A Media Matters study found that economists have been strangely absent from discussions on budget negotiations, following a typical pattern of the media's inability to host experts to discuss complex issues. This lack of expert analysis has steered the debate toward politics and away from core economic concerns.
In a recently published study of news segments discussing current budget negotiations, Media Matters found that the presence of economists was sorely lacking - out of 503 total guests in the 337 segments analyzed, only 22 were economists. The lack of appearances by economists is spread across all networks:
The results of this study are in line with previous Media Matters research. In media discussions of the debt-ceiling debate in the summer of 2011, only 4.1 percent of guests on news programs were identified as economists. The findings of the most recent study reinforce the notion that the media have a tendency to ignore expert opinion when discussing complex issues, such as the economy and climate change.
In recent weeks, media outlets have focused heavily on current budget negotiations regarding automatic tax hikes and spending cuts set to take effect on January 1, 2013 if an alternative agreement is not reached. But major television news outlets are inadequately reporting on year-end budget negotiations, rarely hosting economists and favoring inflammatory rhetoric about the so-called "fiscal cliff," according to a Media Matters analysis. Furthermore, most television segments have completely ignored the possible economic effects of potential tax increases and spending cuts.
In an attempt to discredit higher taxes on the wealthy, Fox's Stuart Varney claimed that high taxes lead to out-migration of residents. However, experts have found that while migration is due to an array of issues, taxes are not the primary cause.
On Fox & Friends, Fox Business' Stuart Varney claimed that states that have experienced high rates of out-migration "all have very high tax rates on top income earners." He went on to suggest that if President Obama's plan to raise taxes on the wealthy is enacted, the U.S. will experience a lack of revenue, a slowing economy, and high unemployment.
The segment is based on a Fiscal Times article that outlines five states (Ohio , New Jersey, California, New York, and Illinois) that have experienced decreases in residency, allegedly due to higher taxes.
Right-wing media figures have attacked President Obama's proposal to increase tax rates on the wealthy to Clinton-era levels by suggesting the federal government should return to Clinton-era spending levels as well. But experts agree that the federal government's current spending levels are largely dictated by the economic downturn and an aging population.
On Fox News' The Five, co-host Andrea Tantaros reacted to an op-ed by investor Warren Buffett by saying, "Don't you love all this conversation about going back to Clinton-era tax rates, but no one wants to talk about going back to Clinton-era spending, right? That would be a far cry as well." On his radio program, Rush Limbaugh echoed Tantaros, saying the best way to argue against calls to raise taxes on the wealthy is to reply "OK, Mr. Democrat friend, then let's go back to the Clinton-era spending levels, too. How about that? If we had prosperity at the Clinton-era tax rates, and the Clinton-era spending, then let's cut spending."
But calling for a return to Clinton era spending levels ignores an array of economic issues. The most glaring problem with the comparison is the fact that it does not take into account the gap in economic output caused by the recent recession. The chart below shows potential GDP compared to actual GDP:
Fox's Bill Hemmer attacked the notion that the federal government needs additional revenue, suggesting that current budget issues are solely due to spending. In reality, economists agree that federal revenue is necessary to reduce the deficit and is at a historic low as a share of the economy.
During an interview with Senator Bob Corker (R-TN) about his budget proposal that seeks to generate more revenue through capping deductions, America's Newsroom host Bill Hemmer asked Corker, "Why do you want to go after revenue at all?"
Hemmer downplayed the need for additional revenue, claiming that any new taxes collected will be spent. In doing so, he ignored the fact that additional revenue would greatly contribute to cutting future deficits. In an analysis of President Obama's 2013 budget proposal, the Center on Budget and Policy Priorities found that 46 percent of the $3.8 trillion in deficit reduction is attributable to increased revenue.
