Save The Economy Segment Pushed Claim That Government Programs For “Low Income Borrowers” Caused Financial Crisis

Save The Economy Segment Suggested That Government-Encouraged “Expansion Of Mortgage Lending To Low Income Borrowers” Caused Housing Bubble To “Burst.” From the June 21 edition of Fox News' Special Report:

BRET BAIER (host): Tonight we continue our 10 part series on saving the economy. This evening Chief Washington Correspondent James Rosen looks at what many people believed triggered the downturn: the housing collapse.

(BEGIN VIDEOTAPE)

JAMES ROSEN (Fox News Correspondent): In the month of May, the National Association of Realtors reports existing home sales fell 3.8 percent, where still the crucial segment of first-time buyers who stoke the economy by hiring contractors for renovations and investing in their new neighborhoods made up only 35 percent of last month's sales, well shy of 50 percent they typically comprise.

Martin Baily served as chairman of the Council of Economic Advisors under President Clinton.

MARTIN BAILY (Former White House Economics Adviser): All the programs going back to the ones that Bush instituted and the ones that Obama's instituted have turned out to be very hard to do anything to raise the state of the housing market. I mean, what would help consumers is if the prices stop falling and started rising. That would be the thing that would help everybody.

ROSEN: But would an across the board increase in home prices really help with the central problem of excessive inventory, the backlog of homes, particularly in sun belt states, that remain unsold? A conservative economist argued a downward price mechanism would help the housing market bottom out.

VERONIQUE DE RUGY (George Mason University): I think that the reason why a lot of sellers are not necessarily willing to lower their prices is they are actually expecting to see whether the government once again is going to step in and do something to prop up these prices.

ROSEN: Almost a decade has passed since President George W. Bush, speaking to a predominantly African-American audience at a church in Atlanta, vowed to increase the rates of minority homeownership.

GEORGE W. BUSH (Former U.S. President): Right here in America, if you own your own home, you are realizing the American dream.

ROSEN: Mr. Bush's initiative followed similar efforts under President Clinton, but it was by most accounts the expansion of mortgage lending to low-income borrowers, who present a higher risk of foreclosure, that burst the housing bubble of the last decade and triggered the credit crisis.

THOMAS SOWELL (Hoover Institution): As someone who lived in apartments, you know, most of his life, I have never understood why there is some sort of right to live in a house.

ROSEN: And so the solutions for the housing market turn on one's view of the effectiveness of government intervention. Clear to all is that this slumping sector is hampering the recovery of the economy as a whole. [Fox News, Special Report with Bret Baier, 6/21/11]

Rosen's Analysis Of Housing Bubble Similar To Right Wing Media's Previous Attacks On Legislation Which Encouraged Lending To Low And Moderate Income Neighborhoods, Such As Community Reinvestment Act. Following the financial crisis the conservative media, echoing reported Republican strategy, blamed affordable housing initiatives for the economic downturn. The primary initiative that came under scrutiny was the Community Reinvestment Act, which encourages lending to “low and moderate income neighborhoods.” However, as Media Matters has documented, these right-wing attacks relied on several myths and falsehoods. [Media Matters, 10/10/08, 10/14/09, 11/16/09, 4/20/10]

In Fact, Fed Chair Bernanke Said Experience “Runs Counter To The Charge That CRA Was At The Root Of, Or Otherwise Contributed In Any Substantive Way To, The Current Mortgage Difficulties.” In a November 25, 2008, letter Federal Reserve chairman Ben Bernanke said: “Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties.” [Board of Governors of the Federal Reserve, Letter to Honorable Robert Menendez, 11/25/08]

Law Professor Barr: Most Subprime Mortgages Were Not Issued By Banks Covered By The CRA. In testimony before the House Financial Services Committee, Michigan law professor Michael Barr said that while problems in the subprime lending industry were a driving force behind the housing crisis, only an estimated 20 percent of subprime mortgages were issued by depository institutions under the CRA. In his testimony, Barr stated:

Despite the fact that CRA appears to have increased bank and thrift lending in low- and moderate-income communities, such institutions are not the only ones operating in these areas. In fact, with new and lower-cost sources of funding available from the secondary market through securitization, and with advances in financial technology, subprime lending exploded in the late 1990s, reaching over $600 billion and 20% of all originations by 2005. More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts. [House Financial Services Committee Testimony, 10/10/08, via Media Matters]

Law Professor Barr: “The Worst And Most Widespread Abuses Occurred In The Institutions With The Least Federal Oversight.” Barr also said:

Although reasonable people can disagree about how to interpret the evidence, my own judgment is that the worst and most widespread abuses occurred in the institutions with the least federal oversight.

The housing crisis we face today, driven by serious problems in the subprime lending, suggests that our system of home mortgage regulation, including CRA, is seriously deficient. We need to fill what my friend, the late Federal Reserve Board Governor Ned Gramlich aptly termed, “the giant hole in the supervisory safety net.” Banks and thrifts are subject to comprehensive federal regulation and supervision; their affiliates far less so; and independent mortgage companies, not at all. Moreover, many market-based systems designed to ensure sound practices in this sector-broker reputational risk, lender oversight of brokers, investor oversight of lenders, rating agency oversight of securitizations, and so on -- simply did not work. Conflicts of interest, lax regulation, and “boom times” covered up the extent of the abuses -- at least for a while, at least for those not directly affected by abusive practices. But no more. [House Financial Services Committee Testimony, 10/10/08, via Media Matters]

