Right-wing media figures have repeatedly criticized Obama administration officials for claiming that the U.S. will default if the debt ceiling is not raised by October 17, instead claiming the U.S. could prioritize payments to bondholders as a way to avoid default. But economists note that the threat of default is real and that the prioritization alternative proposed by Republicans is not a long-term solution.
After reviewing the latest evidence from a major climate change report -- released in full on Monday -- the prominent consulting group PricewaterhouseCoopers concluded that climate change is the "mother of all risks." But while many businesses recognize climate risks, the media often cloud these risks by framing climate change in terms of "uncertainty," according to a recent study. This can lead to a disconnect between scientific understanding and public perception, and a misguided contentment with inaction.
"What 95% Certainty Means To Scientists"
The lead author of the University of Oxford study on media framing clarified, "the general public finds scientific uncertainty difficult to understand and confuses it with ignorance." In fact, as Associated Press reporter Seth Borenstein explained on Tuesday, in an article headlined "What 95% Certainty Means To Scientists," the United Nations Intergovernmental Panel on Climate Change (IPCC) report's finding that scientists are 95 percent certain about manmade global warming reflects a certainty analogous to scientific fact:
Top scientists from a variety of fields say they are about as certain that global warming is a real, man-made threat as they are that cigarettes kill.
They are as sure about climate change as they are about the age of the universe. They say they are more certain about climate change than they are that vitamins make you healthy or that dioxin in Superfund sites is dangerous.
They'll even put a number on how certain they are about climate change. But that number isn't 100 percent. It's 95 percent.
And for some non-scientists, that's just not good enough.
But in science, 95 percent certainty is often considered the gold standard for certainty.
"Uncertainty is inherent in every scientific judgment," said Johns Hopkins University epidemiologist Thomas Burke.
What 95% Certainty Means To Businesses
The disconnect between how the public and scientists view uncertainty may lead some people to come to the misguided conclusion that we should wait to act until the science is "certain." Fox News host Neil Cavuto, for instance, once said that "whether there is or not [a consensus among scientists on climate change], you want to make 100% sure before you plunk down trillions on something." But for a purported business expert, Cavuto seems to have little concept of risk management. As PricewaterhouseCooper's Will Day explained, hedging against catastrophic climate change now is only sensible:
From the September 28 edition of Fox News' Cavuto On Business:
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From the September 27 edition of Fox News' Your World with Neil Cavuto:
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From the September 26 edition of Fox News' Your World with Neil Cavuto:
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Fox News downplayed the immediacy of the upcoming debt ceiling deadline, giving credence to congressional Republicans' plan to use the threat of default as a means of gutting the Affordable Care Act (ACA).
On September 25, Treasury Secretary Jack Lew sent a letter to congressional leadership in the House and Senate regarding the state of government finances. Lew specifically emphasized the consequences of failing to lift the federal debt limit by October 17. From the letter:
Treasury now estimates that extraordinary measures will be exhausted no later than October 17. We estimate that, at that point, Treasury would have only approximately $30 billion to meet our country's commitments. This amount would be far short of net expenditures on certain days, which can be as high as $60 billion. If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.
On the September 25 edition of Fox News' Happening Now, host Jenna Lee and Fox Business host Neil Cavuto discussed the upcoming October 17 deadline to raise the debt limit. Cavuto recognized the fact that a failure to lift the debt ceiling would have far more dramatic consequences than a simple government shutdown, but also specifically rebuffed the nature of a firm deadline, claiming:
CAVUTO: Never believe those figures, Jenna, because every Treasury Secretary, be it a Republican or Democratic administration, has always cried panic and always attached a date that is really just made up.
Cavuto outlined the means by which congressional Republicans could use the threat of breaching the debt limit to extract concessions on the ACA, commonly known as Obamacare, which could range from delaying to defunding key initiatives of the law. In fact, The Hill reported that Republicans in the House of Representatives plan on tying any increase of the debt limit to a one-year delay of Obamacare. From The Hill:
Moving to the debt ceiling fight, which Republican leaders have long seen as stronger ground, could be a way to convince rank-and-file Republicans to fight their spending and healthcare battles there rather than on a government funding bill.
