eat crow after covering Johnston's article and having him on as a guest. Another small bonus: Schultz regularly features Johnston, but he doesn't know his correct name.

Smug Ed Schultz Forced to Admit Huge Blunder About News Corp.

A former gridiron star really ought to know better than to spike the ball in the wrong end zone.

Appearing more subdued than he had on "The Ed Show" just 24 hours earlier, MSNBC action hero Ed Schultz last night admitted making an embarrassing error about News Corporation, parent company of Schultz nemesis Fox News Channel. ...

Posted by: Woody | Jul 14, 2011 6:40:34 PM

I'm looking forward to Johnston's article attacking NPR for all the tax money that they take.

Posted by: Woody | Jul 14, 2011 6:13:28 PM

I look forward to David Cay Johnston's next Reuters post applauding Rupert Murdoch and News Corp for paying 46% of the corporation's income in taxes, far higher than the 35% rate that David Cay Johnston said News Corp should have paid in his first column.

After all, his column is supposed to be a fair and balanced examination of a randomly chosen corporation, with no political agenda axe to grind, right?

Posted by: zz | Jul 14, 2011 5:16:27 PM

I give him some credit for clearly admitting his error. That is more than the NYT, or other MSM usually do. They would have put out something like "these facts are wrong, but the basic story is right". But maybe there is some more soul searching he could do to prevent future mistakes. He should ask himself the following:
1. If he had found a potential story like this on a prominent progressive, like Soros or the NYT, would he have checked his facts more carefully. A charge that big, against an entity that big, should demand extra care. It appears that a simple request for review by a competent tax accountant would have revealed his error. Perhaps his glee on supposedly getting the goods on the evil Rupert Murdock interfered with his usual careful reporting.
2. Why didn't he call Murdocks people before finally printing the story. Surely they would know it was false, and why, and could have easily corrected his error before he printed it.
3. How come errors like this always seem to show up in anti conservative stories. If the errors were evenly distributed between conservatives and liberals I would buy ordinary accident. But when they are mostly skewed against conservatives, I suspect bias.

Posted by: richard40 | Jul 14, 2011 2:27:59 PM

The speed with which incorrect information can propagate across the internet poses far greater dangers than have yet been realized. An honest error tells us a lot about the potential for a deliberate, carefully timed exploitation that could have serious real-world consequences.

Posted by: Tiberius | Jul 14, 2011 2:06:46 PM

Point Kristo: That said, this cannot plausibly be the result of bias or prejudice.

Counterpoint John: Johnston's mistake came no doubt because he wanted it to be true....

Jane, you ignorant slut.

Posted by: Woody | Jul 14, 2011 1:58:35 PM

Some mistakes are easier to make than others... if the question was between $4.8 million in taxes paid or $4.8 million in refund received given $10.4 billion in earnings, then I can easily see the error. Either number amounts to less than one percent, indeed less than a promille of earnings. Both numbers are equally credible, or equally incredible.

But the actual numbers represent the difference between 46% as a rate of taxation and 46% as a rate of... graft. That is a gulf so wide that it should have set off alarm bells for Johnston. One number is totally credible, the other totally incredible.

That said, this cannot plausibly be the result of bias or prejudice. An error this large, if understood at the time of making it, is so obvious that even the most unprincipled hack would avoid making it in the interest of finding a better smear. This error only makes sense as a real non-thinking error, an indication that the author really put no effort at all into his work.

If I were Reuters I would take this as a serious warning sign that Johnston is out to maximize his wages to labor ratio without regard to quality of product.

Posted by: Kristo Miettinen | Jul 14, 2011 12:19:17 PM

This just goes to show you, don't mess with the TaxProfBlog.

Posted by: Lt. Dangle | Jul 14, 2011 11:35:46 AM

Journalists are taught: If your mother tells you she loves you, check it out.

A journalist would have called at least one analyst who follows News Corp to verify the fact in question. Johnston used to be a journalist, although his reporting about IRS even in his Pulitzer Prize winning days left much to be desired. (Like the Russian dancing bear, what was extraordinary was not the performance, but the fact that it was being done at all.)

Reuters is a News Corp competitor. That is just one more reason to be especially careful in situations like this one.

Posted by: Bob | Jul 14, 2011 10:18:26 AM

I like the "no excuses" line followed by about four or five excuses in the next few paragraphs. The fact is, DCJ was likely so focused on his target and agenda that he failed to look at any other elements in the financial statements, many of which would have keyed him in to the fact that he was entirely wrong.

Posted by: Tyler | Jul 14, 2011 9:26:33 AM

Brent Buckner: "He has the sign incorrect; one could make the case that the premise of his column was 200% dead wrong!"

Spoken like an accountant!

Posted by: The Den Mother | Jul 14, 2011 9:09:35 AM

Ya, right. I'm sure you were giddy when writing the original fiction.

Posted by: Skip | Jul 14, 2011 8:58:29 AM

Read Twice. Write Once.

Perhaps he will learn to be a little more circumspect when reviewing anything to do with a lefty boogeyman. But I doubt it.

Posted by: Dr. K | Jul 14, 2011 8:48:08 AM

It's a good thing that previous winners of the Pulitzer Prize don't have to return their certificates because of subsequent bone-headed articles.

Here is a far more deserving candidate than some of the past winners.

The Onion Commentary June 19, 2011: "I Shall Now Exact My Final Revenge Upon That Jack-Ass Joseph Pulitzer"

...with the exception of Margaret Mitchell’s excellent work of history, Gone With The Wind, every single person or publication to win the Pulitzer Prize has been undiluted sewage. ... As an affront to [Josehph Pulitzer's] hatred of everything I stand for, I can think of no better revenge than for The Onion to receive the prize that bears his name. So enjoy these Pulitzer-worthy offerings, you self-congratulatory, self-centered, self-styled intellectuals! ....

Wait, come to think of it, Johnston's articles are like those from The Onion, so maybe that publication can consider his winning the award to be a surrogate prize for them!

Posted by: Woody | Jul 14, 2011 8:34:56 AM

David Cay Johnston and similar articles shared here are regularly shot down by the commenters. Yet, we'll see more. Paul has to be getting a laugh by tweaking us with insane articles from David Cay Johnston, Paul Krugman, and Bruce Bartlett.

Posted by: Woody | Jul 14, 2011 8:01:03 AM

Coming on the heels of Joe Biden's cheating scandal at the school, this is another black eye for the Syracuse College of Law (and I say that as an alumni). The more interesting thing, now that Johnston has completely retracted the premise of his statement, is to see if Murdoch-haters on the left ignore it and still use his original story for sourcing in their attempts to gin up an attack on News Corp. in the U.S.

Johnston's mistake came no doubt because he wanted it to be true, and failed to do any fact-checking before he hit 'send' on his computer. But at least he held himself to account. There are others on the left out there who will likely continue to use his bogus tax payment numbers as part of the effort to bring the British scandal across the pond, to force at the very least a News Corp. divestment of Fox Broadcasting by the FCC.

Posted by: John | Jul 14, 2011 7:49:44 AM

With so obvious a mistake, negative numbers as inflows?, he has no business analyzing financial statements. Amateur.

Posted by: Abdi Abdoh | Jul 14, 2011 7:19:32 AM

Dear Reality Bites - When you are caught with your pants down, I fail to see the "honor" in admitting what everyone else sees. True, the Honorable Weiner (D, NY) did manage to deny the truth (and slander everyone who came to hand, so to speak) but asking to be judged against Weiner is truly "defining deviancy down." (Another bon mot from my all time favorite Senator.)

And just two teeny tiny points on the DCJ apolpogy. 1. Don't include an we-all-make mistakes in your apology. I think many tax/economic/business writers have managed to avoid confusing a sign.
2. Don't blame the target of your venom for fooling you. "News Corp, he said, was using negative numbers to report outflows, rather than tax inflows, starting in 2007. ..." Yeah, but if you weren't locked into your target, you'd have realized the negative tax payments didn't make any sense.

I learned when I was 17 (two years before the invention of dirt) in southern Georgia how to make an apology - I was wrong, I'm sorry, I'll never do it again - full stop - normally followed by a request to drop and perform a certain number of pushups.

Posted by: Ed D | Jul 14, 2011 7:16:50 AM

Tasty crow. Why didn't he write an article on how GM's Unions shanked the real owners (bond holders) and cost the US taxpayers billions in tax dollars. It's called "Takin' more than their fair share."

Posted by: SCtax | Jul 14, 2011 7:13:37 AM

So has the first version of the article, where the evil capitalist-roader Murdoch is bilking the taxpayers for billions in "subsidies", gone viral yet in FireDogLake, Media Matters, Democratic Underground, Kos, TPM and all the other rabid leftling blogs yet?

It doesn't make any difference if not only now it has been totally retracted, but the real facts actually prove the opposite. It will become a part of leftist lore for the next several centuries. And this was not, as most retractions are, just a correction of a piece of data ancillary to the premise of the article, but the underlying central point of the whole danged thing.

Facts, evidence, reality, history, all mean nothing to the Collectivists. Winning power is all that matters, ethics, morals, honor, and principles be damned.

Posted by: geokstr | Jul 14, 2011 7:08:04 AM

I would forgive him but look at his apology column: "No excuses. But I will explain how I made such a bonehead error. The other facts I reported remain..."

No excuses but he makes an excuse the very next sentence! He still tries to argue his original premise that Fox News is somehow dodging taxes.

Posted by: ID | Jul 14, 2011 6:50:54 AM

David Cay Johnston wrote:
The premise of my debut column for Reuters, on News Corp’s taxes, was wrong, 100% dead wrong.

He has the sign incorrect; one could make the case that the premise of his column was 200% dead wrong!

Posted by: Brent Buckner | Jul 14, 2011 5:59:22 AM

Anyone can make a mistake. DCJ is honorable enough to admit it.

Posted by: reality bites | Jul 14, 2011 5:40:37 AM

re: newscorp "error"

Had Johnson actually read the Newscorp report, I mean more than one line of the financial statements, his error in thinking would have popped out.

Instead, his admission of error belies his agenda driven thinking.

And he teaches Law at a major university???
Maybe his course is Blind Agenda

Heaven help us.

Tom Scott
Richmond, Virginia

Posted by: Tom Scott | Jul 14, 2011 5:30:27 AM