Fox News attempted to discredit potential Federal Reserve chair nominee Lawrence Summers by dismissing his concerns about the economic harm caused by austerity measures and his assertions that additional government spending is needed.
Media have reported that President Obama may nominate Lawrence Summers -- former director of President Obama's Council of Economic Advisers and former Treasury Secretary under President Clinton -- to replace Federal Reserve Chair Ben Bernanke as head of the Fed.
Fox responded by implying that Summers was not qualified for the post because of his concerns about austerity measures and the decline in government spending, despite the fact that austerity has slowed economic recovery and the lack of government spending has been a drag on the economy.
On June 4, Fox & Friends co-host Steve Doocy dismissed Summers' possible nomination to lead the Fed, claiming that "he thinks cutting spending is a bad idea." His guest, Fox Business host Stuart Varney, citing a recent Washington Post op-ed by Summers, lamented that Summers did not like spending cuts and did not want rapid deficit reduction. Varney concluded that anyone who wants to see U.S. economic revitalization would be "dismayed by the rise and prominence of Larry Summers."
Fox displayed the following text during the segment:
In his op-ed, Summers asserted that governments should "balance spending and revenue collection in a way that assures the sustainability of its debts" but that austerity efforts during an weakened economy "may backfire." He then explained that financing the government with deficit spending during strong economic conditions is not the way to go, but also wrote that cutting deficits during depressed economic conditions might "actually increase debt burdens because of their negative economic impacts." Furthermore, he asserted that in a time of low interest rates and a sluggish economy, governments should borrow to stimulate private sector demand.
Economists agree that additional austerity measures would be problematic. In an April 27 post on his New York Times blog, Nobel Prize-winning economist Paul Krugman called continued efforts at deficit reduction through austerity measures "very bad policy," explaining that recent declines in government spending -- at the federal, state, and municipal levels -- have contributed to slow economic growth. Similarly, in a February 8 Guardian op-ed, the Center for Economic and Policy Research's Dean Baker asserted that "deficit reduction is throwing people out of work" and concluded that "we need deficits today to fill a huge hole in demand created by the private sector."
Additionally, experts contend that the U.S. should borrow to stimulate economic recovery while the cost of government borrowing is low. Krugman, in a July 26, 2012, New York Times column argued that "when money is cheap, it's a good time to invest." And a March 30, 2012, Economic Policy Institute blog post noted that the "markets are paying the government to borrow money."
Indeed, the decline of government spending -- that could be easily and cheaply financed -- has proven to be a drag on the post-recession economic recovery:
Fox has a pattern of pre-emptively attacking potential Obama nominees, recently reinvigorating its campaign against former U.N. Ambassador Susan Rice, who is reportedly being considered for the post of National Security Advisor.