Federal Reserve Bank Of San Francisco Official: “CRA Has Increased The Volume Of Responsible Lending.” Janet Yellen, then president and CEO of the Federal Reserve Bank of San Francisco, said in a March 2008 speech that “studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. [Emphasis added]” Yellen was referring to a 2002 study conducted by the Joint Center for Housing Studies at Harvard University titled “Community Reinvestment Act: 25^th Anniversary.” [President's Speech at 2008 National Interagency, Federal Reserve Bank of San Francisco, 3/31/08; Community Reinvestment Act: 25^th Anniversary, Joint Center for Housing Studies at Harvard University, 3/20/02]

Bloomberg News: “Community Reinvestment Act Had Nothing To Do With Subprime Crisis.” From Bloomberg Businessweek:

Fresh off the false and politicized attack on Fannie Mae and Freddie Mac, today we're hearing the know-nothings blame the subprime crisis on the Community Reinvestment Act -- a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began. This is even more ridiculous than blaming Freddie and Fannie.

[...]

Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley.

Finally, keep in mind that the Bush administration has been weakening CRA enforcement and the law's reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks. The Federal Reserve, too, did nothing but encourage the wild west of lending in recent years. It wasn't until the middle of 2007 that the Fed decided it was time to crack down on abusive pratices in the subprime lending market. [Bloomberg Businessweek, 9/29/08]

Save The Economy Segment Pushed Dubious Claims About Tax Cuts

Save The Economy Segment Suggested That Lowering Taxes, As It Claims Reagan Did, May “Stimulate” The Economy. From Fox News' Special Report with Bret Baier:

BRET BAIER: (host): Part three of our series on saving the U.S. economy centers on taxes. Some people want lower taxes to stimulate investments, others advocate higher taxes to generate revenue. Correspondent Doug McKelway, looks at both sides.

(BEGIN VIDEOTAPE)

DOUG MCKELWAY (Fox News Correspondent): Eighteenth century economist Adam Smith could not have imagined the matters of today's New York Stock Exchange, but he would have understood its purpose. In a similar work, “The Wealth of Nations,” Smith said of his fellow man, quote, “by pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.” Smith's words live on today among conservative economists.

VERONIQUE DE RUGY (George Mason University): Wealth is created by people pursuing their self-interest and using their skills and ability to try to better their lives.

MCKELWAY: It is that time tested tenet that has led many politicians to make promises like this.

GEORGE H.W. BUSH (Former U.S. President): Read my lips, no new taxes.

MCKELWAY: But does lowering your taxes benefit the economy more than if that money was collected by the government?

MARTIN BAILY (Former White House Economic Advisor): Well, I think in the short run, if we were to lower taxes, that would provide some stimulus to demand. It would put more money in people's pockets, give them more money to spend. I have to say the problem is that we have these huge budget deficits.

DE RUGY: Government cannot create wealth. I mean, come on. We've come out of, what, three years where government has told us that by spending massive amounts, it could actually create jobs, and hence, you know, create wealth, and we've seen that it hasn't worked.

MCKELWAY: History is full of examples that support both views. The Reagan years saw tax cuts and a growing economy. The Clinton years saw tax hikes and a growing economy. But economists are careful not to confuse correlation with causation.

MARK ROBYN (The Tax Foundation): The science of economics is about looking at what the unintended consequences of everything are.

MCKELWAY: One unintended consequence of tax policy occurred in 1991 when Congress passed a tax on luxury goods, but it resulted in BMW and Mercedes losing 20 percent of market share. 19,000 blue collar workers in the pleasure boat industry were laid off. Taxing the wealthy is on the table once again, and it pits those who want the well-off to bear the burden of extra taxes against those who believe in Adam Smith's treatise about how wealth is created.

(END VIDEOTAPE)

MCKELWAY: But there is agreement among many economists in one area. That the tax code is absurdly complex and that simplifying it would be a good start in pointing the economy towards prosperity again. [Fox News, Special Report with Bret Baier, 6/22/11]

In Fact, “No Peacetime President Has Raised Taxes So Much On So Many People” As Reagan. In his New York Times column, Nobel Prize winning economist Paul Krugman described Reagan's actual tax record:

Mr. Reagan presided over an unmatched economic boom. Again, not true: the economy grew slightly faster under President Clinton, and, according to Congressional Budget Office estimates, the after-tax income of a typical family, adjusted for inflation, rose more than twice as much from 1992 to 2000 as it did from 1980 to 1988.

But Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. To his credit, he was more pragmatic and responsible than that; he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people. This is not a criticism: the tale of those increases tells you a lot about what was right with President Reagan's leadership, and what's wrong with the leadership of George W. Bush. [The New York Times, 6/8/04]

Politico: Reagan “Repeatedly Signed Deficit-Reduction Legislation In The 1980's That Melded Annual Tax Increases With Spending Cuts.” In an article titled “Ghost of Gipper looms over GOP,” Politico's David Rogers wrote: "[A] POLITICO review of Reagan's own budget documents shows that the Republican president repeatedly signed deficit-reduction legislation in the 1980's that melded annual tax increases with spending cuts just as President Barack Obama is now asking Congress to consider." Media Matters has also documented that this part of Reagan's legacy is often overlooked. From Politico:

With the nation at risk of default next month, the Republicans' fierce anti-tax orthodoxy is running square into the Ghost of the Gipper -- the GOP's great modern, pre-tea party hero, Ronald Reagan.

Indeed, a POLITICO review of Reagan's own budget documents shows that the Republican president repeatedly signed deficit-reduction legislation in the 1980's that melded annual tax increases with spending cuts just as President Barack Obama is now asking Congress to consider.