Hemmer also failed to acknowledge the current state of dwindling federal revenues. According to the Tax Policy Center, federal revenue as a percentage of GDP stood at 15.4 percent in 2011. While this figure is up from 2009 and 2010, federal revenue has not dipped to such a low percentage of the economy since 1950, and is well below the post-World War II average of 18.1 percent.
Of course, Hemmer's statements were in line with Fox's history of dismissing revenue needs when approaching deficits.
In an effort to discredit President Obama's plan to increase taxes on the wealthy, conservative media outlets have pushed a number of myths to suggest that a large number of Americans will be negatively affected. In reality, only a small percentage of taxpayers would be affected by Obama's proposals.
In an attempt to protect wealthy Americans from increased taxation, Fox erroneously reported the estate tax will affect a large number of small farms and businesses. In reality, President Obama's plan to increase the estate tax would only marginally increase the number of small farms and businesses subject to taxation, and those affected would experience low effective tax rates.
On Fox & Friends, reporter William La Jeunesse ran a segment highlighting California rancher Kevin Kester and his take on potential increases in the estate tax. Throughout the segment, La Jeunesse continually, and erroneously, referred to the estate tax as the "death tax," accompanied by the following chyron:
From the November 16 edition of Fox & Friends:
Of course, the entire purpose of the segment is to create the appearance that the estate tax, which is intended to be a tax on the very wealthy, falls on a large number of small farms and businesses. However, this is simply not the case.
The report highlights that President Obama plans to alter current estate tax policy, lowering the maximum exemption from $5 million to $3.5 million and imposing a 45 percent rate on estate values exceeding that amount. This proposal is simply a reversion to 2009 estate tax exemptions and rates.
According to an analysis by the Center on Budget and Policy Priorities using Tax Policy Center data, "only 40 small business and farm estates nationwide will owe any estate tax in 2012." CBPP previously estimated the change in the number of small farm and business estates affected by a reversion to 2009 policy:
Despite rhetoric from estate-tax opponents portraying small businesses and farms as being severely burdened by the estate tax, only 60 small farm and business estates in the entire country would owe any estate tax next year under the 2009 rules, TPC estimates. [Center on Budget and Policy Priorities, 7/24/2012, emphasis original]
In short, only 20 new small farm and business estates would be affected by President Obama's proposal. The same report notes the effective tax rate is far lower than the headline 45 percent rate due to "special provisions targeted to farm and business estates." Taking such provisions into account yields an estimated effective tax rate of 11.6 percent, which is lower than the current capital gains rate.
Attempting to characterize taxes on the wealthy as affecting a large number of Americans is not new for Fox, which has taken particular care to push those misleading claims in light of current federal budget negotiations.
Fox News botched its explanation of the so-called "fiscal cliff" to shield high-income earners from an increase in tax cuts and falsely claimed that preventing a tax increase on 98 percent of taxpayers would not contribute to alleviating the problem. In reality, extending tax cuts to the majority of Americans would help reduce consumer uncertainty, which would contribute to short-term economic growth.
Appearing on Fox & Friends, Fox personality Eric Bolling explained that if the so-called fiscal cliff is not averted, "514 billion dollars of new taxes will hit America on January 1, 2013." Hosts Brian Kilmeade and Steve Doocy then claimed that President Obama's plan to raise taxes on the highest 2 percent of income earners would fall short of solving "half the fiscal cliff," as Obama had suggested in his November 14 press conference. From Fox & Friends:
In the segment, Doocy claims and Bolling agrees that since raising taxes on the highest income earners would only raise $80 billion dollars in revenue, it would fail to solve "half the fiscal cliff."
But their argument, which matches a figure of revenue against a figure of tax increases, is deeply flawed. The $514 billion figure Bolling cites is an estimate of the increased tax burden -- not a revenue shortfall -- scheduled to take effect in 2013. In fact, the rise in taxes would undoubtedly increase revenue. Instead, he falsely suggests the $514 billion would increase the deficit and is inadequately covered for by the $80 billion in revenue from raising taxes on the wealthy. Claiming that $80 billion in additional revenue falls short of solving "half" of the $514 billion in tax increases is misguided, as both measures move in the same direction of increasing revenue.
