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 16 special edition of Fox News' The Kelly File:
Loading the player reg...
Fox Business host Lou Dobbs downplayed the effects of the government shutdown on the U.S. economy, despite economic reports stating that the shutdown has taken $24 billion out of the economy.
Reporting on the October 16 edition of Lou Dobbs Tonight about the Senate leadership deal to end the government shutdown, Dobbs disputed White House Press Secretary Jay Carney's statement that "the economy has suffered" because of the shutdown, claiming, "The extent of just how much the economy suffered is questionable at best."
In fact, economists have reported that the government shutdown is projected to have significant negative effects on the economy. Business Insider reported that Standard & Poor's cut its "annualized U.S. growth view closer to 2% from 3%." The article added that S&P estimates "the shutdown has taken $24 billion out of the economy and cut 0.6% off of yearly fourth quarter GDP growth."
Fox Business host Melissa Francis erroneously claimed that previous government shutdowns in the 1990s did not harm the economy, a notion that is in direct opposition to economic evidence.
On the October 1 edition of Fox News' America's News HQ, host Bill Hemmer discussed the ongoing government shutdown with Francis. During the discussion, Francis chided President Obama for claiming that previous shutdowns in the 1990s harmed the economy, claiming that data show "that wasn't the case."
Francis' argument rested upon the fact that over earlier shutdowns, GDP growth remained relatively strong and stabilized at levels above pre-shutdown rates. The Daily Caller presented a similar argument in an article on September 29, claiming the "economy boomed" during previous shutdowns.
While Francis is correct that growth remained strong over the 1995 and 1996 shutdowns, this doesn't answer the question of what growth would have been like in absence of a shutdown.
According to Joel Prakken, senior managing director at Macroeconomic Advisers, those shutdowns shaved 0.25 percentage points off GDP growth for the end of 1995, mostly due to federal employee furloughs. Furthermore, the Office of Management and Budget estimated that the total cost to the federal government from those shutdowns at more than $2 billion in today's dollars.
While Francis is quick to dismiss that economic growth would be affected in the current shutdown, independent analysis shows this is not the case. According to Bloomberg:
Mark Zandi of Moody's Analytics Inc. estimates a three-to-four week shutdown would cut growth by 1.4 points. Zandi projects a 2.5 percent annualized pace of fourth-quarter growth without a shutdown. A two-week shutdown starting Oct. 1 could cut growth by 0.3 percentage point to a 2.3 percent rate, according to St. Louis-based Macroeconomic Advisers LLC.
Fox Business host Stuart Varney argued that the potential nomination of Federal Reserve Vice Chairwoman Janet Yellen to succeed Chairman Ben Bernanke would be based in part on her gender, making no mention of her aptitude or qualifications for the position.
On the September 26 edition of Fox Business' Varney & Co., host Stuart Varney was joined by Fox Business host Melissa Francis and Fox News contributor Juan Williams to discuss the current and continuing role of the Federal Reserve. The panel largely focused on the recently politicized nature of the nomination process and who is expected to replace Ben Bernanke as chairman. Varney ended the segment by arguing that the potential nomination of Janet Yellen as the next Fed chair would in part be driven by her gender.
VARNEY: Would you agree with me that the lady in question here, Janet Yellen, is a shoo-in to be the next Fed chair because she's female, she's academic, and it is assumed that she would keep on printing money. That conforms with everything that President Obama wants in a Fed chair. She's a shoo-in, agreed?
Varney's contention that gender would play a role in the nomination process reveals a troubling development in right-wing media. Rather than discussing Yellen's qualifications as an economist, her history of accurate econometric predictions, or her broad base of support among economists, conservative media instead focus their attention on Yellen's gender.
On September 18, the Institute for Women's Policy Research sent a letter to President Obama supporting Janet Yellen, signed by more than 500 economists from across the country. The signatures included several former White House economic policy officials and Nobel Prize-winning economist Joseph Stiglitz. Nobel Prize-winning economist Paul Krugman also expressed his support for Yellen's candidacy in The New York Times. From Krugman's article:
Janet Yellen, the vice chairwoman of the Fed's Board of Governors, isn't just up to the job; by any objective standard, she's the best-qualified person in America to take over when Ben Bernanke steps down as chairman.
