In light of news that the economy declined in the fourth quarter of 2012, media outlets have a responsibility to refocus their coverage of the economy, which has largely ignored the issue of economic growth and instead highlighted secondary concerns.
A January 30 report by the Bureau of Economic Analysis highlighted a grim reality - in the fourth quarter of 2012, the economy contracted by 0.1 percent. Media outlets have been rightfully promoting the figure, which is in stark contrast to their recent approach in covering the problem of stagnant economic growth.
A Media Matters report analyzing television news coverage of the debt ceiling found that the topic of economic growth was largely absent from discussions. In fact, of the 273 segments analyzed, only 33 even mentioned that growth should be a priority of any fiscal policy.
Economists, however, have strongly promoted growth as a means of reducing the deficit. Throughout the debt ceiling debate, many attempted to argue that economic expansion was far more important than worrying about short-term deficit reduction. Since the media ignored the topic of growth and rarely hosted economists as part of discussions, their voices went largely unheard.
In light of this economic contraction, economists are taking the opportunity to re-inject growth and jobs back into public debate. The Economic Policy Institute released the following statement:
The Bureau of Economic Analysis reported today that the U.S. economy contracted at a 0.1 percent annualized rate in the last quarter of 2012. While this quarter's contraction likely does not signal a return to recession (it was driven by decelerating inventory investments and a very large reduction in defense spending, which are not likely to be repeated in coming quarters), the economy had grown at an average rate of just 2.1 percent for the first three quarters of 2012, which is not fast enough to lead to rapid improvements in the nation's job situation. Today's data emphasizes the need to reorient the policy debate back to growth and jobs and away from rapid fiscal contraction.
Economists have long realized that growth is far more important than what the media has been focusing on, namely deficit and debt reduction. With this clear indication that economic growth is in fact a pressing concern, will the media shift its focus to acknowledge this reality?
Media outlets have focused heavily on the topics of deficits and debt, while largely ignoring economic growth during their coverage of the debt ceiling debate. However, experts agree that the need for growth is more pressing than problems of debt, and that growth itself can be a deficit reduction tactic.
A Media Matters study of television coverage over the past three weeks found that while pundits and guests focused heavily on discussing the debt ceiling, the topic of economic growth was sorely lacking. Of the total 273 segments analyzed, only 33 mentioned economic growth.
Instead of touching upon economic growth, Media Matters found that guests and hosts spent most of their discussions focusing on other issues, such as the role of entitlement spending and political leverage in negotiations between parties.
While the debt ceiling issue is certainly important - and failing to raise it would have a negative impact on the overall economy - many economists have eschewed the focus on debt, arguing instead that economic growth should be the primary concern.
Nobel Prize-winning economist Paul Krugman has long argued that the media and political focus on debt is misguided, and that recent increases in debt were necessary to prevent the economy from entering another recession. Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, further argues that the focus on deficits and debt distracts policymakers from the very real problem of sustained high unemployment and a weak economy.
In fact, Krugman echoed Bernstein's point on the January 28 edition of MSNBC's Morning Joe:
In recent weeks, media outlets have focused heavily on negotiations regarding raising the debt ceiling. But television news has failed to highlight the pressing need for stronger economic growth. Furthermore, discussions about the debt ceiling often ignore facts about deficits, instead pivoting the focus to entitlements as a driver of deficits.
Echoing their analysis from 2011, conservative media outlets have advised Republicans against raising the debt ceiling. The commitment to this narrative shows that the economic realities of the past debt ceiling debacle are being completely ignored by the right-wing media.
Following the passage of the American Taxpayer Relief Act, media figures have lamented that spending cuts were not included in the deal. However, experts believe that spending cuts made in 2011 should be included in assessing the latest deal, which shows budget cuts factor heavily into deficit reduction efforts.
In an effort to push for federal spending cuts, right-wing media figures have repeatedly claimed that the U.S. is on the path to becoming Greece, which is facing a severe debt crisis. However, the comparison between the two countries is wholly misleading, and sharp spending cuts in Greece have exacerbated the country's economic contraction.
Wall Street Journal editorial board member Stephen Moore claimed that enacting spending cuts is the only way to reduce government debt. However, economists argue that focusing on economic growth is a crucial part of reducing deficits.
In an appearance on Fox News' Happening Now, Moore, lamenting the fact that spending cuts were not a primary focus of the January 1 budget deal, claimed that "unless you cut spending...you can't bring that debt down."