Cavuto's caution that listeners should "never believe" Treasury Department deadlines, and the claim that these deadlines are "really just made up," directly contradicts the facts presented by Lew.
According to Treasury estimates, the United States government will have merely $30 billion in liquid assets on hand by October 17. By Lew's own admission, this sum, equivalent to roughly 0.75 percent of annual federal outlays, would be insufficient to meet the obligated expenses of certain individual days. Contrary to Cavuto's claims that the government could use flexible accounting to sustain itself for months without a debt limit increase, those so-called "extraordinary measures" have been in place since May 17 and are now at their limit.
If the debt ceiling is not lifted by October 17, the United States government will be unable to finance the payment of its pre-existing expenses through the continued sale of Treasury bonds. This would have all of the effects of a government shutdown -- outlays to certain program beneficiaries, employees, the military, etc. would cease or be delayed -- while also initiating a global financial crisis among corporate and sovereign wealth funds that own or purchase American debt.
According to The New York Times, the Treasury makes more than 80 million individual payments each month, and would miss nearly one-third of those regular payments every day until the debt ceiling was lifted. A $12 billion Social Security payment is due on October 23 and a $6 billion interest payment on public debt is due October 31. These alone would virtually exhaust the Treasury's remaining resources if Congress fails to act.
The notion that Republicans might be able to string a debt limit increase along for months as they negotiate attacks against Obamacare ignores both the economic consequences of a debt default and the political reality in Washington. The last legitimate Republican threat to breach the debt ceiling resulted in the first ever downgrade of the United States Department of Treasury bond rating -- from AAA to AA+. This downgrade marginally increased the cost of future American borrowing and, according to the Bipartisan Policy Center, will cost taxpayers an additional $18.9 billion over the coming decade.
Increasing the debt limit does not increase the national debt, but manufacturing a crisis by using the debt limit to leverage political concessions has already cost taxpayers.
Fox News hyped a misleading Wall Street Journal article that claimed young adults will face higher insurance premiums under the Affordable Care Act (ACA) without disclosing that only a small portion of the health care market would be affected
A September 25 article in The Wall Street Journal claimed that "for some buyers, prices will rise from today's less-comprehensive policies," and went on to say that "For consumers used to skimpier plans--or young, healthy people who previously enjoyed attractive rates--that could mean significantly higher premiums." Fox News host Neil Cavuto hyped the article during an appearance on America's Newsroom, claiming, "premiums are going up, they're going up markedly...for young people in particular, the means by which we pay for all of this, their premiums are going up smartly":
Both the Journal and Fox's segment ignored that the potential premium increase is for a very small subset of the insurance market. The Center for American Progress estimated that "only about 3 percent" of young adults have the potential to see premium increases, which makes up about half of one percent of all Americans:
Fox News' Neil Cavuto trotted out well-worn falsehoods about the successful auto rescue, casting doubt on claims made by Ford CEO Alan Mulally on Cavuto's own show a year earlier.
On September 20, President Obama delivered a speech on the economy at a Ford Motors plant in Liberty, Missouri. During the speech, he noted that while Ford did not accept a bailout in the wake of the financial crisis, if General Motors (GM) and Chrysler had not accepted federal funds, it "would have had a profound impact on Ford."
Discussing the president's speech on Fox News' Your World, host Neil Cavuto was joined by Fox Business contributor Charles Payne and Wall Street Journal editorial board member Stephen Moore. Cavuto criticized the President's remarks about Ford being affected by GM and Chrysler's decision to accept federal funds. Cavuto acknowledged that Obama's remarks were similar to Mulally's, who credited the auto rescue for preserving the industry, but dismissed the statement, asking "how do you know that? It was my question then, it remains my question now."