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) is the most famous, because of its historic size and timing, a dramatic course correction that quickly followed Reagan's signature income tax cuts in 1981. But in the six years after were four more deficit-reduction acts, which combined to almost double TEFRA's revenue impact on an annual basis.

[...]

In Reagan's case, he also signed major tax reform and his signature 1981 tax cuts forever changed the landscape.

A decade after his 1981 Economic Recovery Act, for example, Reagan budgets predicted those tax cuts would reduce annual receipts for the Treasury by as much as $350.2 billion. But the same tables also show that the combination of TEFRA and the four other deficit-reduction bills effectively took back a third of this in the name of deficit reduction.

The rich diversity of Reagan-era tax changes is most striking, impacting even such conservative priorities now as the estate tax. At the same time, Reagan also signed laws to double the federal gasoline tax to build more roads and increase payroll taxes to stabilize Social Security. [Politico, 7/1/11; Media Matters, 7/1/11]

Economists Agree That Lowering Taxes For The Wealthy Does Not Necessarily Create Jobs. As Media Matters has documented, economists agree that lowering taxes for the wealthy does not create jobs. In fact, Tax Policy Center economist Howard Gleckman noted that “higher income households are more likely to bank the cash than spend it.” Analysts at the CBO have also wrote that “increasing the after-tax income of businesses typically does not create much incentive for them to hire more or produce more, because production depends principally on their ability to sell their products.” [Media Matters, 4/14/11]

Save The Economy Segment Suggested The Stimulus Didn't Work

Save The Economy Segment Pushed Right-Wing Talking Point That The Stimulus Did Not Work. The June 24 Special Report segment on how to “save the economy” “look[ed] at whether massive government spending has ever been the right answer.” After presenting arguments from both sides, correspondent Doug McKelway said: “If there are any experts to answer the question of whether stimulus programs work, it might be the voter. In the year 2010 in 1936 voters, fed up with stimulus programs, elected conservative majority to Congress, majorities philosophically opposed to saving economy through the government spending.” From Special Report:

CHRIS WALLACE (guest host): Most people would agree there's nothing funny about the economy these days, but some older Americans may feel they've seen this movie before. In part five of our series on saving the economy, Correspondent Doug McKelway looks at whether massive government spending has ever been the right answer.

DOUG MCKELWAY (Fox News Correspondent): He was a president who came to office in a financial crisis and who believed the way out was through a massive top-down government stimulus. In 1933 it was called the New Deal. It transformed the U.S. with an array of social programs for the needy and public work programs for infrastructure and jobs. It strengthened unions, regulated the banks, and created Social Security.

76 years later, as historians still debate whether it worked, a new president facing a new financial crisis brought on a new stimulus. The American Recovery and Reinvestment Act, a $787 billion top down torrent of cash for infrastructure, for preventing teacher layoffs, for staving off the bankruptcy of GM and Chrysler, and for thousands of other projects across the 50 states. Did it work?

BRAD JENSEN (Georgetown University): That it hasn't turned it around more I think is a testimony to just how deep a hole we have dug for ourselves.

MARTIN BAILY (Former White House Economic Adviser): It was a bit of a mess. I mean, they wanted to get it through quickly so they sort of handed the reins to Congress. And so you've got everybody in every district wanting some of it. So I think it could have been handled better.

MCKELWAY: The nonpartisan Congressional Budget Office found that the stimulus helped the economy. By the second quarter of the year 2010 it raised the gross domestic product by between 1.7 and 4.5 percent. It lowered the unemployment rate by between 0.7 percent and 1.8 percent, and increased the number of people who had jobs by between 1.4 and 3.3 million.

But just as Roosevelt's New Deal was dealt a second recessionary blow in 1937, four years after it was enacted, there is debate over whether the Obama stimulus has run out of steam.

VERONIQUE DE RUGY (George Mason University): The government doesn't have money of its own. It has to either tax people or it has borrow it.

BAILY: I do think it helped because the economy really was in free fall, and so this added a little more money to the system and helped the recession be not quite as severe as it would have been.

(END VIDEOTAPE)

MCKELWAY: If there's any expert to answer the question of whether stimulus programs work, it might be the voter. In the year 2010 and 1936, voters fed up with stimulus programs elected conservative majorities to Congress -- majorities philosophically opposed to saving the economy through government spending. [Fox News, Special Report with Bret Baier, 6/24/11]

Economists Largely Agree That The Stimulus Boosted Growth And Mitigated Job Losses. In March 2010, 70 percent of the 54 economists it surveyed “said the American Recovery and Reinvestment Act boosted growth and mitigated job losses.” Furthermore, in a report on the effects of the American Recovering and Reinvestment Act of 2009, the non-partisan Congressional Budget Office noted that the stimulus added millions of jobs to the economy, raised real gross domestic product (adjusted for inflation) and lowered the unemployment rate. In June, the Center for Budget and Policy Priorities (CBPP) said the “economy has now grown for seven straight quarters.” In its report the CBPP added that “economic activity ... [had been] contracting sharply when policy makers enacted the financial stabilization bill (TARP) and the American Recovery and Reinvestment Act.” Moreover, the White House Council of Economic Advisors' quarterly report from March showed that the stimulus increased gross domestic product and lowered unemployment. [Media Matters, 6/10/11]

Contrary To McKelway's Report, Economists Say New Deal Did Not Worsen Depression -- His “Conservative Course” Did. After McKelway reported that the Congressional Budget Office claimed the stimulus had a positive effect on jobs, he added that just as “Roosevelt's New Deal was dealt a second recessionary blow in 1937, four years after it was enacted, there is debate whether the Obama stimulus has run out of steam.” However, numerous economists have said that the 1937 downturn actually occurred because Roosevelt reversed his New Deal policies, not because he continued them.

