Fox Business' Charles Payne falsely claimed that the 16-day government shutdown helped increase economic growth, despite direct evidence to the contrary.
On January 30, the U.S. Department of Commerce's Bureau of Economic Analysis released its report on gross domestic product (GDP) for the fourth quarter of 2013. According to the report, the U.S. economy grew at an annual rate of 3.2 percent, down from 4.1 percent growth in the third quarter. Despite GDP growth falling, a number of economists agreed that the number was impressive.
Discussing the report on Fox News' America's Newsroom that day, Payne asserted that the 16-day government shutdown -- which occurred in the fourth quarter of 2013 -- helped spur economic growth:
PAYNE: Our economy has gotten so much traction since the government shutdown, which the mass media has said is an evil awful thing and it hurt us, well, during that period, more jobs were created, during that period, the stock market was up and we continue to see, as government gets out of the way, the private sector comes in.
Payne is completely incorrect.
While it's true that the GDP report showed a relatively strong increase, it is important to note how much better it would have been absent the government shutdown. According to MSNBC's Steve Benen:
The congressional Republicans' government shutdown, for example, shaved about 0.3% from the overall total. That's a difference, in other words, between 3.2% growth and 3.5% growth. It's still not clear exactly why GOP lawmakers did this, or what they hoped to accomplish, but there's evidence now that the gambit took a toll on the economy.
And despite Payne's claim that the shutdown helped job growth, Jason Furman, head of the Council of Economic Advisers, previously claimed that it reduced private sector employment by 120,000 jobs in October, 2013.
Furthermore, while Payne claimed that less government spending helped grow the economy, evidence suggests otherwise. Absent government spending cuts, economists estimate GDP in the fourth quarter would have risen an additional 0.9 percentage points.
Image via DJHEAVYD using a Creative Commons License.
Fox News hyped Wisconsin Governor Scott Walker's economic record, claiming that the governor's economic plan generated a nearly $1 billion budget surplus while ignoring that the current surplus is built upon a projected structural deficit and that the state ranks 28th in the nation for job creation under Walker's tenure.
From the January 27 edition of Fox News' Fox & Friends:
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Fox News is misleadingly touting the results of a recent poll to falsely claim that a majority of Americans don't care about inequality and believe that government should do nothing to reduce it.
On the January 23 edition of Fox & Friends, hosts Brian Kilmeade, Steve Doocy, and Elisabeth Hasselbeck discussed the recent policy pivot by Republicans and Democrats toward addressing income inequality. During the segment, the results of Fox News poll in which respondents were asked to prioritize pressing economic issues were displayed on screen:
Doocy used the results of the poll to claim that Americans are unconcerned about rising income inequality:
DOOCY: This is what you're concerned about. Forty percent of you are worried most about jobs and unemployment. About the same number worried about the deficit and how much the government spends. Meanwhile, you wind up with "income inequality" at only 12 percent.
Later that day on America's Newsroom, co-host Martha MacCallum and Fox News contributor Monica Crowley returned to the poll, claiming that the results also showed most Americans do not want the government to take action to reduce income inequality. During the segment, the following graphic ran on the screen:
Fox, and the poll they cite, are creating a false choice between reducing income inequality, creating jobs, and addressing the deficit.
Numerous economists, including Jared Bernstein, former Labor Secretary Robert Reich, and Nobel Laureate Paul Krugman have argued that rising inequality is bad for the economy and creates a drag on economic growth. Furthermore, in their recent book, "Getting Back to Full Employment," Bernstein and economist Dean Baker outlined proposals that could create jobs while lifting wages and reducing reliance on government safety net programs, thereby positively impacting job creation while reducing some pressure from the federal budget. In the view of many prominent economists, Americans do not have to choose between jobs, deficit reduction, or reducing economic inequality; sensible policies can be implemented to address each issue.
Additionally, while MacCallum suggested that few Americans want government action to reduce inequality, the actual poll shows that participants were never asked about inequality. Instead of being asked "How do you feel about income inequality" as Fox showed on air, the actual question in the poll was "How do you feel about the fact that some people make a lot more money than others?"
