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.
Media figures have repeatedly forwarded the notion that the United States is currently facing a debt crisis. However, leaders of both parties agree there is no immediate crisis, and by focusing attention too heavily on deficit and debt reduction, the media distract from the more imminent problem of growth and jobs.
Throughout news coverage of recent budget negotiations, media figures have consistently framed discussions around the notion that the country faces a debt crisis, an assertion that is often presented uncritically and accepted as an indisputable fact. Since discussions are predicated on the assumption that a debt crisis exists, ensuing analysis of budget proposals is often solely focused on how far they go in reducing short term deficits and debt.
While media are convinced that a debt crisis exists, leaders of both parties have made explicit statements to the contrary. In a March 12 interview with ABC's George Stephanopoulos, President Obama claimed that "we don't have an immediate crisis in terms of debt," a statement that was immediately criticized by conservative media. When asked if he agreed with Obama's statement regarding debt on the March 17 edition of ABC's This Week, House Speaker John Boehner (R-OH) conceded that there is no immediate crisis. Rep. Paul Ryan (R-WI) made a similar admission on CBS' Face the Nation, saying "we do not have a debt crisis right now."
Furthermore, the media's focus on a "debt crisis" has necessarily steered the debate about budgets toward how the parties will sufficiently address short term deficits. Economists, meanwhile, have repeatedly argued that undue focus on deficits and debt distracts from the more pressing need for economic growth and reduced unemployment.
The bipartisan admission that there is no immediate debt crisis provides media with an opportunity to reframe their budget negotiations coverage around economic growth.
Video by Alan Pyke.
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.
Conservative media voices have insisted that an increase of the federal minimum hourly wage from $7.25 to $9 would harm the economy. However, a wealth of economic evidence disputes the claims that minimum wage hikes are job killers, that the minimum wage is already high, and that it only applies to jobs held by relatively young workers.
Right-wing media figures have responded to immigration reform by invoking the oft-repeated conservative argument that legalizing immigrants will enlarge the "welfare state." In fact, the announced immigration reform proposal would prevent newly legalized immigrants from receiving federal benefits for an extended period of time; moreover, immigrants in general are less likely to receive welfare benefits.
Media coverage of the debt ceiling frequently claims that raising the limit without simultaneous spending cuts would give President Obama a "blank check," repeating a pattern of promoting this false narrative -- or failing to correct it -- that occurred during the unprecedented brinkmanship of 2011. The phrase implies that the debt ceiling governs additional spending desired by the White House, when in fact it is a restriction on the executive branch's ability to borrow money to pay for spending measures already enacted by Congress.
Fox News promoted a proposal by Louisiana Gov. Bobby Jindal to eliminate the state income tax and increase sales tax by a corresponding amount, saying that with such a plan, "everybody wins." In fact, the plan would seriously harm middle and lower income tax voters while providing little or no benefit to the economy.
Fox News host Neil Cavuto and Fox guest Stephen Moore agreed that President Obama is wrong to suggest that federal spending growth is driven by health care costs, when in fact Obama is right. Health care spending is the only category of federal spending projected to grow substantially over the next two decades, and government health insurance is actually more efficient than private sector insurance. And the president's Patient Protection and Affordable Care Act contains provisions that aims to contain and reduce national health care costs.
CNN guest and Wall Street Journal editorial board member Stephen Moore misrepresented House Minority Leader Nancy Pelosi's comments on taxes, falsely claiming that she said "we've got to tax the middle class." In fact, Pelosi said that while tax increases for upper-income Americans are "not off the table," she does not want to bring in more revenue "at the expense of the middle class."
CNN's Erin Burnett Outfront played a clip of Pelosi appearing Sunday on CBS' Face the Nation and saying that tax increases for upper-income earners are "not off the table" in future spending negotiations. Moore then claimed that "we've only had this tax increase on the rich for what, 72 hours, and already people like Nancy Pelosi are saying, well, we've got to tax the middle class."
However, the full context of Pelosi's remarks reveal that Pelosi, during her appearance on Face the Nation, clearly stated that she is not interested in raising taxes on the middle class:
BOB SCHIEFFER (host): People who are listening to you this morning are going to say she's talking about more taxes, she's talking about bringing in more, in one way or another, by increasing taxes.
PELOSI: One thing I'm not talking about is bringing in more at the expense of the middle class, at the expense of the middle class. That is not something -- and that was what we were fighting all along in this because, to the extent that you diminished the tax cut, the tax change at the high end, you would have to claw down into the middle class to get more revenue.
SCHIEFFER: Are you then saying to the upper classes, get ready, you're going to have to pay some more, this is not the end of it?
PELOSI: Well, I'm saying that's not off the table.
SCHIEFFER: That's not off the table?
PELOSI: That's not off the table. But not in terms of tax rates but in terms of other considerations.
SCHIEFFER: You're talking about deductions and other things.
PELOSI: And the rest.
SCHIEFFER: What would be some of the things that you think, on the upper-income people, what kind of deductions are you talking about?
PELOSI: As I said, I'm not going into particulars.
SCHIEFFER: You're not going into --
PELOSI: Put it all -- put it all on the table and see what is working.
She concluded that any further tax increases should "not ... reach down to the middle class."
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.
Fox News' Special Report falsely suggested that the recent growth of the food stamp program was due to President Obama's 2009 economic stimulus, asserting that the bill "eviscerated" work requirements for food stamps. In fact, most of the growth in the program was due to economic factors, primarily the recession, and 46 states had received work requirement waivers before Obama took office.
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.
From the October 24 edition of Fox News' Happening Now:
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