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.
In light of news that the economy declined in the fourth quarter of 2012, media outlets have a responsibility to refocus their coverage of the economy, which has largely ignored the issue of economic growth and instead highlighted secondary concerns.
A January 30 report by the Bureau of Economic Analysis highlighted a grim reality - in the fourth quarter of 2012, the economy contracted by 0.1 percent. Media outlets have been rightfully promoting the figure, which is in stark contrast to their recent approach in covering the problem of stagnant economic growth.
A Media Matters report analyzing television news coverage of the debt ceiling found that the topic of economic growth was largely absent from discussions. In fact, of the 273 segments analyzed, only 33 even mentioned that growth should be a priority of any fiscal policy.
Economists, however, have strongly promoted growth as a means of reducing the deficit. Throughout the debt ceiling debate, many attempted to argue that economic expansion was far more important than worrying about short-term deficit reduction. Since the media ignored the topic of growth and rarely hosted economists as part of discussions, their voices went largely unheard.
In light of this economic contraction, economists are taking the opportunity to re-inject growth and jobs back into public debate. The Economic Policy Institute released the following statement:
The Bureau of Economic Analysis reported today that the U.S. economy contracted at a 0.1 percent annualized rate in the last quarter of 2012. While this quarter's contraction likely does not signal a return to recession (it was driven by decelerating inventory investments and a very large reduction in defense spending, which are not likely to be repeated in coming quarters), the economy had grown at an average rate of just 2.1 percent for the first three quarters of 2012, which is not fast enough to lead to rapid improvements in the nation's job situation. Today's data emphasizes the need to reorient the policy debate back to growth and jobs and away from rapid fiscal contraction.
Economists have long realized that growth is far more important than what the media has been focusing on, namely deficit and debt reduction. With this clear indication that economic growth is in fact a pressing concern, will the media shift its focus to acknowledge this reality?
The decision by television news producers to rely on political guests and reporter-pundits in their coverage of the recent debt ceiling dispute not only pulled focus away from economic reality, it also gave TV media influencers room to reinforce a key falsehood about the nature of our deficits.
A Media Matters study of 273 cable news segments on the debt ceiling found 55 segments attributing deficits primarily to entitlement program spending, compared to just four segments acknowledging that rising health care costs and the economic collapse are to blame.
Economists are clear about the primary sources of recent deficits -- on top of the Bush tax cuts, the Great Recession triggered massively higher counter-cyclical spending, some of which was automatic for things like jobless benefits and food stamps, and some spending that was newly enacted to buoy a collapsing economy. Middle- and long-term deficit projections are more controversial, but many economists argue that once economic growth catches up to its potential, our fiscal health will depend almost entirely on our ability to control health care costs. This mainstream economist perspective appeared in just 1.4 percent of the debt ceiling segments Media Matters reviewed from a three week period, while over 20 percent of those segments blamed entitlements for the fiscal gloom.
CNBC, Fox News, and Fox Business viewers were far more likely to be told that Social Security, Medicare and Medicaid are dimming America's fiscal horizon than those who tuned into CNN or MSNBC for their debt ceiling coverage:
The tendency by the most conservative networks to focus on entitlement spending is telling in light of the right's claims about a struggle between "takers" and "makers." For conservative outlets and their mainstream enablers, each successive skirmish over spending and debt is an opportunity to re-focus the conversation on the supposed need to cut entitlement spending.
If economic experts were included in that cable news conversation, they could reveal some key data. For example, conservative proposals for Medicare would likely accelerate the growth of health care costs; minute changes to the payroll tax system could make Social Security solvent for 70 years; and "entitlement" programs spur economic growth for everyone.
Media outlets have focused heavily on the topics of deficits and debt, while largely ignoring economic growth during their coverage of the debt ceiling debate. However, experts agree that the need for growth is more pressing than problems of debt, and that growth itself can be a deficit reduction tactic.
A Media Matters study of television coverage over the past three weeks found that while pundits and guests focused heavily on discussing the debt ceiling, the topic of economic growth was sorely lacking. Of the total 273 segments analyzed, only 33 mentioned economic growth.
Instead of touching upon economic growth, Media Matters found that guests and hosts spent most of their discussions focusing on other issues, such as the role of entitlement spending and political leverage in negotiations between parties.
While the debt ceiling issue is certainly important - and failing to raise it would have a negative impact on the overall economy - many economists have eschewed the focus on debt, arguing instead that economic growth should be the primary concern.
Nobel Prize-winning economist Paul Krugman has long argued that the media and political focus on debt is misguided, and that recent increases in debt were necessary to prevent the economy from entering another recession. Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, further argues that the focus on deficits and debt distracts policymakers from the very real problem of sustained high unemployment and a weak economy.
