Media ignored economists in their reports leading up to the initiation of the economically damaging across-the-board spending cuts commonly known as sequestration.
If Congress fails to act by midnight, across-the-board spending cuts of up to $85 billion in 2013 alone will take effect. While sequestration is inherently an economic issue, media are ignoring the last chance to have economists weigh in on the consequences.
Media Matters reviewed news coverage leading up to the sequestration deadline, specifically the February 28 evening news broadcasts; March 1 reports from The Washington Post, Wall Street Journal, and New York Times; and the March 1 morning news programs on the major cable and broadcast networks. We found that economists have been almost completely shut out. Of 122 total guests and quoted figures appearing in a total of 43 articles or television segments, one lone economist was mentioned, Wells Fargo senior economist Mark Vitner in a report from the Journal.
Right-wing media outlets have advanced a number of myths regarding automatic across-the-board spending cuts -- commonly called the sequester -- in order to hide the facts behind an inherently harmful economic policy.
On MSNBC's Morning Joe, host Joe Scarborough continued to harp on Medicare and deficit spending as a pressing economic problem and twice claimed that "liberals are denying math" to avoid tackling the issue. However, economists widely disagree with that assessment, suggesting that it is Scarborough, not liberals, who has a weak understanding of math.
On the February 12 edition of Morning Joe, Scarborough, who has previously hit Paul Krugman on his view of long-term debt and attempted to discredit the Nobel Prize winning economist for defending Medicare, claimed that "liberals should want to reform middle class entitlements" so as to not "steal from welfare programs...for the poorest Americans."
Scarborough's attempt to paint Medicare as one of America's most pressing issues completely misses the point behind its current problems. Former Labor Secretary Robert Reich points out that Medicare, rather than being the "problem," is actually to solution to the real issue -- rising health care costs. Dean Baker, co-director of the Center for Economic and Policy Research, even goes as far as to say that Medicare is "by far the most efficient part of the national healthcare system."
Indeed, evidence suggests that Medicare provides a more economically viable delivery system for healthcare. According to both the Center on Budget and Policy Priorities and the Economic Policy Institute, Medicare is better than the private sector at controlling costs, and projections of future cost growth in public health care programs are lower than those for private sector.
Furthermore, many economists, including Reich and Nobel Prize winner Paul Krugman, note that Medicare can use its bargaining leverage to negotiate prices of medical procedures and prescription drugs. In fact, according to economist Jared Bernstein, provisions in the Affordable Care Act -- many of which have not yet been implemented -- will help control costs of healthcare, brightening the prospects for sustainable Medicare.
In addition to being wrong on Medicare, Scarborough claimed that those who disagree with him on today's deficits amount to just a few "bloggers eating Cheetos," implying that the majority opinion is on his side and that "the American people know" he's right about spending.
Scarborough displayed the same willful ignorance of economic discourse in his January Politico op-ed, "Paul Krugman vs. the world." Economists like Mark Thoma, Brad DeLong, Jared Bernstein, Dean Baker, Henry Aaron, Alan Blinder and Larry Summers agree that deficits are not worthy of concern, so long as economic output lags behind its potential, as do former Reagan adviser Bruce Bartlett and John Makin of the conservative American Enterprise Institute. Business Insider's Joe Weisenthal lists a few others.
The simplest math is this: at least 15 experts, including 13 economists, a congressman, and a Reagan budget adviser, reject Scarborough's argument.
The Congressional Budget Office's new baseline projections back Krugman as well: The CBO found that the sharp rise in debt-to-GDP that Scarborough laments has stopped, and that the ratio of public debt to economic output will hold at or near its current level for the next decade. Further, the report notes a trillion-dollar gap between actual and potential economic output. The CBO doesn't explicitly state policy recommendations, but Rex Nutting of the Wall Street Journal's MarketWatch noted that the report amounts to a call for four more years of high deficits.
This wealth of professional economists and empirical facts may explain an apparent shift in Scarborough's argument from the February 12 segment, in which he said even Krugman's supporters "agree with me that deficits aren't the problem, the long-term debt is the problem." If Scarborough believes that deficits aren't a problem, then what does he think he and the entire mainstream of the economics profession are arguing about? Throughout the recent weeks' debate, Scarborough has attacked deficits, and conflated them with the long-term debt. He blamed "a Keynesian spending spree" for slowed economic growth in late 2012, and bragged in Politico of his sterling deficit-hawk track record dating back to 1994.
It is true that the economists making the textbook argument for running deficits today also note that deficits will need to be controlled in the medium-near future. Jared Bernstein refers to this conceptual balance as being a CDSH: a cyclical dove and a structural hawk. Is Scarborough now looking to join that club, by declaring support for near-term deficits coupled with restraint in the middle distance? If so, Krugman, and his fellow "math-challenged" supporters, would be justified in declaring victory.
