Broadcast and cable evening news coverage touched upon a variety of economic topics, including deficit reduction, economic growth, and effects of the Affordable Care Act throughout the third quarter of 2013. While coverage of certain issues improved, a Media Matters analysis shows that many of these segments lacked proper context or input from economists, with Fox News advancing the erroneous notion that the Affordable Care Act is the purported cause behind poor job growth.
CNBC analyst Michelle Caruso-Cabrera incorrectly argued that there is "next to zero" threat of default at the debt ceiling deadline, accusing White House press secretary Jay Carney of "fear mongering" on the issue.
On the October 1 edition of MSNBC's Morning Joe, Caruso-Cabrera joined a panel discussion of the government shutdown to provide an outlook on its projected effects on financial markets and the greater economy. After downplaying the impact of the shutdown, Caruso-Cabrera addressed comments made by Carney concerning the October 17 debt ceiling deadline. Caruso-Cabrera disregarded the administration's concerns that failing to raise the debt ceiling presented a threat to the American and global financial system, stating:
CARUSO-CABRERA: There is a strong school of thought out there that says if we hit the debt ceiling, that it's not Armageddon, that we don't see skyrocketing interest rates. They keep saying "default on our debt," we just heard Jay Carney say that. The chances of that happening are next to zero because you can prioritize your payments. Defaulting on debt means the U.S. government would not make an interest payment [to] the U.S. Treasury. Highly unlikely, and the other thing is, if you pay that late, if it were even to happen, that is not default. And for investors to suddenly sell U.S. treasuries, because there's going to be a three-day payment late? Highly unlikely, because there aren't many other choices in the world.
Caruso-Cabrera closed the segment by accusing Carney of "fear mongering."
Fox Business host Stuart Varney argued that the potential nomination of Federal Reserve Vice Chairwoman Janet Yellen to succeed Chairman Ben Bernanke would be based in part on her gender, making no mention of her aptitude or qualifications for the position.
On the September 26 edition of Fox Business' Varney & Co., host Stuart Varney was joined by Fox Business host Melissa Francis and Fox News contributor Juan Williams to discuss the current and continuing role of the Federal Reserve. The panel largely focused on the recently politicized nature of the nomination process and who is expected to replace Ben Bernanke as chairman. Varney ended the segment by arguing that the potential nomination of Janet Yellen as the next Fed chair would in part be driven by her gender.
VARNEY: Would you agree with me that the lady in question here, Janet Yellen, is a shoo-in to be the next Fed chair because she's female, she's academic, and it is assumed that she would keep on printing money. That conforms with everything that President Obama wants in a Fed chair. She's a shoo-in, agreed?
Varney's contention that gender would play a role in the nomination process reveals a troubling development in right-wing media. Rather than discussing Yellen's qualifications as an economist, her history of accurate econometric predictions, or her broad base of support among economists, conservative media instead focus their attention on Yellen's gender.
On September 18, the Institute for Women's Policy Research sent a letter to President Obama supporting Janet Yellen, signed by more than 500 economists from across the country. The signatures included several former White House economic policy officials and Nobel Prize-winning economist Joseph Stiglitz. Nobel Prize-winning economist Paul Krugman also expressed his support for Yellen's candidacy in The New York Times. From Krugman's article:
Janet Yellen, the vice chairwoman of the Fed's Board of Governors, isn't just up to the job; by any objective standard, she's the best-qualified person in America to take over when Ben Bernanke steps down as chairman.
Fox News downplayed the immediacy of the upcoming debt ceiling deadline, giving credence to congressional Republicans' plan to use the threat of default as a means of gutting the Affordable Care Act (ACA).
On September 25, Treasury Secretary Jack Lew sent a letter to congressional leadership in the House and Senate regarding the state of government finances. Lew specifically emphasized the consequences of failing to lift the federal debt limit by October 17. From the letter:
Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30 billion to meet our country's commitments. This amount would be far short of net expenditures on certain days, which can be as high as $60 billion. If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.
On the September 25 edition of Fox News' Happening Now, host Jenna Lee and Fox Business host Neil Cavuto discussed the upcoming October 17 deadline to raise the debt limit. Cavuto recognized the fact that a failure to lift the debt ceiling would have far more dramatic consequences than a simple government shutdown, but also specifically rebuffed the nature of a firm deadline, claiming:
CAVUTO: Never believe those figures, Jenna, because every Treasury Secretary, be it a Republican or Democratic administration, has always cried panic and always attached a date that is really just made up.