Despite evidence to the contrary, Fox Business anchor Melissa Francis claimed on Fox's Your World With Neil Cavuto that federal student aid spurs universities to increase tuition and that going to a top-tier university isn't worth incurring the debt it entails.
On August 20, Cavuto asked, "The more aid you give, the more excuse [universities] can have to ratchet up the tuition, right?" Francis agreed, saying that "it just gets absorbed right into the price." Francis then said, "It's like any time you print money. It causes inflation." Later in the segment, Francis referenced a recent study by Demos to assert that student loan debt may be costlier than it seems, claiming, "Down the road that costs them $200,000 worth of wealth, because as you're paying off those loans that's money you're not investing in the market, that's a house you're not buying, that's money you're not putting in your 401k."
Cavuto and Francis cited growing federal student assistance as a reason for increasing tuition costs. The vast majority of studies, however, have held that growing federal aid is not responsible for increasing tuition rates. President Obama also recently signed a new law that lowers student loan interest rates and is embarking on a bus tour to call for more action on college affordability.
Francis also claimed that for some, vocational schools may be a better financial choice in the long run than universities, because the cost of the education is not as great. But Francis ignored the fact that, according to the Bureau of Labor Statistics, in most cases those with higher education will make more money and are less likely to be unemployed.
Similar claims about federal Pell Grants have been made by the Wall Street Journal, and Fox News has repeatedly attacked federal student aid by suggesting that enrollment in fictitious 'cheaper' colleges or forgoing college entirely are solutions for those struggling with the costs of college.
Media figures have repeatedly forwarded the notion that the United States is currently facing a debt crisis. However, leaders of both parties agree there is no immediate crisis, and by focusing attention too heavily on deficit and debt reduction, the media distract from the more imminent problem of growth and jobs.
Throughout news coverage of recent budget negotiations, media figures have consistently framed discussions around the notion that the country faces a debt crisis, an assertion that is often presented uncritically and accepted as an indisputable fact. Since discussions are predicated on the assumption that a debt crisis exists, ensuing analysis of budget proposals is often solely focused on how far they go in reducing short term deficits and debt.
While media are convinced that a debt crisis exists, leaders of both parties have made explicit statements to the contrary. In a March 12 interview with ABC's George Stephanopoulos, President Obama claimed that "we don't have an immediate crisis in terms of debt," a statement that was immediately criticized by conservative media. When asked if he agreed with Obama's statement regarding debt on the March 17 edition of ABC's This Week, House Speaker John Boehner (R-OH) conceded that there is no immediate crisis. Rep. Paul Ryan (R-WI) made a similar admission on CBS' Face the Nation, saying "we do not have a debt crisis right now."
Furthermore, the media's focus on a "debt crisis" has necessarily steered the debate about budgets toward how the parties will sufficiently address short term deficits. Economists, meanwhile, have repeatedly argued that undue focus on deficits and debt distracts from the more pressing need for economic growth and reduced unemployment.
The bipartisan admission that there is no immediate debt crisis provides media with an opportunity to reframe their budget negotiations coverage around economic growth.
Video by Alan Pyke.
Multiple Fox News personalities have suggested the Justice Department's lawsuit against Standard & Poor's is 'political retribution,' either papering over or outright ignoring the facts behind the suit. However, the S&P investigation began well before U.S. credit was downgraded, and a raft of internal emails suggest the company may have knowingly inflated securities ratings.
Fox News is continuing its hunt for "pork" in a Hurricane Sandy relief bill blocked by House Speaker John Boehner, claiming that the bill included $600 million for the Environmental Protection Agency to address climate change. But the funds in question actually focused on ensuring affected states' access to clean water, a crucial issue in the wake of the storm - and emblematic of future consequences of climate change.
Rep. Boehner recently canceled a vote on a Sandy relief bill, prompting heavy criticism from some members of his own party. He later reversed course and called for a vote on $9 billion for the National Flood Insurance Program, with another $51 billion in relief spending to be voted on later.
