CNN's Romans: Trump's "Impossible" Plan To Eliminate National Debt Is Part Of A "Magical Mystery Tour Of Math"
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Republican presidential front-runner Donald Trump and his campaign have reportedly received advice from an increasing number of controversial Republican figures and political strategists, including former New York Mayor Rudy Giuliani, political strategist Roger Stone, and former Secretary of Education William J. Bennett. Various members of this "political kitchen cabinet" have launched sexist attacks against Hillary Clinton, claimed Obama does not love America, and denied the science of climate change.
Fox News host and senior vice president Neil Cavuto responded to President Obama's expansion of federally guaranteed overtime pay to 5 million additional American workers by fear-mongering that the regulatory change would lead the United States down a path toward financial ruin similar to Greece while hurting the workers it is meant to protect.
In a June 29 op-ed in The Huffington Post, President Obama announced his plan to update federal overtime regulations in 2016 by increasing the salary threshold at which qualifying employees are legally guaranteed overtime pay. Under current law, salaried employees earning less than $23,660 annually are legally required to be paid time-and-a-half when their position requires that they work in excess of 40 hours per week. Obama's proposal would more than double the income threshold to qualify for overtime -- covering qualifying employees earning up to $50,400 annually, or roughly 40 percent of the salaried workforce. Current overtime standards only extend to about 8 percent of salaried workers.
In response to the president's proposal, Cavuto expressed concern that paying more Americans for the hours they work could contribute to an economic disaster in the United States. On the June 30 edition of Fox's Your World, Cavuto proclaimed that the U.S. was becoming "Greece on steroids," a reference to the disastrous fiscal and financial circumstances that have unraveled the comparatively tiny European economy for more than six years. Cavuto was joined by discredited economist Art Laffer, who lamented the "huge burden on these companies" that will now be required to adequately pay their employees:
Despite Cavuto's dire predictions, economists expect that expanded overtime protections will be a boon for the American workforce.
According to the Economic Policy Institute, the majority of the workers who will directly benefit from the overtime change are women, and nearly 30 percent of affected workers are minorities. In an op-ed co-authored with philanthropist Nick Hanauer, economist Robert Reich blasted overtime opponents for warning of "unintended consequences" from stronger wages "without an ounce of empirical data to back it up." They also likened the policy to a "minimum wage hike for the middle class," and explained that it will either boost workers' pay or give them additional leisure time while adding new jobs. Economist Jared Bernstein of the Center on Budget and Policy Priorities argued in a blog published by The Washington Post that expanding overtime protections is "a critical labor standard with the potential to boost the paychecks of millions of middle-wage workers."
Fox has a long history of attacking overtime protections, recently complaining that the then-rumored proposal amounted to "left-wing economic engineering" and was "probably going to hurt a lot of other people."
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Fox wants to know whether the stimulus package signed by President Obama caused a recession.
In recognition of the five-year anniversary of the American Recovery and Reinvestment Act of 2009 -- commonly known as the stimulus -- Fox Business' Varney & Co. framed a segment around the question of whether it caused a recession.
Fox is just asking, and here is the answer in one simple chart. The most recent recession started in December 2007, over a year before the stimulus bill was signed into law. Since its passage in February 2009, the American economy experienced an immediate positive turn, culminating in more than four years of steady, gradual economic growth.
Fox's disregard for facts in its frantic push to disparage the president and his policies is nothing new, but the basic failure to understand that the economy has been recovering for the past five years marks a new low.
Frequent Fox guest and former Reagan economic advisor Art Laffer argued for the abolishment of the minimum wage for some workers, describing the law as the "black teenage unemployment act." He added that the federal requirement "makes no sense whatsoever."
Laffer, the so-called father of trickle-down economics, appeared on the January 8 edition of Fox News' Happening Now to discuss the possible extension of recently-expired unemployment benefits for the long-term unemployed. When host Jenna Lee asked Laffer and American Enterprise Institute's Michael Strain about other ways to improve the economy, Laffer recommended doing away with the minimum wage for some workers, saying that "honestly" the requirement is the "black teenage unemployment act." Strain agreed, and suggested lowering the minimum wage "for the long-term unemployed" to $4 an hour.
JENNA LEE: One of the things you both agree on is maybe looking at minimum wage, and Art, you have an idea for minimum wage that you think could encourage hiring and it involves state government so what is that plan?
LAFFER: Yeah, well the minimum wage makes no sense whatsoever to me. I mean, honestly, it's just the teenage -- black teenage unemployment act and this is the very groups that we need to have jobs not be put out of work because of the minimum wage so I'm really very much in favor of at least for teenagers getting rid of the minimum wage so we can bring them back into the labor force, get them the skills they need to continue being productive members of our society for years and years. I mean, that's the way I'd go on minimum wage.
