Craig Harrington

Author ››› Craig Harrington
  • Fox's "Analytically Incorrect" Fearmongering Over Detroit Bankruptcy

    Economist Jared Bernstein Slams Fox For Sounding "False Alarms" That Other Cities Will Follow

    Blog ››› ››› ALBERT KLEINE & CRAIG HARRINGTON

    Fox News is floating the idea that Detroit's filing for bankruptcy could lead to other cities following suit, a claim that economist Jared Bernstein calls "analytically incorrect."

    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 19 edition of Fox & Friends, Fox Business host Stuart Varney warned that Detroit's actions could cause a string of cities throughout the U.S. to also seek bankruptcy protection. Varney claimed, "This is a very big deal. Other cities might choose to go the Detroit route, because federal bankruptcy allows an escape route from these unpayable pension obligations."

    Reacting to Varney's theory, co-host Gretchen Carlson stated:

    This is the microcosm of the macrocosm in America. This is not just going to be Detroit, maybe Detroit is one of the worst, but this is going to be happening to big cities. You can't continue to do this. You can't continue to fund money that you don't have.

    The speculation that Detroit's actions may set in motion other bankruptcy filings continued throughout the day. On America's Newsroom, frequent Fox Business guest Ed Butowsky continued sounding the alarm for municipal default, stating:

    I mean this is going to happen all of the country, all over this United States if people don't start taking the proper measures.

    Fox's narrative of a "domino effect" taking place in cities across the country ignores a number of economic facts. In an interview with Media Matters, economist Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, claimed Fox's suggestion that other cities will follow Detroit's lead amounts to nothing more than "scare mongering":

    There will be no domino effect. There is a lot of scare mongering around that issue. That doesn't mean that every pension fund is in tip top shape, but the fact is that states and cities have been taking action to bring their costs in line and reduce their unfunded liabilities. In fact, between 2009 and 2011, 43 states have reduced the costs of their pension plans, including their unfunded liabilities, typically by modifying their obligations. Between 1970 and 2012, there were five city or county governments that defaulted. Okay, this is a rare event and for anyone to extrapolate from Detroit, which has faced extremely unique and tough economic challenges, to the rest of the country is analytically incorrect.

  • Print Media's Reliance On Raw Number Scare Tactics

    Blog ››› ››› CRAIG HARRINGTON

    Major print publications relied heavily on the use of raw numbers when reporting economic issues, but these discussions of spending, deficit and revenue levels that rely solely on abstract and sensational numerical figures obscure otherwise important information.

    A Media Matters analysis found since the beginning of 2013 three major publications -- The Wall Street Journal, The New York Times, and The Washington Post -- provided a majority of their coverage of the national budget (including figures on debt, deficits, spending, and revenue) without adequate context.

    MMFA

    Reports highlighting gross spending, deficit, and revenue levels consistently failed to include relevant data such as the size of items relative to total federal spending or to GDP. Reports also consistently failed to put data into context with year-to-year comparisons.

    For example, the newspapers' coverage of the national debt regularly failed to include the size of the debt relative to GDP, when doing so would have revealed that the United States does not carry extraordinary debt levels when compared to other developed nations. Discussions of the annual budget deficit regularly overlooked the fact that deficits have declined by more than half since peaking in FY 2009.

    Many economists have noted that the media's reliance on enormous and abstract figures in economic reporting is little more than a scare tactic intended to drum up fears about the deficit. Dean Baker of the Center for Economic and Policy Research noted that the reliance on raw numbers also increases the likelihood that outlets will misreport information.

    Opting to report national budget news in this way contributes to a general public misconception of debt, deficits, and the size and expense of spending programs. A Bloomberg News poll from February 2013 found that just 4 percent of Americans knew that the budget deficit was in decline. The same poll also revealed 34 percent of Americans believe the government spends between 2 and 20 percent of its budget on foreign aid, while another 31 percent believe foreign aid accounts for more than 20 percent of the budget. In fact, foreign aid and relief accounts for just 1 percent of the federal budget and has been in decline relative to overall spending for more than four decades.

    This is not the first instance of media overreliance on inflated figures. Media Matters uncovered similar tactics employed by Fox News as it attempted to undermine Social Security and Medicare with the fear of "unfunded liabilities".

  • Media Continue To Ignore Economic News

    Blog ››› ››› CRAIG HARRINGTON

    Media coverage of economic news has declined sharply over the past three months.

    Media Matters research reveals a roughly 80 percent cumulative decline in segments dedicated to economic issues from April 1 through June 30. The week of the Boston Marathon bombings yielded zero news segments dedicated to economic coverage. Media diverted from its traditional lineup to cover the attack and ensuing manhunt. Even after accounting for this outlier in the data, economic coverage across the three major cable and broadcast networks displayed a strong negative trend.