In fact, Krugman echoed Bernstein's point on the January 28 edition of MSNBC's Morning Joe:
In recent weeks, media outlets have focused heavily on negotiations regarding raising the debt ceiling. But television news has failed to highlight the pressing need for stronger economic growth. Furthermore, discussions about the debt ceiling often ignore facts about deficits, instead pivoting the focus to entitlements as a driver of deficits.
Several conservative media outlets -- including Fox & Friends, Fox Nation, and The Drudge Report -- humiliated themselves by hyping Romney surrogate and fundraiser Donald Trump's latest absurd publicity stunt. In a YouTube video, Trump offered $5 million to charity in exchange for President Obama's college and passport records.
Before the release of the video, Trump had claimed on Fox & Friends that he would reveal "something very, very big concerning the president of the United States." He later claimed "This is not a media event or about Donald J. Trump -- this is about the United States of America."
Trump has previously suggested that Mitt Romney release his past tax returns in exchange for Obama's college records. In the press release accompanying today's stunt, Trump did not make any reference to Romney's still-unreleased records.
In February, Trump recorded robocalls for Romney, then endorsed his candidacy. That was followed by a Romney fundraiser that offered dinner with Trump as a prize to donors. Just a few days ago, Trump was one of the designated "special guests" at a "Romney Victory Fall Retreat." Trump's executive vice president and special counsel Michael Cohen told Business Insider that Trump has given "millions" to SuperPACs supporting Romney's candidacy.
Despite Trump's long history of indulging in conspiracy theories, hyping nonsense and trafficking in classic hucksterism, conservative media dutifully promoted Trump's latest attempt at getting his name back in the news.
Fortune magazine reported that after receiving critical coverage in that publication following his unsupported, conspiratorial claim that the September employment numbers had been rigged by the White House for political gain, former General Electric CEO Jack Welch notified Fortune that he was "terminating" his writing contract with the journal.
"Welch Can't Take The Heat: I Quit," read the Fortune headline.
Note however, that Welch didn't sever his association with CNBC, the partially GE-owned cable channel that Welch used to oversee and where he still regularly appears as a commentator.
Maybe Welch isn't sore at CNBC because the channel played such a central role in promoting Welch's anti-Obama conspiracy last week and giving it legitimacy with constant coverage. "The tweet heard around the world," was how one CNBC anchor described Welch's Twitter-based conspiracy salvo last week.
Indeed, while interviewing Labor Secretary Hilda Solis about the dip in the unemployment rate to 7.8 percent, host Carl Quintanilla's first question to the cabinet member on Friday was about Welch's half-baked claim that the Bureau of Labor Statistics had "fixed" the numbers. Time and again Quintanilla returned to the conspiracy theory, insisting "a lot of people do not believe the 7.8 number." (Later that day Quintanilla referred to Welch as his "former boss" and "a man we all like.")
I'm not suggesting it's been all bad at CNBC since Friday. Several commentators there have poked on-air holes in Welch's unserious job speculation. (See here.) The problem is CNBC kept circling back to the scheme as a topic worthy of serious debate. It wasn't and that should have been self-evident to anyone in the business of journalism.
Yet on Tuesday, CNBC hosted a call-in from Donald Trump who cheered Welch's theory, calling it "100 percent correct." Worse, days after so many experts had dismissed the Welch claim as nonsense, CNBC host Becky Quick told Trump that she agreed with him that the 7.8 figure wasn't "real." He quickly concurred: "Nobody buys it."
What a mess. (And also very Fox-inspired.)
It's fitting though, that just weeks before Election Day CNBC is wallowing in an irresponsible anti-Obama conspiracy theory, considering that just weeks into Obama's presidency the all-business channel engaged in wildly irresponsible Obama bashing, bordering on demagoguery.
From the October 9 edition of CNBC's Squawk Box:
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Media figures have rushed to discredit the newly released jobs numbers, claiming that the drop in the unemployment rate to 7.8 percent has been manufactured to help President Obama's reelection chances. In fact, experts dismiss the claims as unfounded conspiracy theories and agree that the numbers are accurate.
From the October 5 edition of CNBC's Squawk on the Street:
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This morning, regular Fox News and CNBC guest and Mitt Romney surrogate Donald Trump tweeted that Huffington Post founder Arianna Huffington "is unattractive both inside and out. I fully understand why her former husband left her for a man- he made a good decision."
Trump makes weekly guest appearances on Fox News' Fox & Friends and on CNBC's Squawk Box. He often uses those appearances to offer baseless conspiracy theories about President Obama. Indeed, CNBC.com has noted that Trump "has been at the forefront of the 'birther' movement -- those who question whether Obama was born in the U.S."
Shortly after Trump's appearance on CNBC this morning, the program hosted Huffington, who criticized the Republican National Convention for devoting insufficient attention to job creation.
Last year Fox News relentlessly promoted his claims that President Obama was not born in the United States. Earlier this month on CNBC, Trump used an appearance to claim that Mitt Romney should only release his tax returns if Obama releases his college transcripts, echoing a right-wing conspiracy that those documents indicate that he attended college as a foreign student.