• Krugman: Roosevelt “Eager To Return To Conservative Budget Principles ... Precipitating An Economic Relapse That Drove The Unemployment Rate Back Into Double Digits.” [New York Times, 11/10/08]
• Economist Dean Baker: FDR “Worried About The Whining Of The Anti-Stimulus Crowd ... When The Proper Goal Of Fiscal Policy Should Have Been Large Deficits To Stimulate The Economy.” [Alternet.org, 1/6/09]
• Economist Brad DeLong: "[M]ore 'Orthodox' Economic Policies" And Attempt “To Move The Budget Toward Balance ... Provide Ample Explanation Of That Downturn.” [DeLong.typepad.com, 11/17/08]

While Attacking Obama's Jobs Record, Fox Regularly Ignores Statistics Showing The Stimulus Created Jobs. Fox regularly argues that the stimulus did not create jobs and that government spending does not work to stimulate the economy. In fact, as McKelway himself noted, “the Congressional Budget Office found the stimulus helped the economy.” Furthermore, according to a March 2010 study by The Wall Street Journal, 70 percent of economists surveyed said the stimulus “boosted growth and mitigated job losses.” [Media Matters, 6/13/11, 6/6/11, 5/31/11, 2/27/11, 2/18/11]

Save The Economy Segment Pushed For Estate Tax Repeal

Fox's “Straight News” Campaigned For Estate Tax Repeal. During the June 29 edition of Special Report guest host Shannon Bream suggested that the estate tax hurts small businesses and therefore causes the economy to hemorrhage jobs. However, Bream offered no pushback to the claim that estate taxes severely hurt small businesses, despite the fact that Special Report is supposedly one of Fox's straight news programs. From the June 29 edition of Fox News' Special Report:

SHANNON BREAM (Fox News Correspondent): We continue our look at the ways to save the economy by focusing tonight on the estate tax, how it affects small businesses and the people whose livelihoods depend on them.

[...]

The federal estate tax can be especially tricky for many small, family-held businesses. That's because, when an individual dies, what he or she leaves behind can be subject to significant taxation, even if it's primarily invested in a family business. If the entity doesn't have enough cash on hand to meet the obligation, heirs are often forced to sell the business in order to raise enough money to satisfy the tax bill. [Fox News, Special Report with Bret Baier, 6/29/11]

Bream Also Suggested Higher Estate Tax Rates Would Put Many More Small Businesses At Risk. From the June 29 edition of Fox's Special Report:

BREAM: Small business owners have no idea what may happen when the current rates expire at the end of 2012.

DAVID LOGAN (Tax Foundation economist): There's strong evidence to suggest that higher estate taxes lose jobs, just to put it bluntly.

BREAM: For now, family-held small businesses say they're left to wonder whether lawmakers will once again reach an 11th-hour deal on estate taxes, leaving them hesitant to expand or invest until they get that guidance, meaning it's up to Washington to convince them to get off the sidelines.

LOGAN: It's part of a comprehensive tax reform. And that's what we're hoping for. That's what will alleviate that uncertainty that goes to small businesses.

BREAM: Unless Congress intervenes, beginning in 2013, estates will be taxed starting at $1 million instead of 5 million, and the rate will jump from 35 percent to 55 percent. [Fox News, Special Report with Bret Baier via Media Matters, 6/29/11]

The Segment Also Contained A Graphic Referring To The Estate Tax As The “Death Tax.” The following graphic aired during Bream's report:

[Fox News, Special Report with Bret Baier, 6/29/11]

In Fact, According To The Tax Policy Center "99.9 Percent Of Deaths Trigger No Estate Tax." From the Tax Policy Center's page on the estate tax:

Estates larger than $5 million potentially owe estate tax in 2011. Only about 1 in 800 deaths will result in a taxable estate; 99.9 percent of deaths trigger no estate tax. The estate tax will raise over $10 billion from 3,300 deaths in 2011. [Tax Policy Center, accessed 6/29/11]

• Tax Policy Center: Preliminary Estimates Show Tax Deal Would Hit Only 50 “Small Farms And Businesses” in 2011. TPC preliminary estimates indicate that the proposed estate tax would hit only 50 “Small Farms And Businesses,” defined as "[e]states for which farms and business assets comprise at least half of gross estate and total $5 million or less." For these estates, the average tax rate is estimated to be 7.4 percent. For all estates affected by the tax, the average tax rate is estimated to be 14.4 percent. [Tax Policy Center, accessed 6/29/11]

AP: “The [Estate] Tax Would Affect Just 0.14 Percent Of All Estate In 2011, Or About 3,500 Estates, Generating About $11.2 Billion In Revenue.” The Associated Press reported that the 2010 tax deal between Obama and Congressional Republicans exempts the first $5 million of an individual's estate and sets a top rate of 35 percent. AP also reported that the tax would hit only 3,500 estates in 2011 and generate roughly $11.2 billion in revenue. From the AP article:

More than 40,000 estates worth $1 million to $10 million would be expected to escape inheritance taxes next year under the deal struck by Republicans and President Barack Obama.

The package would leave only about 3,500 of the largest estates subject to federal taxes next year, a boon for the wealthy that many House Democrats say they can't accept.

[...]

