Following months of media calls for deficit reduction, cable news channels spent just over 7 minutes reporting on a revised Congressional Budget Office (CBO) projection that the 2013 deficit will decline by more than previous estimates. Broadcast network news evening shows did not cover the new report.
Fox & Friends co-host Brian Kilmeade reacted to a new Congressional Budget Office (CBO) report showing the 2013 deficit dropping by $200 billion by lamenting that the report might discourage further austerity measures.
In a May 14 report, the non-partisan CBO estimated that in 2013, the federal deficit will be $200 billion lower than previously projected, the smallest deficit since 2008. The report also predicted that the deficit over the next 10 years will be $618 billion less than previously thought.
Kilmeade reacted to this news with calls for increased austerity, lamenting that the "positive news" in the CBO report might lead away from a mindset of "fiscal discipline." Kilmeade concluded, "I just hope we still feel the urgency to get our budget in order."
However, Kilmeade's concern may be misplaced. As The Washington Post's Ezra Klein noted in a May 14 post, the new CBO estimate makes the deficit look "downright manageable":
[T]he debt disaster that has obsessed the political class for the last three years is pretty much solved, at least for the next 10 years or so.
In fact, that's probably too much deficit reduction, too quickly.
Many economists agree that too much in spending cuts too quickly can hurt economic growth. 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, data from the Bureau of Economic Analysis show that austerity has led to a decline in government spending, which has turned into a drag on economic growth:
Media outlets largely ignored economic inequality in discussions about the overall economy, despite mounting evidence suggesting that the problem has increased in recent years.
While media have been quick to highlight ostensibly positive gains for the economy -- notably that the Dow Jones Industrial reached 15,000 for the first time in its history, GDP grew by 2.5 percent in the first quarter of 2013, and unemployment for April edged down to 7.5 percent -- signs of rising income inequality have gone largely unmentioned.
According to a recent Media Matters analysis, economic coverage for the month of April barely mentioned issues of inequality. In 123 total segments discussing policy effects on the macroeconomy, only 12 touched upon the growing disparity in economic gains for the rich and the poor.
The discrepancy in covering economic inequality stretched across all major outlets. ABC, CBS, and NBC provided no mentions of the problem. MSNBC devoted the most coverage, with roughly 25 percent of segments on the economy discussing rising inequality.
While the media have pushed inequality out of the spotlight, mounting evidence suggests that the problem is getting worse.
As for the rising stock market, while any gains should be viewed as a positive for the economy as a whole, the distribution of those gains paints a less than perfect picture. According to a Gallup poll, 52 percent of Americans currently hold stocks, a number that has been consistently declining in recent years.
Other indicators highlight the deep-seated nature of economic inequality. According to Congressional Budget Office data, from 1979 to 2007 the top one percent of income earners have seen their after-tax share of total income rise by more than 120 percent, while the bottom 20 percent of earners have seen that share decline by almost 30 percent.
And according to an analysis by journalist David Cay Johnston, economic gains in recent history show an even darker reality - from 2009 to 2011, 149 percent of increased income was reaped by the top 10 percent of earners.
Meanwhile, the economy is currently suffering from an epidemic of long-term unemployed workers, which, as noted in a Bloomberg editorial, could create a permanent underclass of workers unable to reenter the labor force.
Some of the media's attention -- albeit very little -- has focused on the inequitable impact of sequestration on low-income individuals. The overwhelming majority of discussion of inequality in April, most notably on MSNBC, focused on Congress' unwillingness to mitigate the impacts of sequestration of the poor, while members were seemingly enthusiastic to correct inconveniences for those at the upper end of the income scale.
While some attention has been given to economic inequality, the broader trend in media is to ignore the issue, preferring instead to focus on the widely recognized non-issue of short-term deficit and debt reduction.
Evening news coverage throughout April touched upon several economic issues, including income inequality, deficit reduction, and entitlement cuts. A Media Matters analysis of this coverage reveals that many of these segments lacked proper context or necessary input from economists, while some networks ignored certain issues entirely.
Fox News claimed that federal government policy was failing to lower unemployment by citing recent decisions made by the Federal Reserve. However, economists note that Federal Reserve action alone cannot increase employment, and federal spending must be increased to improve the economy.
