Fox News overstated the costs of Medicaid expansion for states by ignoring research and evidence showing that expanding Medicaid actually saves money for many states because of the high share of the cost being picked up by the federal government in the Affordable Care Act (ACA) and the reductions in money spent by states on uncompensated care.
The Wall Street Journal encouraged Congress to support budget cuts while simultaneously arguing for increased economic growth that would be hindered by such cuts.
In a November 11 editorial subtitled "Deficits are falling, but they'd fall more with faster economic growth," The Wall Street Journal argued that while a recent Congressional Budget Office (CBO) report found that the deficit fell to 4.1 percent of GDP in 2013, this number would be smaller if economic growth were stronger, concluding that "above all faster economic growth" is the best path to reduce deficits.
The WSJ urged Republicans in Congress to stand firm on budget caps and across-the-board spending cuts known as sequestration. From the editorial:
But a big part of the spending control is due to the budget caps and sequester. Defense spending took the biggest hit, falling by 6.6% in 2013 and for the second year in a row. Nondefense discretionary spending also fell overall, though CBO didn't break out the details. The spending caps are clearly working, and Republicans should refuse to ease them unless Mr. Obama provides substantial changes in entitlement policy. That means immediate changes in law, not merely promises of future cuts to medical providers that will never happen.
Embracing budget caps and sequestration while arguing for increased economic growth is curious considering that economists have repeatedly noted that budget sequestration has and will continue to hinder economic growth.
According to a separate CBO analysis, canceling sequestration would result in a 0.7 percent increase in GDP, an additional 900,000 jobs in the third quarter of 2014, and continued benefits for years to come.
Economists have long supported increased economic growth to reduce deficits, but unlike the WSJ, they argue that increased investment in the short term -- not destructive cuts -- is the answer.
According to economists Robert Reich and Jared Bernstein, focusing too much on deficit reduction through spending cuts encourages policies that hinder economic growth, such as sequestration. Instead, they argue that focusing on economic growth with increased government spending has the benefit of increasing jobs in the short-run and decreasing deficits in the long-run. According to Reich:
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected -- bringing in more tax revenues than anyone had forecast.
The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low - or become even lower - on the middle class.
If the WSJ were truly concerned about reducing deficits through economic growth, it would reject budget cuts and embrace expansionary fiscal policy.
Incoherently pushing for budget cuts as a way to grow the economy, however, is standard practice for WSJ. In a February editorial, the outlet ignored all economic evidence to falsely suggest that that sequestration will help the economy.
Fox News contributor Laura Ingraham tried to downplay the effects of the recent government shutdown by citing data from before the shutdown even began.
On November 7, the Commerce Department released its latest economic growth estimate for the third quarter of 2013. These data, which track the growth of gross domestic product (GDP) from July through September 2013, revealed a 2.8 percent growth rate over that three-month period.
On Twitter, Ingraham interpreted the reported 2.8 percent GDP growth rate as evidence that the 16-day government shutdown -- orchestrated by the Republican caucus in the House of Representatives and emboldened by favorable right-wing media coverage -- actually had little effect on the economy.
If Ingraham had taken time to read actual reporting on the subject, she would have seen that the third-quarter report (July-September) does not include any negative effects of the government shutdown, which started on October 1. From the LA Times:
The third-quarter outcome was nearly a full percentage point stronger than most economists had predicted. Analysts expect the shutdown will slow growth in the October-December quarter.
A widely-reported impact estimate from financial ratings agency Standard & Poor's put the cost of the government shutdown at roughly $24 billion. The agency also lowered its growth forecast for the last quarter of the year (October through December). Economists argue that the shutdown will have lingering effects on the labor market and overall economy for the foreseeable future. The shutdown also eroded consumer confidence and may have derailed our gradual economic recovery.
Ingraham's faulty attempt to downplay the negative economic consequences of the government shutdown reveals a clear misunderstanding of the facts and of calendars.