Cavuto outlined the means by which congressional Republicans could use the threat of breaching the debt limit to extract concessions on the ACA, commonly known as Obamacare, which could range from delaying to defunding key initiatives of the law. In fact, The Hill reported that Republicans in the House of Representatives plan on tying any increase of the debt limit to a one-year delay of Obamacare. From The Hill:
Moving to the debt ceiling fight, which Republican leaders have long seen as stronger ground, could be a way to convince rank-and-file Republicans to fight their spending and healthcare battles there rather than on a government funding bill.
Cavuto's caution that listeners should "never believe" Treasury Department deadlines, and the claim that these deadlines are "really just made up," directly contradicts the facts presented by Lew.
According to Treasury estimates, the United States government will have merely $30 billion in liquid assets on hand by October 17. By Lew's own admission, this sum, equivalent to roughly 0.75 percent of annual federal outlays, would be insufficient to meet the obligated expenses of certain individual days. Contrary to Cavuto's claims that the government could use flexible accounting to sustain itself for months without a debt limit increase, those so-called "extraordinary measures" have been in place since May 17 and are now at their limit.
If the debt ceiling is not lifted by October 17, the United States government will be unable to finance the payment of its pre-existing expenses through the continued sale of Treasury bonds. This would have all of the effects of a government shutdown -- outlays to certain program beneficiaries, employees, the military, etc. would cease or be delayed -- while also initiating a global financial crisis among corporate and sovereign wealth funds that own or purchase American debt.
According to The New York Times, the Treasury makes more than 80 million individual payments each month, and would miss nearly one-third of those regular payments every day until the debt ceiling was lifted. A $12 billion Social Security payment is due on October 23 and a $6 billion interest payment on public debt is due October 31. These alone would virtually exhaust the Treasury's remaining resources if Congress fails to act.
The notion that Republicans might be able to string a debt limit increase along for months as they negotiate attacks against Obamacare ignores both the economic consequences of a debt default and the political reality in Washington. The last legitimate Republican threat to breach the debt ceiling resulted in the first ever downgrade of the United States Department of Treasury bond rating -- from AAA to AA+. This downgrade marginally increased the cost of future American borrowing and, according to the Bipartisan Policy Center, will cost taxpayers an additional $18.9 billion over the coming decade.
Increasing the debt limit does not increase the national debt, but manufacturing a crisis by using the debt limit to leverage political concessions has already cost taxpayers.
Fox News is resorting to dishonest misrepresentations of President Obama's record of deficit reduction by cherry picking data and completely disregarding Bush-era deficit levels.
On the September 24 edition of Fox News' Fox & Friends, co-hosts Steve Doocy, Elisabeth Hasselbeck, and Brian Kilmeade were joined by Fox Business anchor Stuart Varney for a falsehood-laden discussion of the federal budget and budget deficit. Varney argued that President Obama first ran up the deficit before hemming it down, claiming that in the president's "first full year in office" the federal budget deficit was approximately $1.4 trillion.
Fox provided a graphic of deficit spending from 2008 to projected 2013 levels, claiming that the deficit is up 137.7 percent since 2008.
The 137.7 percent deficit increase cited by Fox is ostensibly calculated by comparing the 2012 deficit to that of 2008. This figure, however, completely misrepresents deficits under the Obama administration, by picking erroneous start and end dates.
The federal budget deficit in fiscal year 2009 was $1.4 trillion. However, fiscal year 2009 began on October 1, 2008, months before President Obama was sworn into office. Attributing the 2009 budget deficit to President Obama is simply incorrect.
According to the Congressional Budget Office's (CBO) budget and economic outlook report for 2009 -- released prior to President Obama's first inauguration -- the federal budget deficit was projected to be $1.2 trillion for the 2009 fiscal year. Citing turmoil in the housing and financial markets, the CBO projected deficits to rise to their largest percentage of GDP since the Reagan administration. From the report:
A drop in tax revenues and increased federal spending (much of it related to the government's actions to address the crisis in the housing and financial markets) both contribute to the robust growth in this year's deficit.
The report noted that the projected deficit also included the initial $180 billion cost of the Troubled Asset Relief Program (TARP) and the estimated $200 billion takeover of mortgage giants Fannie Mae and Freddie Mac.
Choosing 2012 deficits as the end point for analysis of deficit growth is also erroneous. Why Fox didn't choose the most recent data -- projected levels for fiscal year 2013, which ends on September 30 - as the end point remains a mystery.
If Fox had chosen the correct starting and end points for its analysis of deficits under President Obama, a completely different picture of deficit reduction would emerge. Indeed, according to the latest CBO budget and economic outlook released in May, deficits are projected to fall to less than 3.4 percent of GDP in 2014, the lowest level in years. Current deficit projections for 2017, President Obama's final fiscal year, are estimated to fall to just 2.4 percent of GDP. None of these facts were featured in Fox's reporting.