While spending cuts could be implemented to address the deficit and debt, they are hardly the only option. Throughout the debate on budget negotiations, numerous economists felt that deficit reduction should be addressed through a balanced approach, with revenue increases offsetting the need for deep spending cuts.
Furthermore, some economists, such as the Center for Economic and Policy Research's Dean Baker, argue that focusing on deficit reduction is largely a distraction, especially considering that increased deficits over the past few years "are entirely the result of the economic downturn."
Given this fact, some economists have rightly claimed that economic growth should be a priority when attempting to address deficits. According to former Secretary of Labor Robert Reich:
The deficit is a problem only in proportion to the overall size of the economy. If the economy grows faster than its current 2 percent annualized rate, the deficit shrinks in proportion. Tax receipts grow, and the deficit becomes more manageable.
But if economic growth slows -- as it will, if taxes are raised on the middle class and if government spending is reduced when unemployment is still high -- the deficit becomes larger in proportion. That's the austerity trap Europe finds itself in. We don't want to go there. [The New York Times, 11/7/2012]
Indeed, many economists have argued that cutting spending in a weak economy could negatively impact growth. So while spending cuts may reduce deficits in the short term, they could add to debt in the long run through decreased revenues from lowered economic activity.
Conservative media figures have long insisted that top marginal income tax rates effectively target small businesses. This "zombie lie" has sprung up throughout President Obama's first term as an argument against Democratic proposals to renew the Bush-era rates only for middle- and low-income Americans. Despite continual efforts by experts to debunk this claim, media figures continue to repeat these lies in the 2012 edition of the fight over high-income tax rates.
In its recent economic coverage, Fox News consistently downplayed positive developments, while amplifying negative stories as part of an effort to discredit the Obama administration.
Faced with positive economic developments, such as falling jobless claims figures and encouraging unemployment reports, Fox News has consistently dismissed them as either unworthy of highlighting or downright illegitimate. Signs that show the economy is improving were either buried in teasers or used simply as a foil to bring up unrelated metrics, such as rising gas prices and the "real" unemployment rate.
Perhaps the greatest takeaway from Fox News' handling of positive economic news, however, is the now commonplace use of conspiracy theories to deny any signs of an improving economy. Leading up to the 2012 election, hosts and guests repeatedly touted the claim that drops in unemployment were suspicious, suggesting that the Obama administration somehow manipulated data to show numbers in its favor. The network even went so far as to preemptively offer a conspiracy theory prior to the release of the November unemployment rate, indicating that no positive news would be accepted, regardless of its legitimacy.
Negative news, however, was approached remarkably differently. Fox News treated any sign of economic malaise as an opportunity to discredit the efforts of the Obama administration, sometimes delighting in what it meant for his chances of reelection. Regardless of circumstances outside of Obama's control - such as Hurricane Sandy's effect on jobless claims and company scheduled layoffs - Fox News hosts and guests consistently took any negative economic news as an indication of the failure of the administration.
While the network has taken multiple approaches to covering economic news, one theme remains unchanged - Fox News has constructed an alternate reality where positive economic news is bad, and negative economic news is good, in an effort to discredit Obama.
Recent Media Matters research revealed the overwhelming absence of economists and economic debate in television coverage of year-end budget negotiations. The lack of expert opinion has led to an over reliance on easily digested phrases such as "fiscal cliff," which many economists feel is a misleading term.
A Media Matters study found that economists have been sorely lacking in media discussions of budget negotiations, accounting for only 4.4 percent of guests brought on to address the topic. Their scant presence has steered most discussions toward non-economic issues, such as political leverage in negotiations.
Of course, since budget issues are inherently economic, removing the economics from the discussion entirely is not possible. Instead of providing substantive context, the media seem to have taken the tack of relying on misleading buzzwords to do the explaining.
The so-called "fiscal cliff" describes a combination of automatic tax hikes and spending cuts set to take effect at the end of the year that, according to the Congressional Budget Office, could cause the U.S. economy to experience recession in 2013. The origins of the current use of the phrase "fiscal cliff" apparently stem from comments made by Federal Reserve Chairman Ben Bernanke in February 2012.
Since Bernanke's use of the phrase, it has become ubiquitous in media coverage of budget negotiations. Media Matters found that in 337 segments across cable and network news, the term "fiscal cliff" was used to frame discussions 287 times.