While Cavuto cast doubt over whether or not Ford would have gone under, the fact that Ford would have been imperiled by the disintegration of the other "Big Three" automakers is not only well-established, Cavuto was told as much by Mr. Mulally himself on an edition of Your World taped one year previously.
During their interview, Mulally stated, "if GM and Chrysler, who were completely bankrupt, went into free fall they could have taken down the industry and the U.S. economy from a recession into a depression." He went on to state that all of the remaining automakers "would have been in real trouble."
In addition to downplaying the necessity of the auto rescue, the panelists hypothesized that private capital could have been raised to shore up teetering automakers. This opinion, voiced by Charles Payne stating, "I honestly believe that the private sector would have stepped up and funded General Motors the way that bankruptcies have been funded in the past," also does not comport with the facts.
When the auto rescues were first designed in late-2008 the financial industry was in the midst of a free fall of its own, which Fox has also recently downplayed. There was very little private capital available in the United States for any large-scale bankruptcy and American automakers, unlike the subsidiaries of Toyota, Honda, and other auto transplants, could not draw credit from foreign governments or headquarters.
The auto bailouts, which were initially extremely unpopular, are now widely lauded as successful government responses to the myriad crises facing the economy in 2008 and 2009. Despite Fox's attempts to undermine the administration's handling of the auto industry, the rescues are popular in areas heavily reliant on the auto-industry and often credited for swinging key states toward Obama in the 2012 Election.
In the wake of the five year anniversary of the collapse of Lehman Brothers, Fox News is rewriting American economic history, claiming that government interventions to keep the economy from entering free-fall were unnecessary and damaging.
On the September 17 edition of Fox News' Your World, host Neil Cavuto and former Reagan economic advisor Art Laffer discussed their years-long disapproval of the government rescue packages instituted and implemented in late 2008 and 2009 to arrest the free-falling financial industry, save the auto industry, and stimulate the economy. During their exchange, Laffer claimed that government intervention was unnecessary and impeded recovery:
LAFFER: We were saying that the last thing you want to do is suppress a body's immune system when you're sick. It's just stupid, and the one time we should rely on the economy's immune system, called "free markets", is exactly when we're in the midst of a crisis.
LAFFER: You know, Neil, whenever people make decisions when they are either panicked or drunk the consequences are rarely attractive. And so it is with all of this stimulus, bailout, taking over auto companies. It would have been over in six months if they had done nothing.
The argument that the crisis would have corrected itself is devoid of any factual basis and ignores the opinions of experts.
On September 15, 2008, the day that Lehman Brothers filed bankruptcy, the Dow Jones industrial average suffered its largest single-day loss since the terror attacks of September 11, 2001. Over the next two weeks regulators and legislators cobbled together policies to save failing financial markets. On September 29, 2008, when the first draft of a $700 billion financial bailout failed to pass the House of Representatives, the Dow Jones suffered its worst ever single-day loss.
As the federal government was organizing its financial rescue, the Emergency Economic Stabilization Act of 2008, many economists voiced disapproval with the design of the bailout. Nobel laureates Joseph Stiglitz and Paul Krugman joined the chorus calling to reshape the bailouts to hold risk takers accountable and protect the public against losses. However, at no point did any significant group of experts or economists argue that the government should have done nothing. In an April 2012 Huffington Post article on the dwindling popularity of the bank bailouts, columnist Mark Gongloff noted that most experts recognized the necessity of a federal rescue in the wake of Lehman's collapse. From the article:
For what it's worth, most experts think the bailout prevented an even deeper crash and economic depression. Then-Treasury Secretary Hank Paulson tested the counterfactual by letting Lehman Brothers croak, and the result was a face-peeling market firestorm that nearly took down AIG -- the massive insurance company whose bailout is so unpopular now.
Indeed, Cavuto and Laffer's unwillingness to recognize the important role played by financial bailouts in stabilizing a subset of the economy is even at odds with opinions fit for print at FoxNews.com.