The federal estate tax reaches fewer than 1 percent of inheritances, but it has long been a political lightening rod among lawmakers from both parties. Many Republicans want to eliminate the estate tax altogether, derisively calling it a “death tax” that makes it hard for parents to transfer small businesses to their children.

Estate tax opponents got their wish this year, when the tax was temporarily repealed. But the tax holiday will be short-lived because, under current law, the estate tax is scheduled to return next year with a top rate of 55 percent for estates larger than $1 million for individuals and $2 million for married couples.

The package Obama negotiated would set the top rate at 35 percent and exempt the first $5 million of an individual's estate. Couples could exempt $10 million.

At those levels, the tax would affect just 0.14 percent of all estates in 2011, or about 3,500 estates, generating about $11.2 billion in revenue, according to an analysis by the Tax Policy Center, a Washington research group.

Under the current law, more than 44,000 estates are projected to be taxed next year based on the number of estate-holders in that value bracket who are likely to die. That would generate $34.4 billion in taxes. [Associated Press, 12/8/10, via Huffington Post]

CBO: “Most Owners Of Family Farms And Small Businesses Are Unlikely To Owe Estate Tax.” From a 2009 Congressional Budget Office (CBO) report that looked at the effect of the estate tax on small businesses and farms in 2000 and 2005, when the estate tax affected more taxpayers than it does now:

A commonly expressed concern is the effect of the estate tax on family farms and small businesses, including the possibility that heirs may be forced to liquidate the business to pay the estate tax. As with the general public, most owners of family farms and small businesses are unlikely to owe estate tax. About 2.1 percent of farmers (1,137) and 2.4 percent of small-business owners (8,291) who died in 2005 had to file estate tax returns.

The vast majority of estates, including those of farmers and small-business owners, had enough liquid assets to pay the estate taxes they owed in 2005. However, estates involving farms or small businesses are slightly less likely than other estates to have sufficient liquid assets to cover their estate taxes. In 2000, when the effective estate tax exemption amount was $675,000, 138 (or about 8 percent) of the estates of farmers who left enough assets to owe estate taxes faced a tax payment that exceeded their liquid assets, compared with about 5 percent of all estates that owed taxes. Those numbers are upper bounds, however, because the definition of liquid assets used on estate tax returns excludes some money held in trusts, which could also be used to pay estate taxes. The increase in the exemption amount since 2000 probably further mitigated the impact on small businesses. Moreover, the estate tax currently includes several provisions that owners of family farms and small businesses can use to mitigate its effect. For example, heirs are allowed to pay the tax in installments over 15 years at low interest rates, and several special valuation provisions allow some assets to be assessed at less than their market value. [Congressional Budget Office report on Federal Estate and Gift Taxes, 12/18/09]

The Phrase “Death Tax” Is A Loaded Term Created By GOP Pollster Frank Luntz To Make The Estate Tax Unpopular. The Washington Post reported that GOP pollster Frank Luntz (now a Fox News contributor) “poll-tested the term 'death tax' and advised the new GOP majority to never use the terms 'inheritance' or 'estate tax' again.” From the Post:

By 1994, Newt Gingrich's Republican insurgents had latched onto the estate tax issue, but the Contract With America called for an estate tax reduction, not repeal. In 1995, Luntz poll-tested the term “death tax” and advised the new GOP majority to never use the terms “inheritance” or “estate tax” again.

[...]

But ultimately, whether people believe the estate tax will affect them has little bearing on support for repeal. Early this year, with [anti-estate tax activist Patricia] Soldano's money, Luntz again began polling, this time in the face of record budget deficits and lingering economic unease. More than 80 percent called the taxation of inheritances “extreme.” About 64 percent said they favored “death tax” repeal. Support fell to a still-strong 56 percent when asked whether they favored repeal, even if it temporarily boosted the budget deficit. [The Washington Post, 4/13/05]

Two Save The Economy Segments Pushed Right-Wing Talking Point That Obama Policies Cause “Uncertainty”

Save The Economy Segment Pushes Theory That Businesses Won't Invest Because Of “Uncertainty” Caused By Health Care Reform And Financial Regulation. The June 30 edition of the 10 Ways to Save the Economy special was dedicated to the “uncertainty” supposedly caused by regulations. From the June 30 edition of Fox News' Special Report:

BRET BAIER (host): In tonight's segment on saving the economy: a look at federal regulations and the time it takes to implement them. Correspondent Shannon Bream reports if there's one certainty, it seems to be uncertainty.

(BEGIN VIDEOTAPE)

VERONIQUE DE RUGY (George Mason University): In the next ten years, maybe more investors, entrepreneurs, business owners, are going to be in limbo.

SHANNON BREAM (Fox News Correspondent): Each time a federal law is passed, detailed regulations that outline how that law will be implemented are issued by the relevant agencies. But that often takes a great deal of time, especially when it comes to a 2,000 plus page bill like the president's new health care program or the Dodd-Frank bill passed last year, described as the biggest overhaul to the American financial regulatory system in history.

In fact, some regulations for the Patriot Act, first passed in 2001, still aren't finished. Most laws like Dodd-Frank have built in time frames for getting regulations drafted, subjected to public comment, and then finalized. But those markers aren't always met.

DE RUGY: It's hard to tell, because a lot of these rules were going to be ruled out one after the other, and there were deadlines for some of them. And I know we've missed a lot of deadlines on both fronts of rules that were going to have to be written by a certain deadline. So it's really hard to tell.

BREAM: Meanwhile, businesses are left in a holding pattern, unsure of how to move forward until they know how they'll be impacted. Dan Danner of the National Federation of Independent Businesses says small businesses which operate on very tight margins are especially worried about the unknown.

