CBS' Attkisson uncritically aired McCain's false distinction between stimulus, spending

A February 3 report on the CBS Evening News included a clip of Sen. John McCain (R-AZ) claiming that the economic recovery legislation proposed by House and Senate Democrats was "not a stimulus package. It's a spending package." During her report, correspondent Sharyl Attkisson did not point out that the distinction between spending and stimulus has been challenged by economists, including Congressional Budget Office (CBO) director Douglas Elmendorf, who has stated in congressional testimony that the House legislation, H.R. 1, "would provide massive fiscal stimulus" and that the CBO, along with "most economists," believes that all of the spending in the bill "provides some stimulative effect." Moreover, Attkisson reported that "Senate Republicans began the push for what they call a simpler, more targeted stimulus bill half the size, one that includes a lot of tax cuts." Attkisson did not point out that economists including Elmendorf and Mark Zandi, the chief economist and co-founder of Moody's Economy.com, have stated that direct government purchases or transfers to persons (such as unemployment insurance and nutrition assistance) would have a stronger effect on gross domestic product (GDP) growth than would tax cuts.

Introducing her February 3 report, Attkisson claimed, "Two weeks into President Obama's administration, doesn't feel like much of a honeymoon on the stimulus front," and aired McCain's claim that "it's not a stimulus package. It's a spending package." But in analyzing the House version of the bill, and the proposed Senate version, the CBO stated that it expects both measures to "have a noticeable impact on economic growth and employment in the next few years." Additionally, as Media Matters for America documented, in his January 27 testimony before the House Budget Committee, Elmendorf said that H.R. 1 would "provide massive fiscal stimulus that includes a combination of government spending increases and revenue reductions." Elmendorf further stated: "In CBO's judgment, H.R. 1 would provide a substantial boost to economic activity over the next several years relative to what would occur without any legislation." Elmendorf also explicitly refuted the suggestion that some of the spending provisions in the bill would not have a stimulative effect, stating: "[I]n our estimation -- and I think the estimation of most economists -- all of the increase in government spending and all of the reduction in tax revenue provides some stimulative effect. People are put to work, receive income, spend that on something else. That puts somebody else to work."

Additionally, Attkisson reported, "Today, Senate Republicans began the push for what they call a simpler, more targeted stimulus bill half the size, one that includes a lot of tax cuts, Katie [Couric, CBS Evening News anchor] , and that they say would address the mortgage crisis first." But as Media Matters documented, economists have challenged the notion that tax cuts would be more effective stimulus than direct purchases or transfers to persons. In fact, in his January 27 testimony, Elmendorf stated, "A dollar's worth of a temporary tax cut would have a smaller effect on GDP than a dollar's worth of direct purchases or transfers, because a significant share of the tax cut would probably be saved." Moreover, in July 24, 2008, testimony before the House Committee on Small Business, Zandi stated that "extending food stamps are the most effective ways to prime the economy's pump. A $1 increase in food stamp payments by $1 boosts GDP by $1.73." Zandi also included in his written testimony a table that showed that "Extending UI [unemployment insurance] Benefits" would boost GDP by $1.64 for every dollar spent, "General Aid to State Governments" by $1.36 for every dollar spent, and "Increased Infrastructure Spending" by $1.59 for every dollar spent -- each providing a greater "Fiscal Economic Bank for the Buck" than the tax provisions he analyzed:

From the February 3 edition of the CBS Evening News with Katie Couric:

[begin video clip]

ATTKISSON: Two weeks into President Obama's administration, it doesn't feel like much of a honeymoon on the stimulus front.

McCAIN: And it's not a stimulus package. It's a spending package.

ATTKISSON: More than half of Americans say Congress should make big changes to the president's stimulus package, or reject it all together. And Republicans detect a chink in the armor.

SEN. JOHN KYL (R-AZ): I'm sure the Democrats, or at least the president, is embarrassed by some of this.

ATTKISSON: All sides now agree the president's stimulus bill won't survive its original form, passed last week by House Democrats. A bill that, depending on how you see it, would create 3 million jobs or serve to fulfill a long wish list of a Democratic social agenda. A CBS News analysis finds the president's stimulus plan balloons virtually every federal agency in terms of dollars: 5.5 billion more for the Department of Commerce; 9.4 billion extra for the EPA; 5 billion for Labor; a billion for the Census; and nearly 36 billion for Agriculture. And what about HHS, the agency Tom Daschle would have headed? Twenty-one billion dollars, including huge pots of money to be handed out "at the discretion of the HHS secretary": 400 million for research, 60 million for environmental health, 50 million for injury prevention and more, all at the secretary's discretion. The price tag is prompting Republicans to reach for new ways to express numbers that defy imagination.

SEN. JOHN THUNE (R-SD): If you took hundred dollar bills and wrapped them around the Earth at the equator it would go around the Earth almost 39 times.

ATTKISSON: The president has been friendly enough, inviting some Republicans to cocktails, a Super Bowl party, even going to meet them on their own turf in the Capitol. But the charm offensive hasn't risen above the political reality. Republicans were shut out of creating what's become --

SEN. RICHARD BURR (R-NC): The largest spending package probably ever in the history of the world.

[end video clip]

ATTKISSON: Today, Senate Republicans began the push for what they call a simpler, more targeted stimulus bill half the size, one that includes a lot of tax cuts, Katie, and that they say would address the mortgage crisis first.

COURIC: OK. Sharyl Attkisson. Sharyl, thanks very much.