Fox & Friends worked overtime on its September 16 broadcast to "spin" the proposed extension of the middle class tax cuts into "a tax hike" for the wealthiest Americans, by making a series of false and baseless claims.
Carlson falsely suggested that "most economists" think tax cuts for the rich are effective stimulus
Carlson: "most economists believe that people in that tax category" would put the money back in the economy. On the September 16 edition of Fox News' Fox & Friends, co-host Gretchen Carlson took issue with President Obama's assessment that extending the tax cuts for the rich is a "tax cut that economists say would do little to add momentum to our economy." Carlson responded to this statement by claiming: "Most economists believe that they [high earners] would spend the money and stimulate the economy."
In fact, as Reuters reported: "Economists of all stripes agree high earners are less likely to spend extra cash than less well-off peers." In an August 17 "Factbox," Reuters reported that the CBO and economists like Mark Zandi, who advised John McCain's 2008 presidential campaign, believe tax cuts for the rich are less stimulative than those for less wealthy individuals:
CONTENTION: There are more effective ways to stimulate the economy, where one can get a "bigger bang for the buck," than keeping taxes low for wealthier Americans, proponents of letting the top two tax rates rise say.
FACTS: Economists of all stripes agree high earners are less likely to spend extra cash than less well-off peers.
A January report by the Congressional Budget Office, seen as a neutral arbiter of budget matters, measured the impact of various measures to boost growth and employment.
It found that putting money in the hands of lower-income earners by boosting aid to the unemployed or lowering payroll taxes is a significantly more efficient way to stimulate growth compared to putting more funds in the hands of those already well-off.
"There are just better ways to use the money," said economist William Gale at the Brookings Institution.
Moody's Economy.com chief economist Mark Zandi, who advised Republican presidential candidate John McCain, backs this view but argues such programs could not make it through this Congress, which has fought bitterly to extend stimulus spending this year.
The influential Zandi advocates phasing out the low rates for high earners beginning in 2012, citing the fledgling recovery.
Krugman: "[T]here's a lot of evidence suggesting that tax cuts for the rich will do less to promote spending than equal tax cuts for the middle class and below." In a recent blog post, Nobel Prize winning economist Paul Krugman cited a 2001 Center for Budget and Policy Priorities report --written by former OMB director Peter Orszag and Nobel prize winning economist Joseph Stiglitz--on the effects of state tax increases vs. state budget cuts during a recession. Krugman noted: [T]here's a lot of evidence suggesting that tax cuts for the rich will do less to promote spending than equal tax cuts for the middle class and below." In the report, Stiglitz and Orszag wrote:
Since higher-income families tend to have lower propensities to consume than lower-income families, the least damaging approach in the short run involves tax increases concentrated on higher-income families. Reductions in transfer payments to lower-income families would generally be more harmful to the economy than increases in taxes on higher-income families, since lower-income families are more likely to spend any additional income than higher income families.
CBO: Extending tax cuts "does not create much incentive ... to hire more workers." Congressional Budget Office (CBO) director Douglas Elmendorf stated in his written testimony that "[d]eferring the scheduled increases in tax rates in 2011 would help some businesses" but that "increasing the after-tax income of businesses typically does not create much incentive for them to hire more workers in order to produce more, because production depends principally on their ability to sell their products."
CBO scored "[d]effering the scheduled increases in tax rates" as the lowest-scoring policy proposal to stimulate economy. In a January 14 report on "Policies for Increasing Economic Growth and Employment in 2010 and 2011," CBO stated:
[P]olicies that would temporarily increase the after-tax income of people with relatively high income, such as an across-the-board reduction in income taxes or an increase in the exemption amount for the AMT, would have smaller effects [than other options] because such tax cuts would probably not affect the recipients' spending significantly.
The report further stated that "a permanent extension [of the Bush tax cuts] would entail large revenue losses after the recovery is over."
According to a table in the report, CBO estimated that reducing income taxes in 2011 would have the least stimulative effect of the policy options considered.
Fox & Friends adopts GOP "spin" on middle class tax cuts
Doocy: "It's not really a tax cut. It's a tax hike." On Fox & Friends, co-host Steve Doocy adopted Republican Senate Minority Leader Mitch McConnell's (R-KY) claim that the proposed extension of middle class tax cuts are really a "tax hike", by saying: "It's not really a tax cut. It's a tax hike. The taxes are at a certain level and what they're talking about is hiking it up 3%, 4%, 5%." In fact, as Media Matters has noted, the Republican led Congress chose to let the tax cuts expire for all Americans on the last day of 2010, in part to boost the size of the tax cut while hiding the long-term cost. Therefore, if Congress takes no action, taxes will increase for all Americans on January 1 as a result of the laws Bush signed in 2001 and 2003. Congress is currently debating expanding the length of the tax cuts for individuals making less than $200,000, and families making less than $250,000.
Carlson: "It's the spending, stupid! Why don't we ever hear from the president about cutting spending?" Carlson claimed that the problem with Obama arguing that tax cuts for the wealthy is unaffordable was that government spending is not being cut:
CARLSON: All right, I thought of my third point. It's the spending, stupid! Why don't we ever hear from the president about cutting spending? Because that is what so many Americans -- that was the beginning of the tea party. That's the number one concern of the tea party is the overspending. I don't know anyone in the entire nation, e-mail me if you disagree with this, who agrees with wasting money. Who agrees with wasting money? We never look at it from that point of view, ever.
Carlson then responded to McConnell's assertion that Obama is proposing a "tax hike" instead of a tax cut: "See, that's spinning it again like I was trying to do not very eloquently on the spending."
Kilmeade: You "can't say I'm worried about the deficit" over $700b tax cuts for the wealthy if you extend tax cuts for everyone else. While Carlson argued for simply eliminating government "waste," Kilmeade argued for extending the tax cuts for the wealthy because they cost less than the tax cuts for everyone else:
PRESIDENT OBAMA [VIDEO CLIP]: We simply can't afford that. It would mean borrowing $700 billion in order to fund these tax cuts for the very wealthiest Americans. $700 billion to give a tax cut - worth an average of $100,000 -- to millionaires and billionaires. And it's a tax cut economists say would do little to add momentum to our economy.
KILMEADE: All right, but what he's forgetting to tell you, is, all right, so if the so-called wealthy who make over $250,000 don't get their tax break and they're allowed to -- the Bush tax cuts are allowed to evaporate on January 1st, he says it's going to cost the economy over ten years $700 billion. But if he allows those tax cuts to stay in place, [the] cost for the middle class and down, people who make $250,000 and less, he's going to cost the economy over $1 trillion. So ok, it's just a matter of who is not paying the tax overall but you can't say I'm worried about the deficit and still have those tax cuts in place. But what I find staggering is that the president seems to ignore how many Democrats are not in his corner on this. Why does he keep calling out Republicans?