Furthermore, Doocy's claim that Obama falsely said raising taxes would solve "half the fiscal cliff" from a revenue standpoint misrepresents Obama's actual comments. From his November 14 press conference:
OBAMA: And so the most important step we can take right now, and, I think, the foundation for a deal that helps the economy, creates jobs, gives consumers certainty, which means gives businesses confidence that they're going to have consumers during the holiday season, is if we right away say 98 percent of Americans are not going to see their taxes go up; 97 percent of small businesses are not going to see their taxes go up.
If we get that in place, we are actually removing half of the fiscal cliff. Half of the danger to our economy is removed by that single step.
Obama is referring specifically to the policy uncertainty caused by the so-called fiscal cliff, not the impact on federal revenue. Indeed, uncertainty is a real concern and creates a damaging economic effect, with consumer uncertainty perhaps having the greatest impact. According to David Brodwin of the American Sustainable Business Council:
Finally, uncertainty does matter--a lot--when it comes to consumer spending, even though it has nothing to do with whether small businesses hire. If a consumer is worried about layoffs at their work place, they cut back on their spending. If a consumer has inadequate insurance, they cut back on their spending. If a consumer is worried about how they'll afford college, they cut back on their spending.
All this time we've been worried about the wrong kind of uncertainty. We can forget about the uncertainty created by a small bump in the top-bracket tax rates. We need to address the demand-destroying uncertainty that still afflicts far too many ordinary Americans. Once we fix that, demand will return and jobs will follow. [U.S. News, 11/5/2012]
Since current law will impose both spending cuts and tax increases, agreeing to extend tax cuts on the majority of Americans would go a long way in removing the consumer side of the tax uncertainty "half" of the fiscal cliff.
Removing this uncertainty would restore confidence among consumers and allow them to have sound expectations regarding their taxes. Robertson Williams, a senior fellow at the Tax Policy Center, warned consumers that, without knowing what tax bills to expect in the coming year, they should not "spend every penny in [their paychecks] this side of New Years," which could negatively affect economic growth in the short-term.
Fox News is obscuring the national debate over how to balance the deficit while pushing myths that falsely discredit the Obama administration's record. Contrary to the Fox mythology, a downgrade of U.S. debt is not imminent, many economists believe the previous downgrade was due to Republican obstructionism, and raising taxes on the wealthiest households will not hurt employment.
Conservative media outlets have falsely suggested that President Obama's tax plan will negatively affect a broad range of taxpayers, while ignoring Obama's own statements that clearly indicate otherwise. In reality, only a small portion of earners would be affected by his proposed tax increases.
Fox Business host Gerri Willis reacted to President Obama's November 9 remarks on the economy by claiming that he plans to raise taxes on "lots and lots" of middle-income people. From Fox Business' Markets Now:
The speculation that Obama's tax plans will affect a large proportion of earners was also put forth in a National Review Online article, claiming that he "seemed especially intractable on tax hikes for the 'wealthy,' a rather broadly defined term."
However, Obama's statements do not suggest that a large number of earners would be affected by his tax plan. Here's what Obama actually said in his November 9 speech about asking the wealthiest Americans to pay slightly higher taxes on some of their income:
OBAMA: I am not going to ask students and seniors and middle class families to pay down the entire deficit, while people like me making over $250,000 aren't asked to pay a dime more in taxes.
According to most recent Census data, median household income in the U.S. is $50,054, well below the $250,000 threshold suggested by Obama, and only 2 percent of households earn more than $250,000 a year, leaving the vast majority of Americans unaffected by the proposed tax increases. Furthermore, Obama's tax aspirations have a negligible effect on the economy. According to a recent Congressional Budget Office report, allowing upper-income tax cuts to expire would have a modest effect on growth.