Reacting to the May 2 weekly jobless claims report, Fox Business anchor Stuart Varney dismissed the 18,000 drop in initial claims to the lowest level in five years, stating that "it's a better number, but it's still not a good number." Varney went on to claim that the Federal Reserve's recent decision to continue its bond buying program was not producing expected drops in unemployment, claiming "unemployment rates are not falling the way they should when you're printing all this money." From America's Newsroom:
While Varney was quick to dismiss the government's role in strengthening the labor market by citing the Federal Reserve and the effect of current monetary policy on job creation, he completely ignored the fact that decreases in government spending have negatively impacted the economy, overlooking statements made by the Federal Reserve and the warnings of experts.
In the statement released by the Federal Reserve on May 1 outlining its future decisions regarding monetary policy, the board specifically cited that "fiscal policy is restraining economic growth."
Indeed, many analysts have been claiming that actions by the Fed are not enough to bolster economic growth, and that increased government spending -- that is, expansionary fiscal policy -- is necessary to improve current conditions.
In The Washington Post's Wonkblog, Roosevelt Institute fellow Mike Konczal explained how actions taken by the Federal Reserve have failed to counteract the negative effects of decreased government spending:
But the most important lesson to draw is that fiscal policy is incredibly important at this moment. In normal times, the broader effect of government spending, or the fiscal multiplier, is low because the central bank can offset it. But these are not normal times. It's not clear why the Federal Reserve's actions haven't balanced out fiscal austerity. But since they haven't, we should be even more confident that, as the IMF put it, "fiscal multipliers are currently high in many advanced economies."
The main point here is that while the Federal Reserve is attempting to spur economic gains through monetary policy, it simply can't do enough to counteract recent contractions in government spending. Former Labor Secretary Robert Reich echoed Konczal, stating "easy money from the Fed can't get the economy out of first gear when the rest of government is in reverse."
By only focusing monetary policy as the government's way to bolster employment and economic growth, Fox is only telling half the story -- the negative effects of decreased government spending are far too damaging to be mitigated elsewhere -- and continuing its trend of downplaying positive economic news.
The Wall Street Journal reinforced its call for spending cuts, seemingly undeterred by recently discredited research and overwhelming evidence showing that fiscal tightening negatively impacts economic growth.
Reacting to recent research that has questioned austerity proponents' most cited figure -- the 90 percent debt-to-GDP threshold as identified by Camen Reinhart and Kenneth Rogoff -- an April 30 Wall Street Journal editorial claimed that the new revelations are being used to "revive the spending machine."
Instead of addressing the fact that the discrediting of Reinhart-Rogoff took, as The Washington Post's Neil Irwin puts it, a "great deal of wind out of the sails from those who argue that high government debt is, anywhere and everywhere, a bad thing," the WSJ instead used this event to attack government spending in all forms and reinforce calls for austerity. From the editorial:
The Keynesians are now using a false choice between "austerity" and growth to justify more of the government spending they think drives economic prosperity. The brawl over Reinhart-Rogoff is thus less a serious economic debate than it is a political exercise to turn more of the private economy over to government hands.
After five years of trying, we should know this doesn't work. The real way to promote a stronger economy is more austerity and reform in government, and fewer restraints on private investment and risk taking.
Arriving at such a conclusion requires not only obscuring the importance of the Reinhart-Rogoff debt threshold and its importance in pushing global austerity measures, but also ignoring a few key economic realities.
First, the editorial uncritically dismisses the impact of previous economic stimulus in order to bring into question any future government spending:
[Former White House economist Larry] Summers says governments should borrow more now at near-zero interest rates to invest in future growth. But this is what we were told in 2009-2010, when Mr. Summers was in the White House, and the $830 billion stimulus was used to finance not primarily roads or bridges but more unionized teachers, higher transfer payments, and green-energy projects that have since failed. Why will it be different this time?
The WSJ fails to note that the economic stimulus that was enacted in 2009 is widely regarded as a success. According to a WSJ forecasting survey conducted in 2010, 70 percent of economists agree that the stimulus helped the economy, and a May 2012 Congressional Budget Office report noted that it created between 900,000 and 4.7 million full-time-equivalent jobs in 2010 and between 600,000 and 3.6 million in 2011.