Fox & Friends has dedicated three segments in one week to a discussion of the debt, debt ceiling, and deficit. Each time their reports have been plagued by misunderstanding or mischaracterizing the facts.
Fox News' Neil Cavuto trotted out well-worn falsehoods about the successful auto rescue, casting doubt on claims made by Ford CEO Alan Mulally on Cavuto's own show a year earlier.
On September 20, President Obama delivered a speech on the economy at a Ford Motors plant in Liberty, Missouri. During the speech, he noted that while Ford did not accept a bailout in the wake of the financial crisis, if General Motors (GM) and Chrysler had not accepted federal funds, it "would have had a profound impact on Ford."
Discussing the president's speech on Fox News' Your World, host Neil Cavuto was joined by Fox Business contributor Charles Payne and Wall Street Journal editorial board member Stephen Moore. Cavuto criticized the President's remarks about Ford being affected by GM and Chrysler's decision to accept federal funds. Cavuto acknowledged that Obama's remarks were similar to Mulally's, who credited the auto rescue for preserving the industry, but dismissed the statement, asking "how do you know that? It was my question then, it remains my question now."
While Cavuto cast doubt over whether or not Ford would have gone under, the fact that Ford would have been imperiled by the disintegration of the other "Big Three" automakers is not only well-established, Cavuto was told as much by Mr. Mulally himself on an edition of Your World taped one year previously.
During their interview, Mulally stated, "if GM and Chrysler, who were completely bankrupt, went into free fall they could have taken down the industry and the U.S. economy from a recession into a depression." He went on to state that all of the remaining automakers "would have been in real trouble."
In addition to downplaying the necessity of the auto rescue, the panelists hypothesized that private capital could have been raised to shore up teetering automakers. This opinion, voiced by Charles Payne stating, "I honestly believe that the private sector would have stepped up and funded General Motors the way that bankruptcies have been funded in the past," also does not comport with the facts.
When the auto rescues were first designed in late-2008 the financial industry was in the midst of a free fall of its own, which Fox has also recently downplayed. There was very little private capital available in the United States for any large-scale bankruptcy and American automakers, unlike the subsidiaries of Toyota, Honda, and other auto transplants, could not draw credit from foreign governments or headquarters.
The auto bailouts, which were initially extremely unpopular, are now widely lauded as successful government responses to the myriad crises facing the economy in 2008 and 2009. Despite Fox's attempts to undermine the administration's handling of the auto industry, the rescues are popular in areas heavily reliant on the auto-industry and often credited for swinging key states toward Obama in the 2012 Election.
Fox News erroneously characterized President Obama's comment that raising the debt ceiling would not add to the national debt as false. However, raising the debt ceiling only pertains to obligations already made, and does not authorize new spending that would increase the debt.
On September 18, President Obama spoke at the Washington, D.C. headquarters of the Business Roundtable. During his speech, which ranged from the five-year anniversary of the Lehman Brother's bankruptcy to current policy debates in Congress, Obama warned against mischaracterizations of the debt ceiling, stating, "raising the debt ceiling, which has been done over a hundred times, does not increase our debt."
On the September 20 edition of Fox News' Fox & Friends, co-hosts Brian Kilmeade, Elizabeth Hasselbeck, and Steve Doocy discussed President Obama's call to allow for a smooth increase of the federal debt limit to avoid an unprecedented government default. During the segment, Doocy parroted the myth that increasing the debt limit somehow equates with increasing the national debt.
DOOCY: So the first sound bite was from the president a couple of days ago at the Business Roundtable where he really got people thinking, "Did he just misspeak?" because he said essentially that raising the debt ceiling does not increase our debt. I know he studied law, and not economics, but increasing the debt ceiling indeed raises the debt. [emphasis added]
Raising the debt ceiling, however, does not raise the debt.
In May 2011, when Republicans in Congress first flirted with forcing the government to default on its debt obligations for the first time in American history, the United States Department of the Treasury drafted and circulated a factsheet explaining the debt ceiling. In addition to addressing the potentially catastrophic financial and economic consequences of a debt default, the Treasury expressly debunked right-wing claims conflating the national debt and the federal debt limit. From the document:
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
The same Treasury Department document noted that raising the debt ceiling does not increase the federal government's obligations, but rather allows the government to meet existing obligations.