Cavuto and Laffer focused most of the segment on the financial bailout, but lumped the successful auto rescue and economic stimulus into their fabricated retelling of economic history. Contrary to the anti-government narrative forwarded by Fox News, the stimulus packages instituted by the Bush and Obama administrations were widely regarded as not going far enough. Meanwhile, the auto rescue remains so popular in hindsight that it may have effectively moved vital swing states toward President Obama in the 2012 Election.
Media Matters has documented a long track record of Fox News' attacks on stimulus programs, which are sometimes based on entirely fabricated evidence. The right-wing myth that economic stimulus failed is a common talking point used to disparage the fundamental role of government. The argument that stimulus was an unnecessary waste of taxpayer resources directly contradicts prevailing economic opinion.
Cavuto and Laffer's denial of the necessity of some forms of government intervention continues a right-wing media campaign against any role of government in the economy, even in cases when it is absolutely vital for stability, growth, or recovery.
Fox News' Neil Cavuto continued to ignore the economic factors driving the growth in poverty while lamenting the increased reliance on nutrition assistance among low-income individuals.
On the September 10 edition of Fox News' Your World, Cavuto and guest Hadley Heath of the right-leaning Independent Women's Forum offered a context-free critique of the Supplemental Nutrition Assistance Program (SNAP), commonly referred to derisively as "food stamps." During their exchange, Cavuto focused his attention on the growth of enrollment in SNAP over the past few years, stating "Americans are eating up food stamps like never before" while lamenting that nearly one in five Americans receives some degree of nutritional assistance.
Once again, the right-wing media proves that it simply has no clue how anti-poverty programs function.
At no point in the segment did Cavuto or Heath make any mention of the catastrophic recession -- from which the economy is still recovering -- that drove millions of Americans into poverty and reliance on government assistance to avoid food insecurity. According to the Center on Budget and Policy Priorities, nutrition assistance has grown in recent years in response to economic hardship and a weakened recovery. From CBPP:
The recent caseload growth resulted primarily from more households qualifying because of the recession and more eligible households applying for help. The Congressional Budget Office (CBO) has confirmed that "the primary reason for the increase in the number of participants was the deep recession...and subsequent slow recovery; there were no significant legislative expansions of eligibility."
In addition to whitewashing the effects of the recession on SNAP enrollment, the segment included a misleading graphic, which seems to show a dramatic increase in trafficking, fraud, and abuse in SNAP:
According to the latest trafficking report from the United States Department of Agriculture (USDA):
Although trafficking does not represent a cost to the Federal Government, it is a diversion of program benefits. Benefits are intended to help low-income households access a nutritious diet, and trafficking impedes the program's mission and undermines its integrity
The gross value of SNAP trafficking has increased from $330 million in 2006-2008 to $858 million in 2009-2011, according to the USDA. However, the actual rate of trafficking has remained at near historic lows. Fraud and abuse increased from 1.0 percent overall from 2006-2008 to 1.3 percent overall from 2009-2011.
Of course, even these historically low levels of fraud and abuse are fair game in the right-wing media. On the August 19 edition of Fox & Friends, host Brian Kilmeade dramatically exaggerated a 0.3 percentage point increase in the rate of fraud and abuse. On the August 8 edition of Your World, host Eric Bolling questioned the veracity of the most-recently available abuse rate, over-estimating it by 5,000 percent.
Nutrition assistance has long been a favorite object of attack and ridicule in the right-wing media. The continued attacks emboldened the Republican-led House of Representatives to propose cutting $40 billion out of the Supplemental Nutrition Assistance Program over the next 10 years, despite the harm it would cause to millions of working Americans, retirees, and children.
From the September 9 edition of Fox News' Your World with Neil Cavuto:
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The Wall Street Journal's Stephen Moore attacked striking fast-food workers' demands to increase the minimum wage by falsely claiming that such a raise would result in less teenage employment and more workplace automation.
