Neither does the NYT -- until they're caught. Their corrections only include factual errors, such as misspellings, incorrect dates, etc. Errors such as misquotes, erroneous bylines, and fabricated stories are not noted -- until they are outed factually and indisputably, as they were in this case by the San Antonio paper. Considering the media's use of "unnamed sources" to further politically-motivated views, it's virtually impossible to fathom who's telling the biggest whopper.
The problem is that by the time the truth becomes apparent, as in the D.C. sniper reportage, the damage in public perception has already been done -- and that's what the NYT counts on.
Even in the case of gross exaggeration of the looting at the Baghdad museum, all the NYT has to say is that they were simply reporting what museum officials were telling them.
Considering the the NYT is the "paper of record" used by multiple new sources -- including FNC -- each untruth or halftruth is multiplied a thousandfold through a nationwide and worldwide ripple effect.
I'd like to see a lawsuit by Blair airing the NYT dirty laundry, but my guess is that he knows too much and has been paid off handsomely to keep his mouth shut -- not to mention that he shares the same leftist ideology of the Times. Heck, he might even accuse them of secretly supporting the Bush administration!