The temptation to try to create campaign news during the slow summer months is one that journalists ought to resist. If not, they could end up looking like CNBC did on Tuesday when the business news channel lost its bearings (again) and invited disgraced birther Donald Trump on to weave his tired conspiracies about the president's supposedly hidden past. Worse, CNBC.com then wrote up Trump's appearance while touting as news a comically awful right-wing fantasy published this week about Obama's years at Columbia University.
Appearing on CNBC's "Squawk Box," Trump was pushing what he claimed to be a brilliant campaign maneuver for the Romney campaign, which finds itself under pressure to release the candidate's tax records, as all presidential candidates have done in recent years. According to Trump, Romney should finally release years of his tax returns, but only if Obama released his college transcripts.
What Trump apparently doesn't understand, and what nobody on CNBC bothered to point out, is that as a rule presidential nominees do release extensive tax returns, and as a rule they do not release their college transcripts. (Romney hasn't.) Trumps brilliant dare to the Obama campaign doesn't make any sense because tax returns and college records have never been treated similarly by campaigns from either party.
CNBC's Trump troubles were compounded online with a report that soft-peddled Trump's birther past, while claiming serious new questions have been raised about Obama's time at Columbia.
From the July 16 edition of CNBC's Closing Bell:
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Donald Trump went on CNN this afternoon to do what has become his specialty of late: make a complete fool of himself. His appearance was precipitated by every sensible person on both sides of the aisle wondering why, exactly, Mitt Romney voluntarily chooses to associate with Trump, given the real estate mogul's vocal obsession with birtherism and his many years as the cartoonish avatar of repellant avarice.
So there he was, in the Situation Room, getting manhandled by Wolf Blitzer on President Obama's place of birth -- an issue that never actually was an issue and was unmercifully put to rest by the president himself when he released his long-form birth certificate. The highlight of the interview? After Trump questioned the birth certificate's authenticity, the presence of Obama's mother at the hospital, and the birth announcements in the Honolulu papers, Blitzer responded with admirable restraint: "Donald, you're beginning to sound a little ridiculous, I have to tell you."
The new fuel for Trump's birther fire is the Breitbart.com "exclusive" about Obama's publisher wrongly claiming 20 years ago that he was born in Kenya -- the same "exclusive" that the Breitbart people said had nothing to do with birtherism. During an interview with CNBC earlier today, Trump referred to the Breitbart story, claiming that Obama told his publisher that he was "born in Kenya and raised in Indonesia." He brought it up again in his CNN interview: "Obama hates the subject. When his publisher comes out with a statement from him made in the 1990s that he was born in Kenya and that he was raised in Indonesia, and all of the sudden it comes out, I think it's something that he doesn't like at all."
That's factually incorrect; the statement was not from Obama but was rather a "fact-checking error" by the literary agency, which told Political Wire: "There was never any information given to us by Obama in any of his correspondence or other communications suggesting in any way that he was born in Kenya and not Hawaii."
Regardless, it's become the new shiny object for the incurable birther remnant. Who could have predicted?
During today's Squawk Box, CNBC co-anchor Joe Kernen assisted guest Donald Trump's effort to push debunked claims about President Obama's birthplace by citing a supposed quote from Obama in which Obama purportedly suggested that he wasn't born in the United States. The quote is an internet hoax and was never said by Obama, who was born in Hawaii.
After reading the fake quote, Kernen said that "the question is whether there was a time in Obama's life where he thought it was, I don't know, more attractive to be a more international type guy and maybe didn't change the impression that he wasn't. I don't know." He sourced the quote to a "report that was on some of the conservative websites" and added that he hasn't "even confirmed it." Watch:
KERNEN: There is a weird -- in that same report that was on some of the conservative websites and I haven't even confirmed it, Donald, but there was a quote from one of his debates when he was running for state senator, I believe, and one of his opponents said, well, you know, you weren't -- this was at the time when it still -- the Kenya thing was still on some of his biographies or something and the guy said, 'Well, you know, you weren't even born here,' and he said, 'Well, it doesn't matter if I wasn't born here, I'm running for -- I'm not running for president' at the time. And it was a quote that looked like it was right from a debate. I don't know whether you saw it. I'm going to look it up right now.
TRUMP: There was a quote --
KERNEN: -- but from him. And almost so -- but the question is whether there was a time in his life where he thought it was, I don't know, more attractive to be a more international type guy and maybe didn't change the impression that he wasn't. I don't know.
The CNBC anchor appears to be referring to an internet rumor about an exchange that allegedly happened during a 2004 Illinois debate between Alan Keyes and then-state senator Obama during their campaign for the state's U.S. Senate seat.
However, an adviser to the 2004 Keyes campaign who attended the Keyes-Obama debates told Media Matters that the purported exchange is a "hoax."