UPDATE (11/7): Ingraham has since deleted her tweet and has issued no correction to her Twitter account at time of posting.
From the October 31 edition of Fox News' The Real Story:
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Cable and broadcast nightly news programs have remained completely silent on pending automatic cuts to the Supplemental Nutrition Assistance Program (SNAP) -- formerly known as food stamps -- which will have negative impacts on the economy and low-income groups.
From the October 25 edition of Premiere Radio Networks' The Rush Limbaugh Show:
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From the October 23 edition of Cumulus Media Networks' The Mark Levin Show:
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In the week following the end of the 16-day government shutdown, major print media outlets shifted their attention to upcoming bipartisan budget negotiations. This coverage of budget priorities was far more likely to mention the need for deficit and debt reduction than economic growth and job creation, despite economists warning that growth is the more pressing concern.
During a discussion of the latest jobs report, The Wall Street Journal's Stephen Moore ignored the prominent role sequestration cuts played in depressing job growth, choosing instead to make the reality-defying claim that sequestration has in fact been a boon to the economy.
On October 22, the Bureau of Labor Statistics released its monthly unemployment report for September. According to the report, payrolls rose by 148,000, while the unemployment rate dropped from 7.3 to 7.2 percent. Those positive gains, a welcome change from losses sustained after the financial crisis, nonetheless fell short of expectations that 180,000 to 200,000 jobs would be created in September.
WSJ's Moore reacted to the jobs report during an interview with Fox News host Jenna Lee on Happening Now. He claimed the numbers represented an economy in "stagnation" that is "middling at best" and "kind of limping forward." Lee followed up, asking whether automatic spending cuts known as sequestration were to blame. Moore responded:
MOORE: Well first of all, I think the sequester has been very good for the economy, not bad. When you cut government spending, that frees up resources for private businesses. So the sequester has been, in my opinion, a very positive force and it's bringing down the deficit in spending.
Moore's cheerleading of sequestration while complaining about an under-performing economy is ironic because the slowdown of the recovery has been caused in large part by the sequester, which, according to Yahoo! Finance, is "finally dinging the economy":
Forecasting firm MacroEconomic Advisers has lowered its second-quarter forecast for GDP growth from 1.8% to 1.3%. That's very weak growth that will probably hold back hiring and spending, and depress confidence. "The sequester is expected to slow growth this year, and largely accounts for the weak second-quarter growth and lackluster third-quarter growth," the firm said in a recent report.
Pullbacks in the job market seem likely during the next few months. After five straight months of improvements, small businesses surveyed by the National Federation for Independent Business curtailed hiring in May. The latest jobs report from ADP showed private-sector firms created about 30,000 fewer jobs than expected in May, with companies hiring at a pace too slow to bring down the unemployment rate. Manufacturing activity, which is directly affected by federal spending on defense contractors, has fallen below the level generally considered to be recessionary.
Tony Nash of forecasting firm IHS warned recently on CNBC that the effects of the sequester should build as the year goes on. Even the Federal Reserve mentioned the sequester in its latest "beige book" report on regional economic conditions, citing concerns about defense-industry cutbacks in the Cleveland and Richmond regions.
According to the Oregon Office of Economic Analysis, the sequester has impacted job growth throughout the country. CNN recently confirmed an earlier report that the sequester has slowed economic growth. Worse still, an October 2013 report by the Bipartisan Policy Center found that the "full brunt of the [sequester] cuts hasn't hit yet, and if we go down the sequester path for too long, we won't be able to reverse the devastating impacts."
Furthermore, repealing the sequester would stimulate the economy. According to an analysis by the non-partisan Congressional Budget Office (CBO), canceling sequestration would increase the United States' Gross Domestic Product (GDP) by $113 billion and generate 900,000 new jobs, which the Economic Policy Institute noted, is "a number akin to 40 percent of the total number of jobs created over the last twelve months."