Moore, a senior economics writer for the Journal, appeared on the August 29 edition of Fox News' Your World with Neil Cavuto to discuss the fast-food protests that are underway across the country. Moore claimed that strikers' demands, if met, would result in "a lot less teenagers hired for those kinds of jobs" and fast-food restaurants deciding to "substitute workers with machines and automated things":
Moore's claim that a higher minimum wage would negatively affect teenage employment is baseless. The Huffington Post quoted University of California, Berkeley economist Sylvia Allegretto, who was the lead author of a 2011 study on minimum wage and teen employment, explaining that those who "fight such [minimum wage] hikes, arguing that higher wages discourage growth, particularly in down economies" are not supported by her research:
Fox's Charles Payne attempted to discredit fast-food workers' planned attempt to organize for union representation and a higher minimum wage by falsely claiming workers are arguing for a sliding scale of extra income.
Neil Cavuto hosted Fox Business contributor Charles Payne on the August 28 edition of Fox News' Your World with Neil Cavuto to discuss protests planned by fast-food workers, who are demanding higher pay and the right to unionize. Payne claimed during the segment that employers don't owe a debt to their employees and mischaracterized the minimum wage increase as a sliding scale of pay:
PAYNE: Listen, I don't begrudge anyone for trying to earn extra money, but what they're essentially saying is that their salary should be doubled from where they are. It doesn't match the skill set. Now, if we start to talk about this -- and listen, it's something that's been echoed all day long with theme of the March on Washington -- that somehow corporations owe a debt to people who work for them. So if Susan has two kids, she gets X amount of income, then she has another child, then the corporation should pay more money specifically because they owe her a debt and she had another kid -- sort of the responsibility or the welfare state that's been such a burden on America is now being thrusted, or attempted to be thrusted on the shoulders of corporate America.
But workers aren't demanding a sliding scale of income. They're organizing for fair representation at work and a single minimum wage increase. As Ezra Klein explained: "most workers have less power to negotiate raises than they did a generation ago":
Fox News compared the Congressional Budget Office (CBO) prediction of job losses due to sequestration to recent job growth reported by the Bureau of Labor Statistics (BLS), falsely suggesting that the across-the-board cuts have had no negative effects on job creation.
On the August 23 edition of Fox News' Your World, host Neil Cavuto was joined by Fox News contributor Mike Huckabee to address the impacts of across-the-board budget cuts commonly known as sequestration. In response to recent comments made by Treasury Secretary Jack Lew and Attorney General Eric Holder regarding the damaging effects of sequestration on the economy, Cavuto claimed, "I think he just made that up."
Cavuto then attempted to bolster his claim with a misleading graphic, which suggested that continued job growth since the onset of sequestration proves that the budget cuts had no real economic effect.
In fact, the best CBO estimates of the effects of sequestration through the 2013 calendar year predicted slower economic growth and fewer jobs created. Cavuto's graphic correctly listed the number of new jobs created during the first six months of sequestration but incorrectly compared that with the CBO's estimate that 750,000 fewer full-time jobs would be created under sequestration. The two jobs figures are entirely unrelated. According to the CBO report cited by Cavuto (emphasis added):
In the absence of sequestration, CBO estimates, GDP growth would be about 0.6 percentage points faster during this calendar year, and the equivalent of about 750,000 more full-time jobs would be created or retained by the fourth quarter.
Contrary to what Cavuto claimed, the CBO did not predict that the economy would experience a net loss in jobs, rather that sequestration would result in fewer jobs being created. An accurate presentation of the data would make it clear that while jobs growth has been present, absent budget cuts it would be much greater.
While the discussion between Cavuto and Huckabee attempted to downplay the effects of sequestration, cuts are being continuously rolled out, affecting a number of crucial government programs. Unless policy is changed through new legislation, such across-the-board budget cuts will be scheduled every year for the next decade, further weakening ecnomic growth.
From the August 22 edition of Fox News' Your World with Neil Cavuto:
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