Reporting On the Debt Ceiling

Friday, July 15, 2011

Transcript

With the press’s coverage of the drama surrounding the debt ceiling debate in Washington, much of the public misunderstands the underlying economic realities of the situation.  While the usual political fights are playing out in Washington, a growing number of economists, corporate CEOs and those on Wall Street maintain that the solution lies in a combination of spending cuts and tax increases. According to the U.S. News and World Report’s Rick Newman, real economics information is out there – but only if you’re willing to find it.  

Comments [23]

Jonathan Goldberg from St, Louis, MO.

I just listened to your podcast on the debt ceiling and deficit reduction. It made good points on he-said she-said journalism, but contained a serious error on the underlying economics (although the point about the failure to cover the underlying economics was spot on).

The error was the claim that a consensus exits that there should be deficit reduction consisting of some revenue increases and mostly spending cuts. There is no such consensus among economists, and the claim that spending should be reduced is itself wrong.

I claim this because Paul Krugman, Joseph Stiglitz, and Brad DeLong, among others, have all publicly and repeatedly said that the deficit should be increased in the short term and reduced in the long term. If you intended to recommend that spending cuts be delayed I didn't get it, although I listened to that part of the podcast three times.

The reasoning behind this recommendation is as follows:

1) The weak economy, with high unemployment, needs stimulus. (The claim that stimulus has been tried and failed is also flatly false, but that's another post). Professor Krugman has posted a short calculation, which I saw on Professor DeLong's blog, showing that spending cuts will probably INCREASE the deficit by reducing employment, cutting tax revenues and increasing unemployment payouts.

2) Long term, the problem is quite tractable financially, albeit hard politically. Reverse the Bush tax cuts, increase revenues by getting the economy back to normal, stop fighting expensive wars in Iraq and Afghanistan, and bring health care costs under control by paying what other wealthy countries pay for drugs, services, and insurance, and the budget will be in surplus. Bond buyers know these things, which is why the interest rates we pay for money are at historic lows.

3) Since we have (among other things) a huge infrastructure backlog and unemployed resources, and can borrow so cheaply, the logical thing to do is to put the unemployed resources to work reducing the backlog, borrowing the money to pay for it. Infrastructure is economically productive; these expenditures will put people to work now and generate revenue in the future. This policy will increase the deficit in the near term, but is the right thing to do.

Since a substantial number of economists think this way (I certainly didn't come up with it myself), saying that there is a consensus on the opposite policy is an error. However, this line of thought has received almost no media coverage.

Jul. 20 2011 01:28 PM
Alexander Jhin from Seattle, WA

Like climate change, the focus is too much on the debate, not what the actual experts are saying. Frankly, I don't care what Rep. Know Nothing or Senator Blah Blah has to say. What do economists have to say? When people start posting and discussing analysis from trusted economists, then we'll have something to talk about. Until then, we're all just blowing hot air.

Jul. 18 2011 07:19 PM
Charles

What is wrong with the coverage of this story as a pure political fistfight? Because that is what it is.

It's just politics.

It was just politics when, in 2006, Senate Democrats voted against raising the debt limit. That is including Senator Barack Obama of Illinois and Senator Hary Reid of Nevada. They didn't vote against raising the debt limit because that was a valid goal; it was because they wanted to make a point in the legislative porcess.

Bob Garfield seems disappointed that the larger media world isn't sternly lecturing the world that it is plainly nuts to hold up the process of raising the debt limit. You know, like the press never did in 2006 when Democrats were opposing it.

Bob Garfield seems incapable of recognizing the risible statement that sometimes the press just needs to be on the side of what is "right." Like "global warming."

Really Bob; your joking about public radio's "supposed liberal bias" is like Casey Anthony making dead-baby jokes. Not funny.

Jul. 18 2011 06:15 PM
Julia from Downers Grove, IL

I represent one of those millions of workers who rely on a small business owner for employment (not one of the big companies that got a bail out), the very ones that will see a tax increase if Dems get their way. So I do hope that OTM is accurate when it reports that reality has a liberal bias--that is, tax increases will be good for us and won't hurt jobs. I will remember that report if my company closes its doors.

Jul. 18 2011 12:22 PM

Not surprising that OTM missed a couple of the main sticking points for the Right. One, all of the "cuts" take place years down the road, while tax increases start almost immediately. Two, after the last budget deal, few on the Right trust the Obama administration's numbers on "cuts" - billions of dollars of supposed cuts turned out to be fake or gimmicks. Three, Obama hasn't offered any real specifics on cuts, just on taxes.

Jul. 18 2011 11:22 AM
Dragon Rise from Phily PA

Nice try. In 2009, a phoney trillion dollar "stimulation" law is signed, with the only rea tax increases on the mostly poor cigarette smokers.

2010, an unconstitutional health fraud bill is rammed through, with the onlt tax increases on future poor elderly medicare patients.