A Wall Street Journal editorial downplayed the economic consequences of looming across-the-board government spending cuts and even claimed they will "help the economy." But the Journal's own MarketWatch agrees that the cuts, commonly referred to as the "sequester," would greatly harm the economy: it could halve U.S. economic growth and lead to one million lost jobs.
The Journal editorial, headlined, "The Unscary Sequester," claimed that "[t]he most disingenuous White House claim" about the sequester is that it "will hurt the economy." The editorial continued, "Reality check: The cuts amount to about 0.5% of GDP," and went on to claim that the sequester will actually help the economy "by leaving more capital for private investment."
Yet the Journal's own MarketWatch noted on Tuesday that the Congressional Budget Office has estimated that the sequester "will halve U.S. growth in 2013." MarketWatch explained:
U.S. economic growth in 2013 will be 1.4%, the Congressional Budget Office estimated on Tuesday, up from a previously estimated decline of 0.5% pinned on the so-called fiscal cliff. CBO said however that growth would be about 1.5 percentage points faster in 2013 if not for fiscal tightening including the so-called budget sequester.
The Bipartisan Policy Center has also estimated that the full sequester would cause approximately one million job losses.
The editorial also supposes that the sequester would help economic growth, which ignores the fact that the 2012 fourth-quarter decline in GDP was largely due to a steep drop in government spending. While the report on the GDP decline showed that private sector investment had increased, it was not enough to lift GDP growth into positive territory because of the large drag on the economy imposed by lowered government spending. This discredits the Journal's claim that if government spending were decreased through the sequester, private capital would be able to sustain positive economic growth.
Indeed, while the Journal editorial dismisses the effects of the potential cuts by claiming that affected programs "are hardly starved for money," the threat of the sequester alone has already contributed to economic slowdown and negatively impacted government agencies. Experts have noted that the decline in government spending -- particularly in defense -- that contributed to the recent economic contraction was likely due to uncertainty caused by the sequester.
Multiple Fox News personalities have suggested the Justice Department's lawsuit against Standard & Poor's is 'political retribution,' either papering over or outright ignoring the facts behind the suit. However, the S&P investigation began well before U.S. credit was downgraded, and a raft of internal emails suggest the company may have knowingly inflated securities ratings.
The February unemployment report included revisions to baseline data, showing that more jobs were added in the final months of 2012 than initially estimated. This news follows consistent right-wing speculation on the validity of pre-election jobs data.
The Bureau for Labor statistics released its unemployment situation summary for the month of January, showing that unemployment has remained "essentially unchanged" at 7.9 percent, adding 157,000 jobs.
More interesting in the report, however, were the revisions to previously estimated jobs data. The number of jobs was revised upward for every month in 2012 except August and July. Overall, the revisions showed a net increase in the number of jobs when compared to initial estimates.
Furthermore, over-the-month changes in total employment were revised upwards in the months leading up to the election. Over-the-month changes for September, October, and November were revised upward by 6,000, 23,000, and 86,000 jobs, respectively.
The positive benchmark revisions come after months of right-wing speculation that -- somehow -- Democrats were "cooking the books" to produce positive reports, ostensibly to help President Obama win the election. Right-wing media figures repeatedly claimed that the October jobs report was phony, claiming that the number of jobs added would certainly be revised downward after the election.
Today's data shows that right-wing media was right - the jobs numbers were revised, just not in the way they predicted.
MSNBC host Joe Scarborough blamed "a Keynesian spending spree" for the contraction in GDP at the end of 2012, while holding evidence that the opposite is true in his hands. Scarborough's claims fit into his ongoing effort to deny and marginalize demand-side economic policies which continue to enjoy broad support from trained economists.
During a discussion of the 2012 fourth quarter GDP report on MSNBC's Morning Joe, Scarborough implied that the 0.1 percent drop in output was due to government spending since the recession. From Morning Joe:
Scarborough's claim is contradicted by the Wall Street Journal article he held up during the segment, which states that "government spending, which has been a drag on growth for more than two years, declined for the ninth time in 10 quarters." The article's subhead - "GDP Shrinks 0.1% on Government Cuts, but Consumer, Business Spending Offer Hope" - also splashed across the screen moments before Scarborough made his argument.
The Wall Street Journal's reporting is in line with the latest Bureau of Economic Analysis report. The BEA calculates the component parts of the GDP figure for each quarter. This most recent report is notable not because the government spending component of GDP continues to be negative due to shrinking direct spending into the economy, but because, for the first time in the recovery, the government component of GDP was so negative that it overwhelmed the positivity in other components.
Washington Post policy blogger Ezra Klein lays out this chart:
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.