DAN DANNER (National Federation of Independent Businesses): They don't know what the cost of their health care is going to be. They just know they're going to be mandated to provide something. They're going to be told what that is, and they have no idea what it's going to cost.

BREAM: Experts say while most businesses admit they dislike government regulation, they can deal with the requirements and red tape as long as they know what they're facing. Danner says when the government issues regulations in a timely fashion, the small businesses he represents can plan, invest higher, and do their part to move the U.S. economy forward.

DANNER: Small businesses and entrepreneurs are inherently optimists, and so we look forward to the future, and our small business members do, and they're looking forward to things getting better and them creating jobs.

(END VIDEOTAPE)

BREAM: As for how the regulations tied to implementing the president's health care law are progressing, the initial proposals have been drafted but the final batch of regulations won't be issued until 2015 -- if they're finished on schedule. [Fox News, Special Report with Bret Baier, 6/30/11]

June 28 Save The Economy Segment Also Pushed The “Uncertainty” Talking Point. During the June 28 segment of 10 Ways to Save the Economy Shannon Bream continued to push the idea that a sense of uncertainty was negatively impacting the economy. Bream said: "[T]he unresolved debt crisis and how lawmakers will address issues regarding the solvency of Medicare, Medicaid, and Social Security are fueling a level of uncertainty that tends to bring small businesses to a standstill." From Special Report with Bret Baier:

BRET BAIER (host): We learn today that consumer confidence has hit a seven-month low. In tonight's report on saving the economy, we talk about the lack of confidence by small business owners. Correspondent Shannon Bream tells us many people feel that is a major reason for the extended economic slump.

(BEGIN VIDEOTAPE)

DAN DANNER (National Federation of Independent Business): I mean, traditionally, we are led out of a recession by small businesses hiring people and creating jobs. And that's not happening in this recession at this time.

SHANNON BREAM (Fox News Correspondent): Dan Danner is president and CEO of the National Federation of Independent Businesses, a nonpartisan group that represents small businesses across the U.S. The organization's latest survey shows those businesses, by all accounts, crucial to the recovery of the U.S. economy aren't feeling particularly hopeful. May marks the third consecutive month that small business optimism dropped.

Only 5 percent of small business owners say that now is a good time to expand and data from the Bureau of Labor statistics shows the 12-month period that ended in March 2010 marked the lowest number of startup businesses in the U.S. since the bureau started measuring the trend in the early 90s. So, what's driving the lack of small business confidence?

Experts say Washington's unresolved debt crisis and how lawmakers will address issues regarding the solvency of Medicare, Medicaid, and Social Security are fueling a level of uncertainty that tends to bring many small businesses to a standstill.

BRAD JENSEN (Georgetown University): There's enormous uncertainty about how the political process is going to grapple with those issues. I think that now that the economy is kind of on its back, the uncertainty looms much larger.

VERONIQUE DE RUGY (George Mason University): It paralyzes entrepreneurs and people who usually are willing to actually take risk and invest their own money in their business, but also invest in workers and hire people.

BREAM: And while pundits, lawmakers and economists may disagree about how to resolve those weighty problems, there is general agreement that coming to some kind of resolution will allow small businesses, now waiting on the sidelines, to restart hiring and investing.

DE RUGY: So lifting this uncertainty is really key to allow and empower individuals and entrepreneurs. Because, I mean, ultimately, they are the true actors of economic recovery.

(END VIDEOTAPE)

BREAM: Small business leaders say, somewhat surprisingly that a lack of access to capital isn't an issue for them right now. They say that's because until the U.S. economy's long-term future is more certain, most of them just aren't interested in expansion. [Fox News, Special Report with Bret Baier, 6/28/11]

Fox Has Previously Pushed The Conservative Talking Point That Obama's Economic Policies Hurt The Economy By Leading To “Uncertainty” In The Private Sector. During the April 3 edition of ABC's This Week, former Bush administration official Torie Clarke asserted that “What will really get the private sector humming and hire a lot of people is if they have predictability and certainty about things like regulatory regimes and are some of these trade agreements going to go through that we really need.” Reps. John Boehner and Kevin McCarthy also said that “uncertainty” on tax cuts was hindering job creation during the September 26, 2010, edition of Fox News Sunday. Several Fox anchors adopted the talking point soon after Boehner's and McCarthy's comments. [Media Matters, 4/3/11, 9/27/10]

Krugman: “Uncertainty Is Just A Myth Being Made Up” To Blame Economy On Obama. Responding to Torie Clarke's comments on This Week, Nobel Prize winning economist Paul Krugman said: “The reason businesses are not investing is that they have tons and tons of excess capacity. There is a very clear relationship historically between the amount of unemployment and business investment. When unemployment is high, when capacity is low, investment is low there is nothing -- all of this stuff about uncertainty is just a myth being made up to blame this on Obama.” [ABC, This Week via Media Matters, 4/3/11]

Fox Concluded Its Series By Pushing Another Right-Wing Talking Point On Deregulation

Special Report: Deregulation Can “Save The Economy” Because “America Finds Herself Increasingly In Competition,” With Countries With More Heavily Deregulated Private Sectors. From Fox News' Special Report with Bret Baier:

BRET BAIER (host): We conclude our two week series on saving the economy tonight with a big picture look at just what American business is up against. Chief Washington correspondent James Rosen tells us it's a tough world out there.