Differences in individual earnings, which the poll asked about, and structural inequality -- the idea that a small share of earners at the top capture nearly all income gains -- are not the same thing.
When Americans are asked directly about whether or not government should do anything to mitigate income inequality, the results are quite different from what Fox claims. According to a January 23 poll conducted by the Pew Research Center and USA Today, 69 percent of Americans believe that government should do "a lot" or "some" to reduce inequality.
Furthermore, a majority of respondents -- 54 percent -- support raising taxes on the wealthy and expanding programs for the poor in order to help close the income gap.
Media Matters research shows that Fox, along with other right-wing media outlets, consistently misrepresents the issue of economic inequality. These skewed poll results are just the latest in a long line of examples.
Fox News' Neil Cavuto continued to ignore the desperate need for infrastructure investment in the United States, repeatedly arguing instead that the government is stealing or misappropriating existing resources.
On the January 13 edition of Fox News' Your World, host Cavuto invited former Secretary of Transportation Ray LaHood to discuss proposals to raise the federal gas tax to fund construction, repair, and renovation of America's crumbling transportation infrastructure. Rather than acknowledging the need to raise revenue to fund necessary projects, Cavuto made the unsubstantiated claim that federal, state, and local funds for infrastructure investment are being stolen or abused:
The paranoid and unsupported claims made by Cavuto during the segment echo his comments from a contentious December 3 interview with Representative Earl Blumenauer (D-OR). On both occasions, Cavuto claimed without evidence that "someone" in the government had "stolen," "abscond[ed]," or "[run] off with" billions of dollars earmarked for vital improvements to roads, bridges, dams, and other infrastructure systems.
Once again, the only proof that Cavuto provided to support his claims is the fact that American infrastructure is in a state of disrepair. As Media Matters has shown in the past, the dilapidated condition of America's infrastructure is entirely the result of insufficient funding, not the alleged fraud, theft, or misappropriation suggested by the Fox host.
According to the American Society of Civil Engineers (ASCE), the public infrastructure of the United States earned a D+ grade in 2013 and is in need of $3.6 trillion worth of investments and upgrades by 2020. The ASCE estimates the cost of modernizing only America's bridges to be $121 billion, roughly equivalent to all of the revenue streams cited by Cavuto as excessive and wasteful during his tirade against the gas tax.
The reason that former Secretary LaHood, Representative Blumenauer, and others advocate raising the gas tax is precisely because the amount currently raised and spent by the federal government on infrastructure investments is too small. The federal tax, which has not be raised in 20 years, is one of many proposals to close this funding gap.
Instead of engaging in a substantive and important policy discussion, Fox News would rather promote its own narrative that all federal spending is riddled with fraud and abuse.
Weekday broadcast and cable evening news continue to place undue focus on government spending cuts and deficit reduction, pushing a narrative that is out of touch with economic reality.
Media Matters research revealed that throughout the fourth quarter of 2013, weekday broadcast and cable nightly news programs were more likely to advocate for deficit reduction than economic growth and job creation. Out of a total 890 segments on the economy, 250 saw the host or guest mention deficit reduction as an economic priority, while only 204 segments mentioned the need for economic growth and job creation.
Of course, Fox News led the charge in calling for deficit reduction, echoing trends seen in previous quarters.
Media's focus on deficit reduction was a constant theme throughout 2013, a theme increasingly out of touch with economic realities.
While broadcast and cable evening news programs were clamoring about the need for deficit reduction, in fiscal year 2013, the Treasury posted the smallest budget deficit since 2008. The same news programs that advocated for deficit reduction, however, were unlikely to mention this fact -- only 15 total segments over the fourth quarter noted that deficits are in decline.
Meanwhile, economic growth and job creation, while taking a backseat in media coverage, still remain a persistent problem in the U.S. economy. Many economists have repeatedly argued that sluggish economic growth and weak job creation are directly tied to an undue policy focus on deficit reduction. But with the recent government shutdown and budget negotiations taking place, weekday broadcast and cable evening news coverage consistently turned the debate back to deficit and debt reduction and away from more pressing issues like unemployment.
