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.
A Media Matters study found that economists have been strangely absent from discussions on budget negotiations, following a typical pattern of the media's inability to host experts to discuss complex issues. This lack of expert analysis has steered the debate toward politics and away from core economic concerns.
In a recently published study of news segments discussing current budget negotiations, Media Matters found that the presence of economists was sorely lacking - out of 503 total guests in the 337 segments analyzed, only 22 were economists. The lack of appearances by economists is spread across all networks:
The results of this study are in line with previous Media Matters research. In media discussions of the debt-ceiling debate in the summer of 2011, only 4.1 percent of guests on news programs were identified as economists. The findings of the most recent study reinforce the notion that the media have a tendency to ignore expert opinion when discussing complex issues, such as the economy and climate change.
In recent weeks, media outlets have focused heavily on current budget negotiations regarding automatic tax hikes and spending cuts set to take effect on January 1, 2013 if an alternative agreement is not reached. But major television news outlets are inadequately reporting on year-end budget negotiations, rarely hosting economists and favoring inflammatory rhetoric about the so-called "fiscal cliff," according to a Media Matters analysis. Furthermore, most television segments have completely ignored the possible economic effects of potential tax increases and spending cuts.
In an attempt to discredit higher taxes on the wealthy, Fox's Stuart Varney claimed that high taxes lead to out-migration of residents. However, experts have found that while migration is due to an array of issues, taxes are not the primary cause.
On Fox & Friends, Fox Business' Stuart Varney claimed that states that have experienced high rates of out-migration "all have very high tax rates on top income earners." He went on to suggest that if President Obama's plan to raise taxes on the wealthy is enacted, the U.S. will experience a lack of revenue, a slowing economy, and high unemployment.
The segment is based on a Fiscal Times article that outlines five states (Ohio , New Jersey, California, New York, and Illinois) that have experienced decreases in residency, allegedly due to higher taxes.
Right-wing media figures have attacked President Obama's proposal to increase tax rates on the wealthy to Clinton-era levels by suggesting the federal government should return to Clinton-era spending levels as well. But experts agree that the federal government's current spending levels are largely dictated by the economic downturn and an aging population.
On Fox News' The Five, co-host Andrea Tantaros reacted to an op-ed by investor Warren Buffett by saying, "Don't you love all this conversation about going back to Clinton-era tax rates, but no one wants to talk about going back to Clinton-era spending, right? That would be a far cry as well." On his radio program, Rush Limbaugh echoed Tantaros, saying the best way to argue against calls to raise taxes on the wealthy is to reply "OK, Mr. Democrat friend, then let's go back to the Clinton-era spending levels, too. How about that? If we had prosperity at the Clinton-era tax rates, and the Clinton-era spending, then let's cut spending."
But calling for a return to Clinton era spending levels ignores an array of economic issues. The most glaring problem with the comparison is the fact that it does not take into account the gap in economic output caused by the recent recession. The chart below shows potential GDP compared to actual GDP:
Fox's Bill Hemmer attacked the notion that the federal government needs additional revenue, suggesting that current budget issues are solely due to spending. In reality, economists agree that federal revenue is necessary to reduce the deficit and is at a historic low as a share of the economy.
During an interview with Senator Bob Corker (R-TN) about his budget proposal that seeks to generate more revenue through capping deductions, America's Newsroom host Bill Hemmer asked Corker, "Why do you want to go after revenue at all?"
Hemmer downplayed the need for additional revenue, claiming that any new taxes collected will be spent. In doing so, he ignored the fact that additional revenue would greatly contribute to cutting future deficits. In an analysis of President Obama's 2013 budget proposal, the Center on Budget and Policy Priorities found that 46 percent of the $3.8 trillion in deficit reduction is attributable to increased revenue.
Hemmer also failed to acknowledge the current state of dwindling federal revenues. According to the Tax Policy Center, federal revenue as a percentage of GDP stood at 15.4 percent in 2011. While this figure is up from 2009 and 2010, federal revenue has not dipped to such a low percentage of the economy since 1950, and is well below the post-World War II average of 18.1 percent.
Of course, Hemmer's statements were in line with Fox's history of dismissing revenue needs when approaching deficits.