Second, and perhaps more notably, the editorial completely ignores the mounting evidence that too little government spending is already hurting the U.S. economy. When individual contributors to GDP growth are isolated, it becomes clear that in the majority of recent quarters, cuts in government spending have pulled down overall economic growth. In fact, the negative contribution of too little government spending has compromised growth even in the face of strong private contributions.
And while editorial board member Stephen Moore may feel that recently enacted across-the-board spending cuts have helped economic growth, economists and even Fox News personalities recognize that they have and will continue to negatively impact GDP growth.
WSJ's call for ever elusive "pro-growth" spending cuts stands in stark contrast to observations made by former pro-austerity advocates. The International Monetary Fund, which previously called for austerity measures throughout Europe, recently noted that fiscal tightening has failed to deliver a reduction in debt due to declines in output. Even John Makin of the conservative American Enterprise Institute now claims that the U.S. has cut federal spending enough to substantially reduce the debt-to-GDP ratio.
Fox News covered Democratic criticism of harmful and unnecessary spending cuts as a purely political maneuver, without acknowledging that those criticisms are reflected in actual economic data, and echoed by economists and even by House GOP leadership.
On the April 29 edition of America's Newsroom, host Bill Hemmer set up an interview with Wall Street Journal editorial board member Stephen Moore by suggesting that only Democrats argue that America is not in a "debt crisis," and hinted that the raw total of U.S. debt belies that claim. Moore proceeded to divert the conversation far away from economic reality, first citing a Fox News poll on public concerns about the debt, then accusing anti-austerity Democrats of merely seeking to protect "the favored programs that they care about," before finally misleading viewers on the relationship between economic growth and spending cuts. From America's Newsroom:
There are a few layers of deception to unpack here:
These sorts of facts in the U.S., and related ones from other economies, are threatening to upend the entire austerity movement, as Irwin observes. But while that debate proceeds and evolves elsewhere, Fox News continues to offer conservatives a venue to avoid reconciling ideology and fact.
Fox News glossed over an important aspect in its reporting on lower than expected GDP growth -- the government contribution to GDP has been negative in the majority of recent reports.
Following the April 26 release of first quarter GDP growth estimates, Fox Business anchor Stuart Varney dismissed the 2.5 percent increase as "not good numbers," claiming that the increase was not indicative of a robust recovery. From Fox News' America's Newsroom:
Varney provided a laundry list of reasons why GDP growth has failed to live up to expectations, including recent federal and state tax increases and, notably, cuts from sequestration - a reversal from previous right-wing assertions that sequestration was too small to harm the economy. Varney failed to explain, however, that too little government spending has been holding back economic growth, as indicated by many of quarterly reports from the past two years.
The Bureau of Economic Analysis provides data on individual contributions to GDP, including government spending's contribution. When the government's contribution to GDP growth is separated from total growth, it becomes apparent that it has been a drag on the economy for much of the past two years.
In the previous 13 quarters, government spending has only added to GDP growth twice - once in the second quarter of 2010, and again in the third quarter of 2012.
This observation has been recognized by others, causing The Washington Post's Ezra Klein to boldly state that "government is hurting the economy - by spending too little." Of course, any recognition of this fact from Fox News would require the network to abandon its longtime stance that increased government spending can only hurt the economy.
The research consistently cited by media figures to support cutting government spending has recently been invalidated, raising questions about how mainstream coverage of economic policy promoted incorrect data.
In January 2010, economists Carmen Reinhart and Ken Rogoff released a study that suggested when countries reach debt levels of 90 percent relative to GDP, economic growth would be compromised. Conservatives in politics and media alike repeatedly cited the figure in discussions about the economy.
A study released on April 16, however, found that the conclusions reached by Reinhart and Rogoff were based on data that was riddled with errors. Reinhart and Rogoff's response to the critique -- in which they maintain they never implied that rising debt caused lower growth, just that the two were associated -- shows that media's handling of the figure was wrong all along.