Maybe this is why only six percent of Americans know the deficit is shrinking.
Weekday broadcast and cable evening news covered a variety of economic topics including deficit reduction, economic growth, and effects of the Affordable Care Act (ACA) throughout the fourth quarter of 2013. A Media Matters analysis shows that many of these segments lacked proper context or input from economists, with Fox News continuing to advance the erroneous notion that the ACA is the purported cause behind poor job growth.
Right-wing media voices have coalesced around the myth that unemployment benefits to the long-term unemployed do not need to be extended because the economy is improving and benefits have existed for too long. These arguments, however, ignore key realities about long-term unemployment, namely that it remains elevated despite an improving economy.
The past 12 months witnessed innumerable attacks on social safety net programs in the United States. These attacks on American social insurance programs were hardly limited to Social Security -- all forms of social insurance, including unemployment benefits, food stamps, and disability, came under fire from mainstream and conservative media alike, regardless of the programs' social or economic benefits. Media Matters compiled a list of the six types of attacks on the social safety net in 2013.
For more than three years, an influential study by two Harvard economists -- Carmen Reinhart and Kenneth Rogoff -- provided a plausible foundation for attacks on spending of all types. The study fostered debt-paranoia among pundits otherwise interested in austere fiscal policies.
An April study by economists at the University of Massachusetts, however, concluded that the Reinhart-Rogoff data was error-filled in a way that selectively biased the results. A further review of the corrected data by economists at the University of Michigan found that the study should have been deemed inconclusive.
Despite losing its intellectual foundation in April, the deficit reduction talking point maintained a prominent position in fiscal policy discussion throughout the year.
Media calls for deficit reduction in the past year also regularly relied on budget reporting that lacked adequate context that federal budget deficits have declined precipitously from their 2009 peak. A Media Matters review of budget reporting done by The New York Times, The Wall Street Journal, and The Washington Post revealed that a sizeable majority of articles provided budget items and program spending figures out of context. Further analysis concluded this misrepresentative reporting to be little more than a scare tactic, which bolstered calls for deeper cuts to the safety net for the sake of alleged fiscal responsibility.
This lack of context in media, and the effect it had in shifting the policy debate, eventually encouraged Times public editor Margaret Sullivan to issue a statement promising to correct problematic reporting standards going forward, but other outlets have yet to follow suit.
The latest development in the never-ending soap opera of congressional budget negotiations is that Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) are close to reaching a limited deal to partially replace spending cuts imposed earlier this year (the much-maligned sequestration). The details of the deal are not known, but that hasn't stopped conservative activist groups and pundits from denouncing Ryan -- a long-time conservative hero for his austere budget proposals -- as a sellout.
The Washington Post laid out what little is known about the emerging deal:
Senior aides familiar with the talks say the emerging agreement aims to partially repeal the sequester and raise agency spending to roughly $1.015 trillion in fiscal 2014 and 2015. That would bring agency budgets up to the target already in place for fiscal 2016. To cover the cost, Ryan and Murray are haggling over roughly $65 billion in alternative policies, including cuts to federal worker pensions and higher security fees for the nation's airline passengers.
Salon's Brian Beutler notes that if the deal ends up looking like this rough outline, then there's no real reason for conservatives to be all that upset: "If inked, it wouldn't raise revenue through the tax code, and would protect the Defense Department from sequestration's most severe cuts. At the same time, some of the savings in the deal would likely come out of the hide of federal workers."
And yet, the outcry from activists was swift. Groups like Heritage Action, Americans for Prosperity, and FreedomWorks are urging conservative members of Congress to vote against the budget deal, even though they don't know what the deal actually looks like.
Appearing on Fox News on December 10, Stuart Varney trashed the deal, calling it "a handshake deal. It does absolutely nothing to resolve the basic problems which we're facing. It does not tackle entitlement reform, it does not tackle tax reform, and it does nothing to drastically reduce the debt."
Fox News dismissed the economic benefits of long-term unemployment insurance, erroneously characterizing the program as a "crutch" holding back economic growth.