Continuing Fox News' attempts to find "pork" in the bill, Fox News anchor Bill Hemmer proclaimed lawmakers "were just chucking everything" including "$600 million for climate change for the EPA" into the bill, and "that's where the resistance" from Rep. Boehner came:
But the previous day, Rep. Carolyn Maloney had explained to Fox Business that the "money is for wastewater treatment," which she pointed out is "very much needed" in many areas hit by Sandy. Indeed, The New York Times reported that sewage from storm-battered treatment plants had flowed into New York and New Jersey waterways after the storm, "a sign of an environmental and public health disaster that officials say will be one of the most enduring and expensive effects of Hurricane Sandy."
In response to a compromise on tax policy, conservative media are again comparing the United States to Greece. According to right-wing logic, the deal brings America even closer to the violence and discord in Greece, Italy, Ireland, France, and just about every European country whose citizens have protested austerity measures.
Of course, conservative media figures have spent at least three years ringing this same alarm. Economic experts have spent just as much time dismissing this panicked comparison, but to little avail. This Media Matters video, drawing on three years of television coverage of deficits and spending, shows the prevalence and longevity of the Greece talking point:
Fox Business anchor Melissa Francis suggested that the United States should eliminate the corporate tax because "companies don't pay taxes, their customers do" -- a statement of considerable debate among economists -- while overlooking potential revenue losses and negative economic effects if the tax were abolished.
In the Bulls & Bears segment, Francis claims that the burden of taxes levied on corporations is ultimately shifted to consumers. While economists have long realized that tax incidence can fall to other parties as Francis described, they are unable to agree who truly bears the burden for corporate taxes. From a New York Times article explaining the corporate tax debate:
Economists are divided on the issue. Some (including Gregory Mankiw) are persuaded that the corporate income tax ultimately falls mainly on labor, rather than on the presumably wealthier owners of capital. One can actually make a case for cutting the tax in the name of a more progressive income-tax structure, which should appeal to voters and politicians left of center.
Other economists, including the authors of the surveys cited above (Jane Gravelle, Jennifer Gravelle and Thomas Hungerford), are persuaded by the available empirical evidence on the five factors I note that the burden of the corporate tax ultimately rests mainly on the owners of capital. That also appears to be the operative assumption of the Congressional Budget Office, the Treasury and other agencies when they analyze the distributional impact of various forms of taxation. (The New York Times, 7/23/10)
While Francis never acknowledges this reality, more important is the fact that she completely overlooks the potential revenue loss from abolishing corporate taxes, claiming "the government doesn't need any more of your money." According to analysis from the Center on Budget and Policy Priorities, the corporate income tax is the third largest single tax contributor to the federal budget:
(Center on Budget and Policy Priorities, 8/20/12)
Abolishing the corporate income tax, a small percentage compared to revenue raised by income and payroll taxes, would still result in a substantial loss (about $184 billion in 2011 according to the graph above). Francis never addressed how to account for this lost revenue, which could negatively affect economic growth. The Financial Times further elaborates on potential revenue losses and negative economic effects:
But lowering the corporate tax rate is expensive - each percentage point reduction would cut revenues by about $120bn over 10 years. Scaling back the three largest corporate tax expenditures to pay for a cut could increase the cost of capital, thereby reducing investment and growth. (Financial Times, 9/17/12)
The share of federal revenues accounted for by the corporate tax has been on a consistent decline since the 1950s, made up for by increases in payroll tax revenues:
(Center on Budget and Policy Priorities, 8/20/12)
While increasing payroll taxes may help offset corporate tax revenues, the net effect on the economy could be largely negative. As previous Media Matters research points out, many economists believe that low payroll taxes will lead to jobs and economic growth.
Instead, many economists who are in favor of abolishing corporate taxes on efficiency grounds recommend abolishing preferential taxation of capital gains in order to make up for revenue shortfalls. However, given the right-wing media's unabashed defense of low capital gains tax rates, it is unlikely that would enter the discussion.
From the October 20 edition of Fox News' Cashin' In:
Loading the player reg...
Conservative media have claimed that the Obama administration is waging a "war" on "cheap," "clean" coal that will cause blackouts and massive layoffs. In fact, the Obama administration has simply implemented long overdue and legally required clean air regulations to protect public health without hurting electric reliability or employment, and much of the transition away from coal is due to the rise of cheaper, cleaner natural gas.
Loading the player reg...