These new developments show that media consistently used an apparently incorrect figure for the past few years to call for austerity measures. Here's a look back at how major cable networks cited the figure in its coverage of the budget and economic policy:
Video by Alan Pyke.
A wide swath of media figures have cited economists Carmen Reinhart and Kenneth Rogoff's January 2010 finding that a country's economic growth becomes impaired when its debt level exceeds 90 percent of gross domestic product. But the Reinhart-Rogoff paper is premised on an Excel error, revealed when other researchers reviewed the data underlying the commonly-cited debt-to-GDP threshold claim.
Austerity proponents, such as House Budget Chairman Paul Ryan (R-WI), frequently claim that a debt-to-GDP ratio of 90 percent signals economic doom, using Reinhart and Rogoff's work as leverage for imposing sharp cuts that economists agree would do serious harm to economic growth. Media coverage of budget and economic policy throughout the past three years has also repeated that claim, often without a direct connection to the Reinhart-Rogoff work from which the notion derives.
But that work, arguably the lynchpin of the case for imposing austerity in order to deliver economic growth, is crippled by basic errors, as the Roosevelt Institute's Mike Konczal explains:
From the beginning there have been complaints that Reinhart and Rogoff weren't releasing the data for their results (e.g. Dean Baker). I knew of several people trying to replicate the results who were bumping into walls left and right - it couldn't be done.
In a new paper, "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff," Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst successfully replicate the results. After trying to replicate the Reinhart-Rogoff results and failing, they reached out to Reinhart and Rogoff and they were willing to share their data spreadhseet. This allowed Herndon et al. to see how how Reinhart and Rogoff's data was constructed.
They find that three main issues stand out. First, Reinhart and Rogoff selectively exclude years of high debt and average growth. Second, they use a debatable method to weight the countries. Third, there also appears to be a coding error that excludes high-debt and average-growth countries. All three bias in favor of their result, and without them you don't get their controversial result. [...]
So what do Herndon-Ash-Pollin conclude? They find "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as [Reinhart-Rogoff claim]." Going further into the data, they are unable to find a breakpoint where growth falls quickly and significantly.
Rogoff and Reinhart responded to the criticism, which has since been criticized as a weak rebuttal. But now that those numbers are known to be wrong, the litany of media outlets which have cited them have an opportunity to reexamine their coverage of the austerity premise. Print media, notably The Weekly Standard, The Washington Post, San Francisco Chronicle, and Atlanta Journal-Constitution, have frequently reproduced the Reinhart-Rogoff thesis in covering budget and economic policy. Television and radio media have made frequent use of the Reinhart-Rogoff paper, including prominent mentions on NPR, CNN, and Fox Business.
The Reinhart-Rogoff threshold has long been challenged by fellow economists, such as former Federal Reserve economist Joseph Gagnon, Paul Krugman, and Josh Bivens and John Irons of the Economic Policy Institute, on the grounds that it gets the directionality of causation exactly wrong. These and other economists argue that high debt levels are a consequence of prolonged weak GDP growth, rather than its cause.
As the Center for Economic and Policy Research's Dean Baker notes, however, the newly discovered errors obviate these more intricate economist responses to Reinhart-Rogoff: "we need not concern ourselves with any arguments this complicated. The basic R&R story was simply the result of them getting their own numbers wrong."
From the April 15 edition of Fox News' America Live:
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From the April 10 edition of MSNBC's Martin Bashir:
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Karl Rove accused President Obama of misleading the American people on deficit reduction when the GOP operative and Fox employee denied that Obama "has met the Republicans more than halfway" on the deficit.Rove was repeating a bogus piece of spin from GOP leadership -- on the whole, deficit reduction under the Obama administration has actually been heavily tilted towards spending cuts.
When Happening Now guest host Rick Folbaum asked Rove if Obama had "met the Republicans more than halfway," as the president has said, Rove replied, "He has not met the Republicans halfway. The Republicans gave him $600 billion in additional revenue at the end of the year on the fiscal cliff deal." Rove continued: "The president during the campaign said we ought to have, he had TV ads, saying there ought to be two and a half dollars in spending cuts for every dollar in new revenue. So he's got to come up with about $1.5 trillion in spending reductions, and there's nowhere near that in this budget."