2010, last gasp lame duck Democrats ram through two more years of tax cuts "for the rich".

Now the want the other party to raise taxes and cut their own throats. What a joke.

Nice trick, no dice.

Jul. 18 2011 12:07 AM
LizinOregon

I had to laugh when you asked if the press is incapable of presenting the budget debate fairly in fear of appearing liberal because when you described the "liberal" position on reducing the debt you answered your own question. On what planet does a solution of "deep spending cuts and modest tax gains" represent the Liberal position?

This debate is positioned so far to the right that the question you asked hardly even matters any more.

Jul. 17 2011 09:23 PM

The major fault I find in the reporting which mainly comes from my Public Radio is the echo chamber of sound bites. Diane Rehm had Grover Norquist on and she could not get him past the big picture. Make the no new tax and balanced budget crowd put a plan forward that shows what they would cut in each program and then see how happy the voters in their District are with that vote or plan.

The one item I have not hear any reporter report on is if the rating agencies downgrade the rating from AAA is all the private investments that have to be sold because they are legally required to only hold AAA rated investment.
The other thing I have noticed is when you get a quote from the top actors it normally has no real substance. Example "I want a balanced budget" sounds like it has substance but if you asked what programs would you cut and by how much would you get a real answer. I though we could balance the budget by getting rid of waste, fraud, and abuse.

Jul. 17 2011 06:13 PM
Dudley Bokoski

The coverage of economics is driven by who is covering it and what access they have to the key players. If coverage appears shallow it is because we have a generation of journalists who went to college to be educated as journalists and have very little connection to experiences outside reporting.

Compounding the problem is that politicians and government functionaries routinely shop for the safest venues to present their views and aren't exposed to tough questions. Assuming the media had the knowledge or inclination to question the President, when do they have the chance? As for the opposition party, their principles (as with the Democrats) can pick and choose which tame group of talking heads to sit down with.

Finally, underlying this story was the assumption journalists (perish the thought) need to educate as well as inform. Just ask the tough questions and give us facts, we'll educate ourselves, thank you.

Jul. 17 2011 04:44 PM
cdh from Minneapolis

I seriously fear what we've suffered here in Minnesota repeating itself over the federal debt ceiling negotiations. Our current state government shutdown is the result of the GOP digging in its heels over the same misinformed arguments for no new revenue (source: Americans for Tax Reform/Grover Norquist). Local media, determined to appear even-handed, has left the public either confused, tuned out or equally intractable. How disheartening. How scary.

Jul. 17 2011 04:35 PM

Besides the obvious conflation syndrome in the newsrooms, the absence of facts in the discussion of tax expenditure {akal tax rate cuts} is quite disheartening.

The following facts about government revenue, missing consumer demand, etc.

can be found here: for reporters et al.

From Harlan Green- Popular Economics – SF FED on reduced consumption

http://www­.frbsf.org­/publications/econom­ics/letter­/2011/el20­11-21.pdf. H Green

Suppy/demand basics – from Popular Economics

http://www.huffingtonpost.com/harlan-green/its-basic-economics-stupid_b_895141.html

David Cay Johnston on tax expenditures [tax rate cuts] & tax deductions – From WNYC radio/ Brian Lehrer Show - 12 July 2011

bl071211dpod.mp3

Government Revenue ##S from 1950-2010 – note Ike still wins for consistently high receipts despite smaller population, lower CEO/Exec salaries & marginal tax rates in the90% range.

http://www.usgovernmentrevenue.com/downchart_gr.php?year=1950_2010&view=1&expand&units=p&fy=fy12&chart=F1-fed&bar=0&stack=1&size=m&title&state=US&color=c&local=s

Jul. 17 2011 04:19 PM
Phillip Wyckoff

Here is a though, get the 9% plus unemployed back to work and use the resulting income tax to help pay down the national debt.

Jul. 17 2011 11:56 AM
Lenore from New York City

In this story, you referred to the media "whiplash" style coverage, he said, she said. And you described Obama's proposal to pay for MOST of the debt plan by cuts, just a little by taxes, as "moderate."

Both FALSE.

Would we at least got he said, she said coverage. On the NPR air waves I have been treated to one Republican after another--the other day, Allan West!--with no countervailing force that I was lucky enough to hear. Did you interview Bernie Sanders, e.g.??

And Obama's plan is not moderate--it is a teeny bit less extreme than the Republican jihad on the rest of us.

Very sad, all of this.

Jul. 17 2011 11:49 AM
Burton from The heartland (Iowa)

I find it curious that the we so seldom hear that President Obama's mantra of requiring the rich pay their "fair share" (my quotes) wouldn't make a significant change in the deficit, even if we were to go back to the WWII rates of 90%.

He and others are just saying, "Let someone else pay" without being required to say who else that is.