Moore's ignorance is not new. He previously claimed that sequestration was a "success" free of "negative consequences," a sentiment echoed throughout the right wing media. Instead of spending cuts, Moore would do well to turn his attention to job creation.
The lackluster September unemployment report highlights the need for a focus on job creation, a priority that is likely to be ignored by media.
On October 22, the Bureau of Labor Statistics released its unemployment report for the month of September, which found that payrolls rose 148,000, edging the official unemployment rate down from 7.3 to 7.2 percent. While the report found positive gains in the labor market -- a welcome change from losses sustained after the financial crisis -- job creation fell far short of economists' expectations, which predicted 180,000 to 200,000 jobs would be created in September.
The underperforming labor market, identified in this month's report, presents an opportunity for the media to focus on job creation and economic growth.
Unfortunately, this opportunity is likely to be squandered in favor of promoting discussion on spending cuts and deficit reduction, as evidenced in past reporting.
Media's focus on deficits and debt instead of economic growth and jobs has long been criticized by economists. Previous coverage of budget negotiations show that media place overwhelming focus on the need to reduce spending, often leaving the more pressing need for economic growth largely unmentioned.
Indeed, this issue has already been raised by economist Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. In a post on The New York Times Economix blog, Bernstein expressed fears that after concluding the 16-day long government shutdown, the media will undoubtedly pivot focus to deficit and debt reduction. Bernstein explains that the debate over spending and deficit reduction will crowd out discussion on the more immediate jobs crisis:
Imagine instead that the politicians turned not to the budget deficit but to the jobs deficit, the infrastructure deficit, to poverty, wage stagnation, immobility and inequality. Along with a budget conference -- and don't get me wrong; I'm glad they're talking -- imagine there was an economic conference to make recommendations on what's really hurting the country, which I assure you is not our fiscal situation. That's taking care of itself for the short term, as is always the case after a recession (deficits go up in recessions, for obvious reasons).
I'm surely going to jump into the budget debate myself any minute now, but before I do, I wanted to point out that this is not the debate we should be having. It's the preferred debate of those who seek to shrink the role of government, to undermine social insurance, to reduce needed investments in public goods and human capital, and to protect the concentrated wealth of the top few percent.
Bernstein's fear of undue focus on debt and deficits has already been realized.
Reacting to the deal that ended the recent government shutdown, Fox News host Megyn Kelly claimed it wasn't a "win for the American people" because it didn't reduce the national debt. CNN reported that the shutdown deal shouldn't be celebrated because it "kicks the can [of budget negotiations] down the road." Wall Street Journal editorial board member Stephen Moore immediately declared the preservation of sequestration cuts -- which will continue to reduce spending and deficits -- the "winner" of the shutdown, and the Journal preemptively told Republicans to stand firm on sequestration cuts in any budget deal in an October 13 editorial.
If history and early reports are any indication, media will continue their habit of promoting deficit reduction as budget negotiations take place.
From the October 18 edition of Fox News' The Real Story with Gretchen Carlson:
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Fox News has downright ignored the billions lost in productivity as a result of the government shutdown, which stands in stark contrast to the network's years-long attack on minimal waste and abuse in food assistance programs.
On October 16, the financial ratings agency Standard & Poor's released its estimate of the economic cost of the 16-day long shutdown of the federal government, concluding that it cost the American economy $24 billion in lost productivity. The agency also cut its forecast for economic growth in the upcoming fiscal quarter by at least 0.6 percentage points.
Since the shutdown was lifted on October 16, Fox News personalities have expended considerable effort downplaying the effect the shutdown had on the economy.
On October 16, Fox Business host Lou Dobbs cited a slight uptick on the Dow Jones industrial average throughout the shutdown as evidence that the nationwide closure of federal lands and agencies had a negligible economic effect. Fox Business' Melissa Francis made a similar argument, claiming that the shutdown had shown Americans they could live with "a lot smaller government." On the October 17 edition of The Five, Fox News host Eric Bolling questioned the validity of S&P, and other agencies, that report economic losses from the shutdown, baselessly suggesting that their reports are influenced by political factors.