STRAIN: I certainly agree with Art that we should lower the minimum wage for teenagers, I also think we should lower the minimum wage for the long-term unemployed. You know, right now, if you're a worker and you apply for a job and you've been unemployed for 7 months, the firm may say 'hey, you know, I wonder if there is something about this person maybe previous firms have seen something that I'm not seeing -- I'm not going to hire them.' And the reason that, well a reason that a firm might feel that way is because the government says that you have to take a $7.25 per hour risk on that worker. So if we lower that down to, say, $4 an hour, then the risk is much less to the firm, firms are going to be more likely to hire these workers. Now, I think if we do that, for workers that are heads of households and that are working full time, we don't want them living in poverty, so, if we're going to lower the minimum wage for those workers then we need to have some sort of a wage subsidy or an expansion of the earned income tax credit or something to make up the difference.
LEE: I'm going to need a calculator.
In the wake of the five year anniversary of the collapse of Lehman Brothers, Fox News is rewriting American economic history, claiming that government interventions to keep the economy from entering free-fall were unnecessary and damaging.
On the September 17 edition of Fox News' Your World, host Neil Cavuto and former Reagan economic advisor Art Laffer discussed their years-long disapproval of the government rescue packages instituted and implemented in late 2008 and 2009 to arrest the free-falling financial industry, save the auto industry, and stimulate the economy. During their exchange, Laffer claimed that government intervention was unnecessary and impeded recovery:
LAFFER: We were saying that the last thing you want to do is suppress a body's immune system when you're sick. It's just stupid, and the one time we should rely on the economy's immune system, called "free markets", is exactly when we're in the midst of a crisis.
LAFFER: You know, Neil, whenever people make decisions when they are either panicked or drunk the consequences are rarely attractive. And so it is with all of this stimulus, bailout, taking over auto companies. It would have been over in six months if they had done nothing.
The argument that the crisis would have corrected itself is devoid of any factual basis and ignores the opinions of experts.
On September 15, 2008, the day that Lehman Brothers filed bankruptcy, the Dow Jones industrial average suffered its largest single-day loss since the terror attacks of September 11, 2001. Over the next two weeks regulators and legislators cobbled together policies to save failing financial markets. On September 29, 2008, when the first draft of a $700 billion financial bailout failed to pass the House of Representatives, the Dow Jones suffered its worst ever single-day loss.
As the federal government was organizing its financial rescue, the Emergency Economic Stabilization Act of 2008, many economists voiced disapproval with the design of the bailout. Nobel laureates Joseph Stiglitz and Paul Krugman joined the chorus calling to reshape the bailouts to hold risk takers accountable and protect the public against losses. However, at no point did any significant group of experts or economists argue that the government should have done nothing. In an April 2012 Huffington Post article on the dwindling popularity of the bank bailouts, columnist Mark Gongloff noted that most experts recognized the necessity of a federal rescue in the wake of Lehman's collapse. From the article:
For what it's worth, most experts think the bailout prevented an even deeper crash and economic depression. Then-Treasury Secretary Hank Paulson tested the counterfactual by letting Lehman Brothers croak, and the result was a face-peeling market firestorm that nearly took down AIG -- the massive insurance company whose bailout is so unpopular now.
Indeed, Cavuto and Laffer's unwillingness to recognize the important role played by financial bailouts in stabilizing a subset of the economy is even at odds with opinions fit for print at FoxNews.com.
Cavuto and Laffer focused most of the segment on the financial bailout, but lumped the successful auto rescue and economic stimulus into their fabricated retelling of economic history. Contrary to the anti-government narrative forwarded by Fox News, the stimulus packages instituted by the Bush and Obama administrations were widely regarded as not going far enough. Meanwhile, the auto rescue remains so popular in hindsight that it may have effectively moved vital swing states toward President Obama in the 2012 Election.
Media Matters has documented a long track record of Fox News' attacks on stimulus programs, which are sometimes based on entirely fabricated evidence. The right-wing myth that economic stimulus failed is a common talking point used to disparage the fundamental role of government. The argument that stimulus was an unnecessary waste of taxpayer resources directly contradicts prevailing economic opinion.
Cavuto and Laffer's denial of the necessity of some forms of government intervention continues a right-wing media campaign against any role of government in the economy, even in cases when it is absolutely vital for stability, growth, or recovery.
Fox News baselessly suggested that other U.S. cities may follow Detroit's lead in filing for bankruptcy, citing an outlandish estimate of total state and local unfunded pension liabilities, even though other estimates put the figure at a much lower amount.
On July 18, the city of Detroit filed for Chapter 9 bankruptcy protection, officially becoming the largest city in the United States to do so. According to USA Today, "The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities."
On the July 23 edition of America's Newsroom, co-host Bill Hemmer interviewed frequent guest Art Laffer on Detroit's bankruptcy, noting "other cities that could be heading down the same path."