    According to a Gallup survey released June 28, Americans are most concerned about the economy when thinking about this nation's future. Economic issues remain at the forefront of American public interest polling, while media focus elsewhere.

    American's concerns about the economy are not unfounded. Through the first quarter of 2013, the United States economy is on pace to produce $843 billion less than its ideal economic potential.  This "output gap" is estimated to have cost the economy more than $4.6 trillion since the onset of the recession.

    One major story consistently overlooked in the media is the pervasive negative effect of a weak economic recovery. Television pundits are often quick to pronounce that individual monthly job growth is insufficient but rarely discuss why those numbers are insufficient or what policy changes might be enacted to spur growth.

    The primary factor holding back economic growth has been so-called "fiscal drag," or the economic policies out of Washington that emphasize austerity and deficit reduction ahead of stimulus and growth. Economists agree that fiscal austerity harms growth and has slowed economic recovery, but television news has largely ignored these expert opinions.

    Despite the emergence of internet-based alternatives, television remains the primary news source for most Americans. According to a recent Gallup survey, 55 percent of Americans rely on television for current events. With finite time and resources to report developments, and with an industry-wide focus on alleged Washington "scandals," huge portions of the American public are not exposed to valuable economic coverage.

  • Media Coverage Of Social Security Ignores Proposals That Assist Beneficiaries

    Blog ››› ››› CRAIG HARRINGTON

    Cable and television news outlets have overwhelmingly presented Social Security as a program that should be cut, giving little to no airtime for proposals that would instead strengthen the program for beneficiaries.

    Media Matters research revealed significant media selection bias in the Social Security debate. Through the first six months of 2013, the three largest broadcast and cable news networks dedicated nearly 300 segments to discussions of Social Security. More than two-thirds of those segments framed the entire Social Security debate as a problem of long-term solvency and the national debt, which can only be solved through drastic cuts to beneficiaries.

    Media's heavy focus on "fixing" the solvency of the program belies the fact that Social Security is funded for at least the next two decades.

    On May 31, the Social Security Board of Trustees submitted its annual report to members of Congress and the White House, which concluded that Social Security "does not face an immediate crisis," as noted by the Center on Budget and Policy Priorities' summary of the report. The report recommends that lawmakers prudently address long-term solvency concerns, but need not immediately adopt deep benefit cuts.

    The Economic Policy Institute argued, contrary to most news coverage, that the challenges facing Social Security are "modest and manageable." Nobel Prize-winning economist Paul Krugman had a similar reaction to the latest Social Security report, noting "the system will be able to pay most of its scheduled benefits as far as the eye can see." Krugman also recognized the irrationality of arguments made by those who claim to want to save Social Security from eventual collapse:

    The risk is that we might, at some point in the future, have to cut benefits; to avoid this risk of future benefit cuts, we are supposed to act pre-emptively by...cutting future benefits. What problem, exactly, are we solving here?

    While media coverage of Social Security paints the debate of the program as one-sided, members of Congress have put forth plans that would expand the program through need-based benefit increases and tax reform.

    The most prominent Social Security expansion proposal involves raising the payroll tax cap from its current $113,700 annual limit. The payroll tax is the primary source of revenue for Social Security. A report from the Center for Economic and Policy Research revealed that placing a cap on taxable income causes low wage workers to pay higher effective rates than high wage workers. Eliminating the payroll tax cap would more evenly distribute payroll taxes to all workers while extending the life of the Social Security trust fund indefinitely.

    In January 2013, the National Academy of Social Insurance conducted a comprehensive survey of American attitudes toward various Social Security reform proposals. The data revealed overwhelming support for lifting or raising the payroll tax cap, while respondents reported significant opposition to benefit cuts, including raising the retirement age and decreasing cost of living adjustments through chained CPI.

    The Center for American Progress has also argued in favor of expanding Social Security through tax reform and increasing outlays to those beneficiaries who most rely on the program.

    News segments devoted to the alleged demise of Social Security and other benefit programs consistently overlook these alternative proposals aimed at strengthening -- rather than cutting -- the program for beneficiaries.

  • Limbaugh Oversimplifies Student Loan Legislation To Pin Blame On Democrats

    Blog ››› ››› CRAIG HARRINGTON

    Conservative radio host Rush Limbaugh severely misrepresented several years of student loan-related legislation in an attempt to smear Democrats while pushing yet another unfounded conspiracy.

    On July 1, interest rates on government-sponsored Stafford Loans automatically doubled from 3.4 to 6.8 percent. Myriad provisions to avoid the rate hike have been advocated by various caucuses in the House and Senate, as well as by the White House.