Increasing the debt ceiling simply authorizes presidential authority to borrow money, through the Treasury Department, to cover pre-existing expenses and obligations. Furthermore, according to Article I Section 8 of the United States Constitution, only Congress has the power to authorize spending. Raising the debt limit would simply provide President Obama a means to pay for projects already authorized and appropriated by members of Congress
Fox's continued misrepresentation of the federal debt ceiling is in line with other right-wing narratives depicting debt limit increases as fiscal malfeasance on the part of President Obama and congressional Democrats. The network's fundamental misunderstanding of how the debt and debt ceiling function is pervasive -- from falsely analogizing the federal budget with a household budget to downplaying the catastrophic consequences of a debt default, Fox consistently refuses to hear an honest conversation on the functions of government.
In the wake of the five year anniversary of the collapse of Lehman Brothers, Fox News is rewriting American economic history, claiming that government interventions to keep the economy from entering free-fall were unnecessary and damaging.
On the September 17 edition of Fox News' Your World, host Neil Cavuto and former Reagan economic advisor Art Laffer discussed their years-long disapproval of the government rescue packages instituted and implemented in late 2008 and 2009 to arrest the free-falling financial industry, save the auto industry, and stimulate the economy. During their exchange, Laffer claimed that government intervention was unnecessary and impeded recovery:
LAFFER: We were saying that the last thing you want to do is suppress a body's immune system when you're sick. It's just stupid, and the one time we should rely on the economy's immune system, called "free markets", is exactly when we're in the midst of a crisis.
LAFFER: You know, Neil, whenever people make decisions when they are either panicked or drunk the consequences are rarely attractive. And so it is with all of this stimulus, bailout, taking over auto companies. It would have been over in six months if they had done nothing.
The argument that the crisis would have corrected itself is devoid of any factual basis and ignores the opinions of experts.
On September 15, 2008, the day that Lehman Brothers filed bankruptcy, the Dow Jones industrial average suffered its largest single-day loss since the terror attacks of September 11, 2001. Over the next two weeks regulators and legislators cobbled together policies to save failing financial markets. On September 29, 2008, when the first draft of a $700 billion financial bailout failed to pass the House of Representatives, the Dow Jones suffered its worst ever single-day loss.
As the federal government was organizing its financial rescue, the Emergency Economic Stabilization Act of 2008, many economists voiced disapproval with the design of the bailout. Nobel laureates Joseph Stiglitz and Paul Krugman joined the chorus calling to reshape the bailouts to hold risk takers accountable and protect the public against losses. However, at no point did any significant group of experts or economists argue that the government should have done nothing. In an April 2012 Huffington Post article on the dwindling popularity of the bank bailouts, columnist Mark Gongloff noted that most experts recognized the necessity of a federal rescue in the wake of Lehman's collapse. From the article:
For what it's worth, most experts think the bailout prevented an even deeper crash and economic depression. Then-Treasury Secretary Hank Paulson tested the counterfactual by letting Lehman Brothers croak, and the result was a face-peeling market firestorm that nearly took down AIG -- the massive insurance company whose bailout is so unpopular now.
Indeed, Cavuto and Laffer's unwillingness to recognize the important role played by financial bailouts in stabilizing a subset of the economy is even at odds with opinions fit for print at FoxNews.com.
Cavuto and Laffer focused most of the segment on the financial bailout, but lumped the successful auto rescue and economic stimulus into their fabricated retelling of economic history. Contrary to the anti-government narrative forwarded by Fox News, the stimulus packages instituted by the Bush and Obama administrations were widely regarded as not going far enough. Meanwhile, the auto rescue remains so popular in hindsight that it may have effectively moved vital swing states toward President Obama in the 2012 Election.
Media Matters has documented a long track record of Fox News' attacks on stimulus programs, which are sometimes based on entirely fabricated evidence. The right-wing myth that economic stimulus failed is a common talking point used to disparage the fundamental role of government. The argument that stimulus was an unnecessary waste of taxpayer resources directly contradicts prevailing economic opinion.
Cavuto and Laffer's denial of the necessity of some forms of government intervention continues a right-wing media campaign against any role of government in the economy, even in cases when it is absolutely vital for stability, growth, or recovery.
New data reveal persistent, elevated poverty rates in the United States in the wake of recession. The news of economic stagnation among low-income Americans comes at a time when right-wing outlets are leveling attacks on anti-poverty programs and other policies that could raise incomes, drive economic growth, and lift millions of Americans out of poverty.
On September 17, the United States Census Bureau released updated nationwide statistics on income, poverty, and health insurance coverage for 2012. Tens of millions of Americans have seen no positive change in their circumstances from year-to-year. From the press release:
The nation's official poverty rate in 2012 was 15.0 percent, which represents 46.5 million people living at or below the poverty line. This marked the second consecutive year that neither the official poverty rate nor the number of people in poverty were statistically different from the previous year's estimates. The 2012 poverty rate was 2.5 percentage points higher than in 2007, the year before the economic downturn.