JAMES ROSEN (Fox News Correspondent): Every minute of every day of every year we are locked in mortal struggle, a fierce battle over the disposition of scarce resources and precious human capital that pits us against nearly 200 other nations around the world.

DAN DANNER (National Federation of Independent Business): There's no question today that almost every business is global. The whole question about outsourcing is: Where is the best business environment?

ROSEN: America finds herself increasingly in competition. Especially with those nations known as the BRIC countries: Brazil, Russia, India and China. Those last two, India and China, have over the last five years both ranked among the top 40 most improved countries in terms of easing the regulatory burden they impose on their own business classes.

MARTIN BAILY (Former White House Economics Advisor): They embarked on a program of deregulation but they still have a lot of it left. So I suspect that they will continue to be on a deregulatory track.

ROSEN: In 2010, and for the fifth consecutive year, the World Bank's annual “Doing Business” survey, which ranks 183 economies in terms of their regulatory burden, found Singapore to be the world's friendliest regulatory environment, followed by Hong Kong, New Zealand, the United Kingdom, and then the United States. This fifth place ranking represented a decline for the U.S., which placed third in 2009, and saw America bucking a worldwide trend.

That trend has seen 85 percent of the world's economies over the last five years take steps to make it easier for local entrepreneurs to operate. Last year 61 countries fared better than the U.S. in terms of the tax burden on business owners.

ROSEN: The regulatory burden that the United States government imposes on its business class -- where do we fall in ranking of the industrialized states?

VERONIQUE DE RUGY (George Mason University): If you had asked me this ten year ago, I would have told you, I mean, America is the place to start a business. It's not true anymore today, and we know that the heavier the regulation, in particular in product and labor market, the more it reduces economic growth.

ROSEN: Of course, some regulations, like child labor laws, just to name one, remain vital. But economists from across the spectrum agree that for America to compete in the global economy, regulations should themselves be tightly regulated, tailored narrowly to address specific problems and made to go away when those problems do. [Fox News, Special Report with Bret Baier, 7/1/11]

But Special Report Failed To Note That Obama “Order[ed] A Government-Wide Review” “To Remove Outdated Regulations That Stifle Job Creation And Make Our Economy Less Competitive.” In a Wall Street Journal op-ed titled “Toward a 21st-Century Regulatory System,” President Obama called for the United States to “strike the right balance” between regulations and their costs. He wrote: “Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.” From The Wall Street Journal:

[T]hroughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business--burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

Where necessary, we won't shy away from addressing obvious gaps: new safety rules for infant formula; procedures to stop preventable infections in hospitals; efforts to target chronic violators of workplace safety laws. But we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.

For instance, the FDA has long considered saccharin, the artificial sweetener, safe for people to consume. Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.

But creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends--giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing.

We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money. We're looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for--and reduce--the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way.

[...]

Despite a lot of heated rhetoric, our efforts over the past two years to modernize our regulations have led to smarter--and in some cases tougher--rules to protect our health, safety and environment. Yet according to current estimates of their economic impact, the benefits of these regulations exceed their costs by billions of dollars.

This is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another. [Wall Street Journal, 1/18/11]

Fox Has Repeatedly Pushed Deregulation Talking Point. Fox News shows and others in the conservative media have repeatedly pushed for more deregulation. Indeed, conservative media figures even used the one-year anniversary of the Gulf of Mexico oil spill to push for deregulation of the drilling industry. [Media Matters, 6/23/11, 6/7/11, 6/2/11, 4/20/11, 4/20/11, 2/10/11]

Only Three Of The Ten Save The Economy Segments Did Not Clearly Push Right-Wing Talking Points

June 20: Ten Ways To Save The Economy Segment Focuses On The Importance Of Raising Consumer Confidence. From the June 20 edition of Fox News' Special Report:

SHANNON BREAM (guest host): Tonight, we begin a ten-part series looking at possible ways to fix the struggling economy. First up, Chief Washington correspondent, James Rosen, on consumer confidence.

(BEGIN VIDEOTAPE)

JAMES ROSEN (Fox News Correspondent): Y2K, the dawn of a new millennium, and also, according to the data kept by the conference board, the peak of American consumer confidence with the 144.7 posted in January 2000, the highest measurement ever of this crucial statistic since economists first developed it back in 1967.

MARTIN BAILY (Former White House Economic Advisor): So, they ask consumers various questions about how they stand right now, how they think the economy is going in the future. Everybody is kind of gloomy about the future. People don't spend, they don't invest, they don't take risks, then the economy is likely to remain on a slow growth or even on recession path.

ROSEN: Gallup surveys this month found consumer confidence hitting a new low for the year, a reflection analyst said of dismal job growth and Wall Street decline. President Obama cited still another factor, high gasoline prices.

BARACK OBAMA (President, United States): It has enormous impact on family budgets and on the psychology of consumers.

ROSEN: That consumer confidence is a function of psychology quite literally all in the mind of the average consumer leads economist to differ over how directly a president of the United States can affect it.

VERONIQUE DE RUGY (George Mason University): A lot of presidents try to do this, right, when they talk about how they're going to invest in our country, how they're going to invest in our roads and education. And I think for a while, it actually works. People like this idea. But I actually think that people are like tired, and they also understand that nothing really good ever comes out of it.

BAILY: I think a lot of people argue that Franklin Roosevelt did. You know, he made the speech, the only thing we have to fear is fear itself. He was a man that if you see the clips, projects a lot of confidence. I think Ronald Reagan projects a lot of confidence.

