FacebookTwitterGoogle+RedditEmail

The Fiscal Cliff and Baby-Killing Doctors

by DEAN BAKER

Extreme opponents of abortion sometimes refer to obstetricians who perform abortions as “baby killing doctors.” The media do not adopt this language in their coverage of the debate over abortion, and instead use more neutral language.

Unfortunately the media do not feel the same need for objectivity elsewhere. Many of the country’s most important news outlets openly embrace the agenda of the rich and powerful, allowing this agenda to color its coverage of major economic issues.

This is perhaps nowhere better demonstrated than in its coverage of the current budget standoff between President Obama and Congress, which the media routinely describe as the “fiscal cliff.” This terminology seriously misrepresents the nature of the budget dispute as everyone in the debate acknowledges. There is no “cliff” currently facing the budget or the economy.

If there is no deal reached this year then on January 1, daily tax withholdings will rise by average of about $4 per person. Any money actually deducted from pay checks will be refunded if a deal is subsequently reached that returns tax rates to 2012 levels. Government spending probably won’t change at the start of the new year since President Obama has considerable discretion over the flow of spending. No one can think that this modest increase in tax withholdings would plunge the economy into a recession, but the Wall Street types seeking to dismantle Social Security and Medicare have used their enormous wealth and their allies in the media to generate precisely this fear across the country.

One way in which they have pushed this recession fear has been to misuse projections from the Congressional Budget Office (CBO). CBO’s projections show that if higher tax rates and lower spending are left in place for the whole year then it will substantially slow growth and push the economy into a recession.

However, these projections explicitly assume that we go a whole year without reaching a deal. They say nothing about what happens if we get a deal by the second or third week of January. Even a Washington Post editor should be sharp enough to understand this distinction, nonetheless many stories have appeared that imply the recession projections apply to missing the January 1 deadline.

The other deception that the Wall Street types have used to push their Social Security and Medicare cutting agenda is to claim that the markets are demanding that these programs be cut. This sort of assertion, which is treated as a fundamental truth by the Washington insider crowd, has the wonderful feature that it cannot possibly be contradicted by evidence.

Of course none of us knows exactly what will trouble the financial markets or how much it will matter to the economy if something does trouble the markets. (As a factual matter, even a sustained drop in the stock market has a limited effect on the economy and short-term fluctuations have almost no impact.) This means that when the Wall Street types or their designated spokespeople make authoritative sounding claims that the markets will be upset if we don’t cut Social Security or Medicare as part of a budget deal, there is no direct way to refute them. After all, it is possible that they will be right.

If economic reporters did their job they would be looking for evidence to support these assertions about financial markets. They could start by looking at the track records of those issuing the warnings. If they did examine the track records of people with organizations like the Campaign to Fix the Debt and other deficit hawks, they would tell their audiences that these “experts” have the distinction of being almost 100 percent wrong on just about all their economic predictions over the last five years.

This crew has been predicting that large budget deficits would cause interest rates to skyrocket ever since President Obama’s first stimulus almost four years ago. Many also predicted inflation would explode. Of course none of them warned of the housing bubble; they were running around the country yelling about the budget deficits even when the deficits were small enough that the debt to GDP ratio was actually declining.

In short, major national news outlets have adopted wholesale the agenda of a Wall Street elite that displays zero evidence of any understanding of what drives the economy. Their assertions that the markets will panic without a budget deal that cuts Social Security and Medicare has no apparent foundation in reality. It is just a threat that they have concocted to advance their agenda. Now that would make for a very good news story.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This article originally appeared on The Guardian.

 

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

May 02, 2016
Michael Hudson – Gordon Long
Wall Street Has Taken Over the Economy and is Draining It
Paul Street
The Bernie Fade Begins
Ron Jacobs
On the Frontlines of Peace: the Life of Daniel Berrigan
Louis Yako
Dubai Transit
Bill Quigley
Teacher, Union Leader, Labor Lawyer: Profile of Chris Williams Social Justice Advocate
Patrick Cockburn
Into the Green Zone: Iraq’s Disintegrating Political System
Lawrence Ware
Trump is the Presidential Candidate the Republicans Deserve
Ron Forthofer
Just Say No to Corporate Rule
Ralph Nader
The Long-Distance Rebound of Bernie Sanders
Ken Butigan
Remembering Daniel Berrigan, with Gratitude
Nicolas J S Davies
Escalating U.S. Air Strikes Kill Hundreds of Civilians in Mosul, Iraq
Binoy Kampmark
Class, Football, and Blame: the Hillsborough Disaster Inquest
George Wuerthner
The Economic Value of Yellowstone National Park
Rivera Sun
Celebrating Mother Jones
Nyla Ali Khan
Kashmir and Postcolonialism
Mairead Maguire
Drop the Just War Theory
Weekend Edition
April 29, 2016
Friday - Sunday
Andrew Levine
What is the Democratic Party Good For? Absolutely Nothing
Roberto J. González – David Price
Anthropologists Marshalling History: the American Anthropological Association’s Vote on the Academic Boycott of Israeli Institutions
Robert Jacobs
Hanford, Not Fukushima, is the Big Radiological Threat to the West Coast
Ismael Hossein-Zadeh
US Presidential Election: Beyond Lesser Evilism
Dave Lindorff
The Push to Make Sanders the Green Party’s Candidate
Peter Linebaugh
Marymount, Haymarket, Marikana: a Brief Note Towards ‘Completing’ May Day
Ian Fairlie
Chernobyl’s Ongoing Toll: 40,000 More Cancer Deaths?
Pete Dolack
Verizon Sticks it to its Workers Because $45 Billion isn’t Enough
Moshe Adler
May Day: a Trade Agreement to Unite Third World and American Workers
Margaret Kimberley
Dishonoring Harriet Tubman
Deepak Tripathi
The United States, Britain and the European Union
Eva Golinger
My Country, My Love: a Conversation with Gerardo and Adriana of the Cuban Five
Richard Falk
If Obama Visits Hiroshima
Vijay Prashad
Political Violence in Honduras
Paul Krane
Where Gun Control Ought to Start: Disarming the Police
David Anderson
Al Jazeera America: Goodbye to All That Jazz
Rob Hager
Platform Perversity: More From the Campaign That Can’t Strategize
Pat Williams
FDR in Montana
Dave Marsh
Every Day I Read the Book (the Best Music Books of the Last Year)
David Rosen
Job Satisfaction Under Perpetual Stagnation
John Feffer
Big Oil isn’t Going Down Without a Fight
Murray Dobbin
The Canadian / Saudi Arms Deal: More Than Meets the Eye?
Gary Engler
The Devil Capitalism
Brian Cloughley
Is Washington Preparing for War Against Russia?
Manuel E. Yepe
The Big Lies and the Small Lies
Robert Fantina
Vice Presidents, Candidates and History
Mel Gurtov
Sanctions and Defiance in North Korea
Howard Lisnoff
Still the Litmus Test of Worth
Dean Baker
Big Business and the Overtime Rule: Irrational Complaints
FacebookTwitterGoogle+RedditEmail