This is just as dishonest as the Republicans--read Tea Party--saying the deficit can be closed by spending cuts.

Jul. 17 2011 08:22 AM
Mik

Rick Newman concluded that there’s no reason the media couldn’t do better in covering the US debt than merely quoting the Washington politicians’ accusations back and forth. Regrettably, there’s very much of a reason – and it’s called corporate media, which value the bottom line more than proper reporting of news. When newsroom staffs and expenses are being cut to the bone, and (in the case of TV) a handful of “stars” are disproportionately rewarded to look good on the screen so they can sell more prescription drugs – all this to benefit of VERY highly paid media executives – how can we expect any other result?

By contrast, I noticed that in your interview with Simon Hoggart of the Guardian, he described that paper’s reporter Nick Davies, who had worked on the Murdoch affair for a couple of years or more, as going after it like a dog with a bone. For all the trashy tabloids in the UK, some media still do proper journalism; and it’s no accident that Hoggart and Davies work for a newspaper that’s owned by a trust rather than a for-profit corporation.

Jul. 16 2011 10:09 PM
Steve K. from Portland, Oregon

Bob,

You are still trapped inside the false dualism that you criticize (regarding press coverage of the debt ceiling debate).

You suggest that we need "deep spending cuts and modest tax gains," and you indicate this could be considered a liberal position.

That is not a liberal position. It might be Obama's position, but Obama is no liberal (whatever the Republicans might say). Indeed, the Obama White House is entirely bereft of liberals. But liberals still exist in significant numbers in the House and Senate -- Sherrod Brown, Dennis Kucinich, Barbara Mikulski, Jerry Nadler, Bernie Sanders, to name a few. So the word has still has meaning, and that meaning is not completely relative.

Second, I am surprised that, when criticizing the media's two-sided approach on this debate, you simply picked one of the sides.

Thus, you failed to critique the dualism itself -- you failed to raise the possibility that both sides might be wrong, that both sides might be misinforming the public (and even the press itself).

Remember, Congress already appropriated ALL of the funds that will increase our nation's debt this year. So cutting these funds now, in an across-the-board manner, after already authorizing and appropriating these funds, is simply absurd.

One could even argue that it undermines our democracy -- because the prospect of a very small handful of people now choosing to cut funds already appropriated by Congress renders prior congressional debates and votes meaningless.

Congressional debates and votes are not just matters for lawmakers and corporate lobbyists. Thousands of citizens in grassroots groups across the nation contact, and even visit, their Representatives and Senators during these debates to influence legislation and votes (ie- to influence funding levels, among other things). But what's being proposed right now -- by Republicans and President Obama -- would override all those efforts of those constituents who participated in the democratic process this past year.

So the solution, Bob, is NOT deep spending cuts and modest tax gains. The solution is to approve the new debt ceiling as a matter of course,No spending cuts. No tax gains. And if Congress won't do this, then Obama should because a Congressional vote on this matter is not even necessary. (Again, Congress has already voted to appropriate these funds.)

Then NEXT year, Congress & President Obama can decide to lower spending or raise taxes however they wish, but only during the regular session, using the accepted [small-d] democratic methods.

(And if they are really serious about reducing the federal debt and overall deficit, then they should reverse the Bush tax cuts. They should also consider imposing a small stock transaction tax. Such a tax could raise a great deal of money, and might even reduce the number of high-speed computerized trades which threaten to destabilize the market.)

Jul. 16 2011 07:19 PM
David

Reality, apparently, doesn't always have a liberal bias:

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

-Barack Obama, 2006

The Republicans actually know that revenues likely have to be increased to pull us out of a hole to which they, too, contributed. But they are pushing the cap on spending because their real, live constitutuents want a balanced budget like you and I, and many of our states have. There is a Conservative reality as well - cf. Italy and Greece.

Jul. 16 2011 04:53 PM
neil hecht from Santa Fe, NM

I find it amazing that you didn't cover the logical solution to the debt ceiling problem. (Obviously, logical is my description. No one else might agree.)

To me, the obvious solution is to increase spending over the short term and cut the deficit over the long term. Raise the debt ceiling, pass another stimulus bill, and have long term reductions in entitlements.

PS Matt Miller probably says it better than I just did.

Jul. 16 2011 03:21 PM
Erick Stoll from Ohio

The failure of the press to cover this issue (and every issue) in a meaningful way is incredibly complicated, but there is, I think, one factor more than any other that is responsible: the constant demand for "updates."

If our news consists exclusively (or primarily) of "updates" to pre-existing narratives, then political battles are naturally going to be the most covered element of any given issue (or in this case, legislative battle). If you are required to report on the happenings of Congress every single day (or with the internet, every hour of every day), simplistic updates of partisan bickering are going to be the basic currency of political news.

Has anyone learned anything by closely following the cynical posturing of the two parties over the past few weeks? Is there any value to that knowledge, whatsoever?