According to Census Bureau data, the poverty rate, which neared all-time lows by 2000, has been on the rise for more than a decade through two distinct periods of recession and recovery.
Despite more than three years of consistent economic growth, and a recovery of the financial sector, millions of Americans remain mired in poverty, where they are often the target of right-wing assaults.
Right-wing media attacks on anti-poverty programs like the Supplemental Nutrition Assistance Program (SNAP) reached new heights in the past year. A misleading Fox News documentary portrayed the alleged abuse of the program by a single California recipient as a harbinger of fraud nationwide. Meanwhile, various Fox personalities have wildly exaggerated actual rates of fraud and abuse. At least one attack on SNAP inflated actual abuse statistics by 5,000 percent.
Although these segments frame a narrative regarding how much the government should cut from these benefit programs, they completely ignore the fact that abuse rates in SNAP and other government benefits are historically low and the economic return on investment is positive. The fact that Fox News, in particular, has begun using its own misleading coverage of benefit abuse as a lobbying and promotional tool to influence members of Congress shows unprecedented legislative influence by the right-wing media in dismantling the social safety net.
Right-wing attacks have also been leveled against proposals to increase the federal minimum wage, an action that would immediately lift millions of workers out of poverty and provide a boost to the economy.
Part of the attack against lifting the minimum wage has consistently focused on the involvement of labor unions. In his preview of the latest poverty data, economist Dean Baker of the Center for Economic and Policy Research (CEPR) explained that unionization is one of the best options available to alleviate poverty. His analysis of union activity in OECD countries concludes that higher rates of union membership have a positive impact on lowering poverty rates. Labor unions, via collective bargaining, effectively raise wages and therefore the share of economic productivity distributed to workers. In cases when they are politically active, unions typically promote policies that they believe would benefit other workers, spreading the benefits of unionization to union members and non-members alike. From CEPR:
There are many other important differences that could be important in reducing poverty in these countries. However in almost every case, unions were a major force in advancing the various policies that are associated with lower poverty. It would have been difficult to envision a scenario in which these policies would have been enacted with pressure from unions.
Decreasing union membership is often celebrated by the right-wing as an ideological victory, when it in fact represents an economic policy failure. The right-wing media remain unflinching in their constant attacks on worker mobilization and labor unions.
Five years after the collapse and bankruptcy of Lehman Brothers, media are turning a blind eye to persistent economic inequality and poverty, and whitewashing the effects of austerity on preventing economic growth.
September 15 marked the fifth anniversary of the collapse of Lehman Brothers, the investment bank whose bankruptcy set off a global financial crash and dramatically accelerated a recession that began in the United States in December 2007. For nearly two years, the American and global economies were marked with enormous job loss, a collapse of housing and investment values, and the looming prospect of economic depression. Five years later the economy has yet to fully recover.
In the past five years, in large part thanks to unprecedented government intervention, financial markets have more than recovered from the 2008-2009 collapse. Since bottoming out on March 9, 2009, investment markets are up across-the-board. The Dow Jones industrial average crossed the 15,000 point threshold on May 7 for the first time ever and currently sits near its all-time high set on August 2. The other major indices are doing just as well. The S&P 500 crossed the 1,700 point threshold on August 2, when the NASDAQ also set a new 13-year high.
Corporate profits have ballooned along with the soaring stock market. CNNMoney reported in December 2012 that quarterly corporate profits set a new record, but it also noted that workers' wages had "fallen to their lowest-ever share of GDP." When Business Insider reported on the same phenomenon in April, profitability had continued to rise as wages continued to fall. Wage growth has largely been captured by the highest earners.
The top end of the economy has recovered from the collapse and recession, but other indicators remain stuck. Stagnant and falling wages contribute to growing economic inequality and diminish the purchasing power of the American consumer economy. The Economic Policy Institute detailed the effect that a decade of wage stagnation has had on the shrinking middle class and swollen ranks of working poor.
Unemployment, while falling, remains a drag on economic growth and has remained higher than pre-recession levels thanks largely to policy decisions in Washington.
Economist Jared Bernstein notes that poverty rates have barely fallen since the end of the recession, yet another indication that the growth seen over the past several years is not reaching the broader economy.
The economy is growing, but media have done a poor job acknowledging the causes and symptoms of lingering structural inequality. Five years after the Lehman Brothers collapse, media have been complicit in exacerbating structural inequalities by failing to cover the issues or grant a voice to groups that continued be to economically disadvantaged.