On December 6, the Bureau of Labor Statistics released its unemployment report for the month of November. The national unemployment rate edged down from 7.3 to 7 percent, while the economy added a total of 203,000 jobs month-to-month, beating economists' expectations.
On the December 6 edition of Fox News' Your World, host Neil Cavuto and Fox Business contributor Charles Payne used the better than expected report to cast doubt on Rep. Nancy Pelosi's (D-CA) recent call to extend long-term unemployment benefits set to expire at the end of the year. Cavuto claimed that Pelosi was misguided for "talking up the need for extending jobless benefits and all of that in the face of more jobs" before Payne launched an all-out attack on social safety net programs:
PAYNE: Yeah, you know, it's really interesting as people, as we get more and more people coming off these jobless benefits, what are they doing? They're going back into the job market. What's happening? More jobs are being created. It's the exact opposite of what they're preaching in Washington which is the defeatist attitude. They don't believe in the American economic system. You know, it doesn't need all these crutches, it doesn't need all these aids. Let people come back into the job market, that's a sign of confidence; confidence is what this is all about. That's what will spark a real recovery. Unlimited unemployment benefits, 50 million people on food stamps, that's nutty stuff, you can do the math, you can talk about multiplier effects all you want, that's not what America was built on. This stock market wants people to get off these unemployment benefits after three years and look for a job, because they will eventually find a job and that's better for all of us.
Cavuto and Payne's claim that the strong jobs report indicates that unemployment insurance doesn't have to be extended -- in addition to claiming that allowing the program to expire would help the economy -- is at odds with reality.
Despite recent months of relatively strong job growth, the long-term unemployed -- the same people who are facing benefit cuts when the Emergency Unemployment Compensation (EUC) program expires later this month -- have seen little gain. According to economist Chad Stone of the Center on Budget and Policy Priorities, long-term unemployment currently "equals the highest rate achieved in any previous recession since the end of World War II." Stone also noted that when previous emergency unemployment insurance programs expired, the long-term unemployment rate was at far lower levels.
Fox News' Neil Cavuto refused to hear arguments in favor of expanded infrastructure investments, instead claiming that revenue for necessary improvements will be lost to fraud or waste. Cavuto has repeatedly argued against and downplayed the necessity of infrastructure spending, revealing his misunderstanding of the the federal budgeting process and the current state of American infrastructure.
On the December 3 edition of Fox News' Your World with Neil Cavuto, Cavuto engaged in a contentious interview with Rep. Earl Blumenauer (D-OR) regarding the congressman's proposal to increase the federal gas tax as a means of financing necessary investments in roads, bridges, and other forms of public infrastructure around the country.
On the December 4 edition of Your World, Cavuto returned to the previous night's argument in his opening segment. He was joined in his heated criticism of infrastructure investments by libertarian pundit Matt Welch, editor-in-chief of Reason magazine. Both Cavuto and Welch continually claimed that they do not know where all of the infrastructure and transportation revenue has gone; maintaining only that it must not be going to the places where it is needed:
CAVUTO: To make the point here, that we're not following the moneys we're already spending that, I think, are not exactly in a 'lock box' just meant for this sort of thing.
WELCH: Yeah, I mean if you look at people who advocate for big government, they actually don't spend a lot of time extolling the virtues of big government, because that is an awkward conversation and because it requires them to do what you were asking earlier, is just document what you've already spent.
WELCH: Spending money on the federal level is an inefficient way to deal with local, and state, and city roads.
CAVUTO: If you were to add it all up. Let's say now -- being devil's advocate here -- let's take the stimulus money, the shovel-ready projects a lot of them were infrastructure-targeted, at around $800 billion and average it out over the last five years and throw in the $60 billion or so you're supposed to get from the oil companies, a lot of taxes, and they were going to tap that for infrastructure. You're looking at $250-300 billion a year that would be presumably allocated to just this sort of thing. We're asking for more?
Cavuto's central argument is that the federal government must not be spending money on infrastructure if our infrastructure is in a state of disrepair. Cavuto repeated a popular Fox News thesis, claiming that the government is wasting, misallocating or stealing tax dollars instead of putting them to good use.