Hemmer and Laffer claimed throughout the segment that unfunded pension liabilities could force other municipalities to file for bankruptcy, with Hemmer going so far as to call pension programs a "Ponzi scheme."
During the segment, Fox aired a graphic that claimed in 2012, total state and local unfunded pension liabilities amounted to more than $4 trillion.
Conservative media are again using a European financial crisis to stoke fears about the U.S. economy.
According to many right-wing media figures, the Cypriot government's plan to tax private bank accounts to avert a fiscal disaster provides a dire warning for the U.S. Many have speculated or outright claimed that the same could happen here unless the so-called "debt crisis" is averted
Of course, fears of heavy taxation on private bank accounts occurring in the U.S. are largely unfounded, with many experts noting the comparison between the two countries is ill-conceived. But the facts rarely matter for right-wing media when it comes to exploiting a European crisis.
The Wall Street Journal has repeatedly supported the conservative call for states to cut income taxes in order to foster economic growth, ignoring a large body of evidence that shows cutting or eliminating income taxes is economically damaging.
In recent months, The Wall Street Journal has published opinion pieces in support of Republican governors' push to reduce or eliminate state income taxes.
A January 30 editorial claimed that eliminating state incomes taxes "makes sense," arguing that it would spur economic growth and bolster state revenues. Economist Art Laffer and Wall Street Journal editorial board member Stephen Moore reiterated that thinking in a March 28 opinion piece titled "The Red-State Path to Prosperity," which argues for - among other measures - "pro-growth tax reform" that hinges upon a reduced reliance on income taxes.
Both pieces ostensibly rely on research conducted by the corporate-funded, right-wing American Legislative Exchange Council (ALEC). Both Laffer and Moore have published research jointly with ALEC, and the January 30 editorial directly references Laffer's ALEC research. According to the Center on Budget and Policy Priorities (CBPP), ALEC's studies on state-based tax reform are heavily biased toward states with low taxes and often do not comport with broader research findings:
ALEC's studies and reports claim that its agenda would boost economic growth and create jobs, but they are disconnected from a wide body of peer-reviewed academic research on public finance.
In addition, the preponderance of mainstream research refutes core elements of ALEC's argument, showing that state tax cuts or lower state taxes generally do not boost the economy, state tax cuts do not pay for themselves in the form of higher economic growth that generates more revenues, progressive taxes and corporate taxes do not inherently damage the economy, and taxes generally do not cause people to flee a state. (emphasis added)
Indeed, a recent review conducted by CBPP reinforces the lack of validity in ALEC and WSJ's claims -- of the eight peer-reviewed studies on the effect of state-level personal income taxes on the economy since 2000, six have found insignificant effects, and one had internally inconsistent results. CBPP also found that in states that cut taxes the most in the 1990s, average annual job growth fell far below the national average in the following economic cycle.
In an effort to discredit President Obama's plan to increase taxes on the wealthy, conservative media outlets have pushed a number of myths to suggest that a large number of Americans will be negatively affected. In reality, only a small percentage of taxpayers would be affected by Obama's proposals.
Fox News figures have routinely invoked Ronald Reagan while discussing Republican presidential candidate Mitt Romney and his running mate, Congressman Paul Ryan. Most recently, Fox compared Ryan to the former president by splicing together their quotes and saying that Ryan and Reagan are physically and ideologically similar.
Fox News is trying to cover up the fact that Mitt Romney's tax plan would disproportionately benefit the rich and harm the middle class, as the nonpartisan Tax Policy Center has concluded. The Center found that Romney's plan would "provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers."
Fox's Neil Cavuto hosted serial misinformer Art Laffer to make dubious claims in support of lower tax rates. The segment was based on the premise that productive citizens leave high-tax states for low-tax ones. This premise was also pushed by a New York Post article, which used the Tax Foundation's state-to-state migration data, a tool which details how many people and how much income have moved to and from a specific state.
But attributing tax rates as the primary motivating factor behind the movement of labor and capital out of a state is highly questionable, as a large body of evidence contradicts this claim. A report by the Center on Budget and Policy Priorities (CBPP) points to non-tax factors that are primarily responsible for spurring migration between states, such as new jobs, cheaper housing, or a better climate:
Most people have strong ties to their current state, such as job, home, family, friends, and community. On average, just 1.7 percent of U.S. residents moved from one state to another per year between 2001 and 2010, and only about 30 percent of those born in the United States change their state of residence over the course of their entire lifetime. And when people do relocate, a large body of scholarly evidence shows that they do so primarily for new jobs, cheaper housing, or a better climate. A person's age, education, marital status, and a host of other factors also affect decisions about moving
CBPP cited Florida as an example of a state that, despite having no income tax, has recently shed population: