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 #276  

 January 2000




Congressional Research Service Reports Often Written To Reflect Lawmaker's Bias

by Amy Ridenour

 

In his autobiography, Mark Twain apparently put words into the mouth of the English statesman Disraeli, quoting him thusly: "There are three kinds of lies: lies, damned lies and statistics."

The line became one of the most quoted - and misquoted - in history with many actually attributing it to the 19th-century Prime Minister. But there is no evidence that Disraeli ever said it, and many historians believe Twain simply made it up and passed it off as Disraeli's. That, in itself, produced the famous quip, "As Disraeli almost said, there are three kinds of lies..."

The actual origins of the quote may be murky, but one thing's certain: If Twain were alive today he might be sorely tempted to change it to "There are three kinds of lies: lies, damned lies and Congressional Research Service reports."

It would be overkill to condemn all Congressional Research Service reports because many contain unbiased and useful research. Indeed, since its founding in 1916, the Library of Congress' Congressional Research Service has carefully nurtured its reputation as nonpartisan, independent and "above the fray."
But far too often, the CRS and its staff members are at the mercy of lawmakers who request reports merely to buttress their own ideology. The reports are requested by members of Congress, who pretty much tell the CRS the parameters of the research being conducted and the specific questions to answer. If they want to engineer a report that strongly backs their viewpoint, it's fairly easy to do.

When the CRS report is completed, it goes directly to the lawmaker, who then brandishes it at a press conference and cites it authoritatively.

It's one of the most-loved ruses in Congress because it allows a politician with few facts on his side to enhance his arguments by citing a Congressional Research Service report that - voila! - is in complete agreement. Periodic efforts to reform this process have failed.

As a result, the body politic will continue to be entertained by lawmakers like Rep. Fortney "Pete" Stark, a millionaire Californian, who recently unveiled a CRS study purporting to show that U.S. prescription drug companies: 1) are taxed lightly compared to other industrial sectors; and 2) charge far less for their products overseas than they do here.

"It is totally unfair for U.S. taxpayers to subsidize drug companies to develop products, and then have those sold for a cheaper price in rich, foreign nations," railed Stark, a longtime industry critic.

The story was headlined in dozens of newspapers around the country, most of whom cited the "nonpartisan" Congressional Research Service report.

Only one problem with that: This CRS report was one-tenth truth and nine-tenths baloney.

At Stark's request, the CRS constructed a worst-case scenario by comparing drug companies U.S. corporate income taxes paid to their worldwide income, producing an apples-to-grapefruit analogy that was totally misleading.

A more apt comparison, according to the respected accounting firm PricewaterhouseCoopers (PWC), is obtained by measuring U.S. corporate taxes to U.S. source income, i.e., profits actually earned in this country.

Using that yardstick, a recent analysis by PWC of the latest available data from the IRS found "the pharmaceutical industry pays more corporate income taxes relative to assets or revenues than either the manufacturing sectors as a whole or all corporations."

PWC noted that the CRS report repeatedly treated the "foreign tax credit" - a major factor in determining its findings - as a tax benefit for pharmaceutical firms when, in fact, it "is not a tax benefit because its intent is to prevent the double taxation in the U.S. of income earned abroad."

Stark, of course, should know that since he's sat through numerous discussions about the foreign tax credit during his more than two decades on the House Ways and Means Committee.

Pharmaceutical companies don't deserve to be unfairly singled out by our tax code, especially when you consider the United States produces more than 80 percent of the world's new drugs, including almost all of the miracle "breakthrough" medicines.

The pharmaceutical sector, in fact, plows more than 20 percent of its sales revenue back into R & D compared with an industry average of less than three percent, the PWC analysis said.

Sure, some drugs cost more and a few seem outrageously priced. But these are drugs that weren't available a few short years ago. They are saving lives, preventing long hospital and nursing home stays, and enhancing the quality of life for millions of Americans. They are, in short, a very big net plus.

It's too bad Congress doesn't pass legislation freeing the Congressional Research Service from the whims of lawmakers like Rep. Stark. The CRS shouldn't be forced to surrender its integrity to politicians seeking to propagandize the public.


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Amy Ridenour is president of The National Center for Public Policy Research. Comments may be sent to [email protected]




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