ROSEN: Across Ronald Reagan's presidency, consumer confidence rose by 41 percent, the best showing for any chief executive since 1967. The steepest plunge came after the tumultuous month of October 1973, which brought the Nixon impeachment drive in Watergate, the Yom Kippur War, and the OPEC oil embargo. By that, Christmas consumer confidence had shrunk by more than a third. After 9/11 by contrast, confidence fell only 2-1/2 percent and quickly rebounded.

(END VIDEOTAPE)

ROSEN: Business confidence also appears to be flagging. A “Wall Street Journal” survey of companies conducted in March found 67 percent saying they plan to cut at least some spending allocated for business development. [Fox News, Special Report with Bret Baier, 6/20/11, accessed via Nexis]

June 23: Ten Ways To Save The Economy Segment Discusses Need To Simplify Tax Code. From Special Report with Bret Baier:

CHRIS WALLACE (guest host); Now, we continue our series on fixing the American economy with a look tonight at corporate taxes. Correspondent, Doug McKelway tells us many people believe just trying to figure out the rules may be the hardest part.

(BEGIN VIDEOTAPE)

DOUG MCKELWAY (Fox News Correspondent): Like a lot of Americans, Brett McMahon does not understand his taxes. He runs Miller & Long, a construction company that started out as two guys and a pick-up truck in 1947 with total assets of $2,600. Today, it's a multimillion construction company employing over 1,000 people. McMahon believes the current tax and regulatory environment makes it nearly impossible for young entrepreneurs to duplicate this company's success.

BRETT MCMAHON (Miller & Long Vice President): I'm not sure how you do it now. It used to be that we had a very simple set of instructions, that were clear, that everyone could understand.

MCKELWAY: To demonstrate the min-numbing complexity in taxes and regulation, McMahon holds a company bank loan from 1962. It's written on a single piece of paper. A similar loan from the 1990s shows an inch-thick binder. And today, it would go three binders. And the corporate tax code itself?

MCMAHON: It's a 38,000 pages and four loopholes. The constitution is four pages and covers everything.

(LAUGHTER)

MCMAHON: It's idiotic. You just can't run a railroad like that.

MCKELWAY: Adding to business uncertainty, the massive federal debt.

VERONIQUE DE RUGY (George Mason University): It's gigantic amount of debt that we have is likely to lead to massive increase in taxes in the future.

MCKELWAY: There are encouraging signs from both Pennsylvania Avenue. There is agreement to simplify the corporate tax code.

BARACK OBAMA (President of the United States): The whole concept of corporate tax reform is to simplify, eliminate loopholes, treat everybody fairly.

MCKELWAY: The economists agree loopholes are a huge source of revenue laws.

MARK ROBYN (The Tax Foundation): There are many that don't need to be there, and if we can get rid of those, we could cut a tax rate, raise the same amount of revenue, and be much better off.

MCKELWAY: But faced with the prospect of losing those loopholes which effectively lower on company's tax burden, many companies are certain to deploy armies of lawyers and lobbyists to Capitol Hill to preserve those cherished tax breaks.

That's why ongoing budget talks are a true test of Congress' will, the will to simplify the tax structure for the betterment of the economy even if it hurts some favored constituents and interests. [Fox News, Special Report with Bret Baier, 6/23/11, accessed via Nexis]

June 27: Save The Economy Segment Contemplates “Whether Government Investment On The Long-Term Spending Projects [May] Help” The Economy. From Fox News' Special Report with Bret Baier:

BRET BAIER (host): We continue are series on saving the economy tonight with a look at whether government investment on long-term spending projects might help. Correspondent, Doug McKelway, starts out looking at one of the most famous.

(BEGIN VIDEOTAPE)

JOHN F. KENNEDY (Former U.S. President): I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.

DOUG MCKELWAY (Fox News Correspondent): When President Kennedy's goal was reached eight years later, it was regarded as the greatest achievement of mankind but was this huge expenditure also an example of government spending growing the economy?

UNIDENTIFIED FEMALE: Go there. Did you see it?

MCKELWAY: Apollo led to benefit in everyday life. Among them, the remarkable miniaturization yet growing power of computers. Scientists say this miniaturization called Moore's Law is doubling every two years. Some economists say it may bring the next economic boom.

MARTIN BAILY (Brookings Institution): If you look back at that time, I don't think anyone predicted how strongly the affect of Moore's Law or the cheapness of computers and of telecommunications, what that was going to do. Since then, we've had a lot of things like search engine, lot of software stuff. These technologies are allowing us to do amazing things.

MCKELWAY: Today, government is now expanding broadband coverage as it did with electrical power in rural America 75 years ago or the interstate highway system decades later. But rapid change mean many jobs lost in the recession will never come back. Some now call calling for a public/private partnership to retrain workers.

BRAD JENSEN (Georgetown University): You know, how are we going to take the 40-year-old unemployed person who's been out of work for 12 or 18 months and give them skills that they need to take a job that does exist?

MCKELWAY: Some critics say that for every Apollo program, there is another long-term massive government program that could not produce such inspiring results.

VERONIQUE DE RUGY (George Mason University): We are already spending gigantic amount of money on roads. We are spending gigantic amount of money on education. I mean, the government, every single budget year, the government, whether he's a Republican or he is a Democrat tell us how they're investing in our future, and it doesn't seem to be paying off at all.

MCKELWAY: The economists are evenly divided over whether long-term government spending programs work, but most agree there are times when the private sector may have the inspiration but lacks money to carry out a new idea. And in that realm, let's say the government can play a key role in helping to grow the economy. [Fox News, Special Report with Bret Baier, 6/27/11, accessed via Nexis]