Of course not--when news consists only of updates, then each days news is made obsolete by the following update. Learning that John Boehner wanted a big deficit deal one day was meaningless the next, as it ceased to be true. Learning that the Fukushima reactor might be leaking radioactive water was meaningless, since we found out what really happened the next day.

In other instances, closely followed news narratives end up determining our policy for us—is there anyone who believes we would have intervened in Libya had it not been for the romantic press coverage of the regional political phenomenon, poetically dubbed by the press as “Arab Spring”?

What if we stopped paying attention to the news for a few weeks, and turned it on August 4th? Would we have missed anything? Would anything we would have learned by paying attention affect our lives in anyway? It's possible. But probably not. And maybe with all the extra time we could have read something with permanent value—a novel, a history book, maybe some philosophy.

It isn't in the interest of news organizations to actually inform us--even cursory understandings of major issues renders news coverage meaningless and trivial. If you had a basic understanding of our current healthcare system, then the partisan bickering that disguised itself as a policy debate was obviously a meaningless distraction.

Understanding doesn't just make most news useless--it makes demagogues impotent. If you understood the now-absent provision in the healthcare bill that reimbursed doctors for having discussions about end-of-life care, the words "death panel" would have no power over you.

News distracts us. News makes us stupid. News makes us docile. Stop checking the news every day, and hold out for the Sunday paper. If there's anything you ACTUALLY need to know ("Carmageddon" comes to mind as one of the only useful news items of the past few months, though only for those in LA), I'm sure that news will find you.

Jul. 16 2011 12:35 PM
listener

In discussing the media coverage of the debt ceiling issue, one does not have to reach way back to the old chestnut of WMD to discover a lack of media credibility. In the last 30 months didn't the Democrat Party leadership create the largest debt in human history without submitting a budget outlining how they planned to pay for it? Wasn't the President's budget rejected in the Democrat led US Senate 97-0? Did the media notice these actions of elected officials or did they focus instead on concerned citizens who protested this spending and were derided and defamed for their efforts which turned out to be prescient?

Jul. 16 2011 10:43 AM
Mark Sullivan from Rochester, MI

Why does the media refuse to go beyond junior high school journalism (he says, she says) in covering the so-called Debt Ceiling debate? By totally failing to explain to the public that the real issue is not the deficit, but rather what should the role of government be, the media is part of the grid lock in the debate. The Republicans in the House are being held captive by a group of 60 to 100 Tea Party idealogs. These idealogs do not care about the deficit, their real issue is shrinking the role of the Federal Government. To achieve that, they want to starve the beast 9no money, no governmetn); that’s why they are so strongly against any form of revenue raising in any compromise over the Debt Ceiling debate. At the same time, the Democrats are set on protecting the more expansive role of the Federal Government that has been in place since the 1930s. The intersection of these positions is a null set, not surprisingly therefore the negotiations are going no where and we are careening towards economic disaster in just two weeks.

The media should be calling out the Tea Party agenda, and then let a public debate begin on what we want government to do. We need to move beyond the fantasy world put forward by Fox News and their elk, and start talking about what government really does and then decide if we want that or not. Right now we have an incredibly uninformed public responding to propaganda put out by the Right. What we need is an honest review of what government does, how that impacts real people, and then decide what we want done and are willing to pay for.

Jul. 16 2011 09:51 AM
Jeff from Pittsburgh

It is astonishing to me to hear you imply that reporters, in their effort to inform us, are to dismiss Republican ideas because "a majority of economists" think that both spending cuts and taxes must be involved. The public are not farm animals. And yes, your job is to provide a clear understanding of the facts on both sides. History is replete with majorities of scientists, including economists, that were wrong. More than 300 scientific papers now show that the markets are not completely efficient, even though more than a super-majority of economists held that view for decades. There are many, many more examples - please investigate.

Jul. 16 2011 07:49 AM
Daniel Bennett from Washington, DC

Although you tried hard to get at part of the problem of the reporting on the debt ceiling, your guest and you also missed other major aspects of the story. The vote on the debt ceiling does not even need to have a "deal" on the deficit, there well could be a clean bill to increase the debt. Your coverage has gotten caught up in what a deal on how to win enough votes of Republicans.

And you miss that Republicans prefer to have government debt, which is vital for investment diversification. Government bonds provide significant profits and safe hedges for the wealthy. Especially considering that the government has to fund tax cuts to the wealthy by borrowing the money from....yes, you got it.. the wealthy who get the tax cut (and others). It is not a coincidence that Republicans don't want serious deficit reductions, just cuts in benefits to non-wealthy people.

I wonder how many in congress are making money off of government debt, but want to vote against the debt ceiling. Oh yes, a default will increase the return on investing in government debt as interest rates will go up.

Jul. 15 2011 11:34 PM

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