Rove is trying to pull a fast one on Fox's viewers by omitting the crucial fact that Obama signed $1.5 trillion in spending cuts into law in 2011 as part of the Budget Control Act. Those cuts are legally binding and are in place today. According to the Center on Budget and Policy Priorities, "these reductions will shrink non-defense discretionary spending to its lowest level on record as a share of GDP, with data going back to 1962." As Washington Post columnist Ezra Klein has written, "you can't pretend the BCA cuts didn't happen."
This CBPP chart shows the balance between spending cuts and revenue increases signed into law since 2011:
Rove is not the only one trying to tell the American people that post-2010 spending cuts never happened. By starting the timer at the beginning of 2013 and ignoring Obama's actual record on deficit reduction, Rove is parroting GOP House Speaker John Boehner, who said last week that "the president got his tax hikes on the wealthy with no corresponding spending cuts."
A Fox News analyst invoked the discredited "death panels" myth to stoke fears that cancer clinics are turning away patients as a result of the 2010 health care reform law, even as those clinics say they are being forced to turn away patients because of automatic across-the-board budget cuts that took effect last month.
On April 3, Sarah Kliff of The Washington Post's WonkBlog reported that thousands of cancer patients will be turned away from clinics for chemotherapy treatment because of automatic cuts to Medicare:
Cancer clinics across the country have begun turning away thousands of Medicare patients, blaming the sequester budget cuts.
Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.
Patients at these clinics would need to seek treatment elsewhere, such as at hospitals that might not have the capacity to accommodate them.
On April 5, Fox News analyst Peter Johnson, Jr. appeared on Fox & Friends to discuss the story and blamed not only sequestration, but President Obama's health care reform law, saying: "This is about people dying as a result of Obamacare and as a result of the sequester." Johnson then claimed that Medicare growth reduction, which is in the Affordable Care Act (ACA), would lead to similar problems for Medicare patients. Later, Johnson used this situation to push the right-wing myths about "death panels" under the ACA.
Johnson's claim that the ACA resulted in cancer patients losing chemotherapy treatment is groundless. The Post's Kliff explained in her post how sequestration is solely responsible for this reduction in care:
Legislators meant to partially shield Medicare from the automatic budget cuts triggered by the sequester, limiting the program to a 2 percent reduction -- a fraction of the cuts seen by other federal programs.
But oncologists say the cut is unexpectedly damaging for cancer patients because of the way those treatments are covered.
Medications for seniors are usually covered under the optional Medicare Part D, which includes private insurance. But because cancer drugs must be administered by a physician, they are among a handful of pharmaceuticals paid for by Part B, which covers doctor visits and is subject to the sequester cut.
Following a pipeline rupture in Arkansas, Exxon Mobil is reportedly cleaning up thousands of barrels of oil in a residential neighborhood. As efforts to contain and clean the spill were ongoing, Fox News contributor Monica Crowley advocated Exxon Mobil becoming a sponsor of Yellowstone National Park, adding: the "free market solves everything."
On the March 1 edition of Fox News' Your World with Neil Cavuto, Monica Crowley suggested Exxon Mobil, one of the world's largest oil companies, would be an "appropriate" sponsor for one of America's largest national parks. Arguing for smaller government, she went on to compare the proposed partnership to private companies owning sports stadiums and the privatization of the US Postal Service, arguing that "profit motive" would ensure efficiency:
As Crowley made her endorsement, cleanup efforts continue in Mayflower, Arkansas, after an unspecified amount of oil leaked from an Exxon Mobil pipeline. Reuters reports that the Pegasus line "can transport more than 90,000 barrels per day" and that Exxon Mobil "had no information on when the pipeline last underwent maintenance." From the same article:
The Pegasus pipeline, which ruptured in a housing development near the town of Mayflower on Friday, spewing oil across lawns and down residential streets, remained shut and a company spokesman declined to speculate about when it would be fixed and restarted.
Exxon, which was fined in 2010 for not inspecting a portion of the Pegasus line with sufficient frequency, had yet to excavate the area around the Pegasus pipeline breach on Monday, a critical step in assessing damage and determining how and why it leaked.