    On the July 1 edition of The Rush Limbaugh Show, Limbaugh stated that "it was Democrat legislation that doubled the student loan interest rate, 3.4 to 6.8 percent." He went on to claim that, originally, "Democrats intentionally wrote law to make student loan interest rates double in an election year" so they could "blame it on the Republicans."

    While Limbaugh attempted to pin the automatic rate hike solely on Democrats, the legislation in question -- the College Cost Reduction and Access Act of 2007 -- passed both houses of Congress with broad bipartisan support. On September 7, 2007, the bill passed 292-97 in the House of Representatives with 77 Republican votes before passing 79-12 in the Senate with 33 Republican votes. The legislation did not face so much as a cloture motion from the Republican minority.

    Limbaugh's claim that House and Senate Democrats intentionally designed the bill to raise interest rates to previous levels during an election year to help Democrats' election prospects in 2012 is also false. The final rate expiration date specified in the College Cost Reduction and Access Act of 2007 was negotiated with Republicans to go into effect on July 1, 2012 - the original Democratic drafts had the rate cut expiring in 2013.

    Last summer, near the height of the election, President Obama and Republican presidential candidate Mitt Romney both lobbied Congress to delay the rate hike for twelve months specifically to avoid making student loan rates an election issue, according to The Washington Post.

    Finally, after falsely claiming that Democrats would use the returning issue of student loan rates as a "bludgeon" against Republicans, Limbaugh reiterated a long-debunked claim that the increased revenue from a student loan rate increase would go to fund Obamacare, claiming, "The bottom line is that the student loan rate is going to double.  It's gonna go from 3.4% to 6.8%, and here's the reason why:  Congress has figured out they need that additional money to spend on Obamacare. "

  • Media Offer Scant Coverage In The Face of Student Loan Deadline

    Blog ››› ››› CRAIG HARRINGTON

    In the weeks leading up to an automatic doubling of federal student loan interest rates, broadcast and cable nightly and weekend news devoted little time explaining the effects of the rate hike and the expiration of other programs designed to help American students, graduates and families with increasingly high education costs.

    In 2007, Congress passed a law to reduce interest rates on federal subsidized student loans, the Stafford Loan program, to 3.4 percent. The law was intended to reduce college costs and increase access to higher education. The Budget Control Act of 2011 ended several provisions of previous law; foremost setting an expiration date of July 1, 2013, for Stafford Loan interest rates. Today, those rates automatically double to their previous 6.8 percent.

    Media Matters research found the looming student loan deadline has been largely ignored by major news networks in the past several weeks. Since May 23, the date the House of Representatives passed a party line student loan plan of its own, primetime and weekend television news has offered just 13 brief segments on student loan issues.

    Absent from media analysis has been any real discussion of economists' recommendations for dealing with student debt. Many economists, including Nobel Prize winners Joseph Stiglitz and Paul Krugman, have supported various efforts to defray college costs, expand federal funding, and provide restructuring and refinancing options for student and family borrowers.

    In May, the Consumer Financial Protection Bureau released a report on student loan affordability. It found that expanded refinancing options for student debt could have a simulative effect on economic growth, household formation and homeownership among borrowers. The Federal Reserve Bank of New York had previously found that student debt was a driving force in decreasing home and automotive purchases among recent graduates.

    The rate increase set to take effect on July 1 will directly affect millions of Americans while making college less affordable for prospective students. The Congressional Research Service estimated that the higher rate could cost average borrowers more than $1,000 to take out a subsidized federal loan.  College graduates are saddled with an enormous debt burden - more than $1 trillion through 2013, according to The New York Times.

    Methodology

    Media Matters conducted a Nexis search of transcripts of Sunday and evening (defined as 5 p.m. through 11 p.m.) programs on CNN, Fox News, MSNBC, and network broadcast news from May 23 through June 30. We identified and reviewed all segments that included any of the following keywords: student loan, college loan, student debt, college debt, student, debt, loan, and college.

    The following programs were included in the data: World News with Diane Sawyer, This Week with George Stephanopoulos, Evening News (CBS), Face the Nation, Nightly News with Brian Williams, Meet the Press with David Gregory, Fox News Sunday, The Situation Room, Erin Burnett OutFront, Anderson Cooper 360, Piers Morgan Live, The Five, Special Report with Bret Baier, The O'Reilly Factor, Hannity, On the Record with Greta Van Susteren, Hardball with Chris Matthews, Politics Nation with Al Sharpton, All In with Chris Hayes, The Rachel Maddow Show, and The Last Word with Lawrence O'Donnell. For shows that air re-runs (such as Anderson Cooper 360 and Hardball with Chris Matthews), only the first airing was included in data retrieval.

    Media Matters only included segments that had substantial discussion of increasing student debt or the July 1 interest rate deadline. We did not include teasers or clips of news events, and re-broadcasts of news packages that were already counted on their initial broadcast in the 5p.m. to 11p.m. window.