In fact, the government's infrastructure budget is simply woefully underfunded.
In 2013, broadcast evening news programs have largely ignored the need for the economy to return to full employment, instead placing overwhelming focus on debt and deficit reduction.
Right-wing media have repeatedly blocked efforts to help the economy return to full employment in recent years, instead placing undue focus on policies that would hinder economic growth and job creation.
In a December 2 post on The New York Times' Economix blog, Center on Budget and Policies Priorities Senior Fellow Jared Bernstein outlined a number of policies that would help the economy return to full employment, roughly defined as when all who are able and want to work are employed. Bernstein's policy prescriptions derive from his recently released book, Getting Back to Full Employment, coauthored with economist Dean Baker.
Bernstein's myriad recommendations, as he notes, have been repeatedly stymied by the current "political environment." Many of the policies he recommends -- particularly those related to fiscal policy -- have been given extra derailment by the right-wing media, who vehemently oppose efforts that would return the U.S. economy to full employment.
The primary reason Bernstein cites to explain why the economy has been operating below full employment is the implementation of austerity measures that have drastically reduced the deficit in the past few years. According to Bernstein, the policy of cutting deficits in a time of high unemployment has held back the economy from reaching its full potential.
Of course, in the past few years, right-wing media have championed every effort to reduce deficits and derided any policies that would potentially increase them, even if the result was faster economic and jobs growth.
For example, in the third quarter of 2013, Fox News placed overwhelming focus on deficit reduction, mentioning its supposed need as the country's top economic priority instead of economic growth. Indeed, calling for deficit reduction has become a theme at the network, even while other news outlets place more emphasis on the need for economic growth.
Right-wing media's focus on deficits as economic priorities has not only impeded efforts to increase employment through increased government spending -- an idea endorsed by economists -- but has also crowded out any discussion of pro-growth economic policy.
Bernstein states that one of the best paths to full employment is directly targeting unemployed people through things like subsidized jobs programs. According to Bernstein, government should be involved in directly creating jobs as "employer of last resort," adding that "just as the Fed's powers must be invoked when credit markets fail, so must the government's when labor markets fail to create the quantity of jobs necessary to employ American labor resources (or 'people,' if you prefer)."
In the past few years, right-wing media have not only railed against enacting policies that would create jobs indirectly -- such as canceling sequestration -- but also against direct employment efforts.
In 2011 when President Obama introduced the American Jobs Act, a bill that would directly increase employment through investment and jobs training programs for the unemployed, right-wing media were quick to run attacks against the legislation. Fox News erroneously characterized the bill as "another failed stimulus plan" and falsely claimed that economists considered it "nonsense." And even though the 2009 American Recovery and Reinvestment Act - commonly known as the stimulus -- unequivocally created up to millions of jobs, Fox still continues to characterize the bill as a failure.
Bernstein notes that one of the greatest direct employment efforts of the past few years was utilizing the Temporary Assistance for Needy Families (TANF) Emergency Fund to places hundreds of thousands of low-income individuals in temporary jobs. Of course, TANF -- commonly referred to as welfare -- has become right-wing media's favorite boogeyman, with false claims about its effectiveness and necessity trumpeted regularly on Fox News.
Bernstein's final recommendation focuses on the need for greater infrastructure investment, noting that it would increase long-term economic output and productivity. He also notes that given current low borrowing rates, increased investment through deficit spending would produce minimal negative side effects.
Right-wing media have long opposed infrastructure investment and have ramped up efforts to block additional investment in recent months. Conservative media figures repeatedly dismiss calls for additional investment, erroneously claiming that current investment levels are adequate despite the fact that spending on infrastructure is at historic lows. In a more direct and egregious attack on infrastructure spending, The Wall Street Journal editorial board recently claimed that it could not spur economic growth despite mounting evidence to the contrary.
While Bernstein includes additional recommendations on how to achieve full employment that get little play in national media debates, it is clear that right-wing media have played a role in ensuring that the economy does not achieve this goal anytime soon.
After weeks of highlighting negative aspects of the Affordable Care Act (ACA), media outlets have largely underreported the law's success in helping slow the growth of health care costs.