Fox's continued denial of the ruinous economic effect of the government shutdown reveals the network's hypocritical and overzealous reporting on waste and abuse in federal anti-poverty programs.
In August, the United States Department of Agriculture (USDA), which administers the Supplemental Nutrition Assistance Program (SNAP), updated its figures for "trafficking," or when SNAP recipients sell their benefits for cash, in the program. Its data reveal a slight increase in trafficking rates from 1.0 percent in 2006-2008 to 1.3 percent in 2009-2011. The total value of trafficked benefits during the last three year period is estimated to be $858 million annually.
Rather than acknowledging that SNAP trafficking rates were still near historic lows, Fox misleadingly highlighted what it called a "30 percent" increase in abuse. Days previously, Fox dedicated another segment to attacking food assistance that included host Eric Bolling overestimating SNAP fraud and abuse rates by 5,000 percent.
The amount of yearly trafficking abuse in SNAP amounts to less than four percent of the wasted economic output caused by the government shutdown. In other words, the cost of the 16-day shutdown is nearly 28 times larger than a full year of food assistance abuse. While Fox has repeatedly claimed that waste in SNAP cannot be tolerated, the network has yet to acknowledge that waste from the shutdown even exists.
Of course, this should come as no surprise given the network's efforts to encourage the shutdown and resulting economic fallout. Fox News played a prominent role in encouraging and facilitating a partial government shutdown that cost the economy billions of dollars in lost productivity while producing zero policy gains for the Republican Party or its right-wing media champions. Fox has tried repeatedly to find scapegoats in the administration to shift blame away from allies in the House GOP caucus.
According to the USDA, "fluctuations in the number of SNAP participants in the last 16 years have broadly tracked major economic indicators." With the Republican-led shutdown effectively draining tens of billions of dollars out of the economy, SNAP registries are likely to increase in the near-term as the shutdown and lingering fiscal austerity drag down recovery.
If that happens, recipients of federal anti-poverty assistance can expect a resurgence of Fox attacks.
Despite numerous economic reports explaining the negative effects, Fox News personalities continue to downplay the effects of the ill-fated, Republican-led government shutdown.
From the October 17 edition of Fox News' The Five:
Fox News legal analyst Andrew Napolitano falsely claimed that Congress' decision to raise the debt limit means that President Obama can now "spend as he wishes," even though the debt limit only affects the government's ability to meet past financial obligations, and government spending has always been checked by congressional allocations.
A day after Congress agreed to a deal that would end 16 days of government shutdown and avert the financial crisis that would have resulted from a failure to raise the debt limit, Fox & Friends co-host Steve Doocy asked Napolitano to comment on whether the decision to raise the debt ceiling was "a deal or raw deal." In response, Napolitano summarized: "because the Democrats bullied the Republicans last night, they have the ability to borrow more money and the president can spend as he wishes for another 90 days." Meanwhile, an on-air graphic framed the congressional deal as a "borrowing binge."
But Napolitano misrepresented the way that government spending functions. As the Government Accountability Office has previously noted, the debt ceiling places a "limit on the ability to pay obligations already incurred." Raising the debt ceiling would only allow the government to meet "existing legal obligations," which, as Federal Reserve Chairman Ben Bernanke has pointed out, does not authorize new spending.
Furthermore, Napolitano's claim that reopening the government would allow Obama to "spend as he wishes" is a common right-wing myth that has been repeatedly debunked. As PolitiFact noted, "[o]nly Congress can appropriate money. Obama can only spend what he's given." The "Power of the Purse" is a congressional responsibility that places restrictions on the executive branch's ability to spend.
The idea that a debt ceiling deal amounts to a "blank check" is a right-wing talking point frequently parroted by the media. Indeed, Fox has previously suggested that a debt ceiling increase would allow the president to take over Congress' power to dictate spending.