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.

 

Like What You’ve Read? Support CounterPunch
Weekend Edition
September 4-6, 2015
Lawrence Ware
No Refuge: the Specter of White Supremacy Still Haunts Black America
Paul Street
Bi-Polar Disorder: Obama’s Bait-and-Switch Environmental Politics
Vijay Prashad
Regime Change Refugees: On the Shores of Europe
Kali Akuno
Until We Win: Black Labor and Liberation in the Disposable Era
Arun Gupta
Field Notes to Life During the Apocalypse
Steve Hendricks
Come Again? Second Thoughts on My Ashley Madison Affair
Paul Craig Roberts
Whither the Economy?
Ron Jacobs
Bernie Sanders’ Vision: As Myopic as Every Other Candidate or Not?
Rob Urie
Capitalism and Crisis
Jeffrey St. Clair
Arkansas Bloodsuckers: the Clintons, Prisoners and the Blood Trade
Richard W. Behan
Republican Fail, Advantage Sanders: the Indefensible Budget for Defense
Ted Rall
Call It By Its Name: Censorship
Susan Babbitt
“Swarms” Entering the UK? What We Can Still Learn About the Migrant Crisis From Che Guevara
Andrew Levine
Compassionate Conservatism: a Reconsideration and an Appreciation
John Wight
Adrift Without Sanctuary: a Sick and Twisted Morality
Binoy Kampmark
Sieges in an Age of Austerity: Monitoring Julian Assange
Colin Todhunter
Europe’s Refugee Crisis and the Depraved Morality of David Cameron
JP Sottile
Chinese Military Parade Freak-Out
Kathleen Wallace
The Child Has a Name, They All Do
David Rosen
Why So Few Riots?
Norm Kent
The Rent Boy Raid: Homeland Security Should Monitor Our Borders Not Our Bedrooms
Michael Welton
Canada’s Arrogant Autocrat: the Rogue Politics of Stephen Harper
Ramzy Baroud
Palestine’s Crisis of Leadership: Did Abbas Destroy Palestinian Democracy?
Jim Connolly
Sniping at the Sandernistas: Left Perfectionism in the Belly of the Beast
Pepe Escobar
Say Hello to China’s New Toys
Sylvia C. Frain
Tiny Guam, Huge US Marine Base Expansions
Pete Dolack
Turning National Parks into Corporate Profit Centers
Ann Garrison
Africa’s Problem From Hell: Samantha Power
Dan Glazebrook
British Home Secretary Theresa May: Savior or Slaughterer of Black People?
Christopher Brauchli
Poor, Poor, Pitiful Citigroup
Norman Pollack
Paradigm of a Fascist Mindset: Nicholas Burns on Iran
Barry Lando
Standing at the Bar of History: Could the i-Phone Really Have Prevented the Holocaust?
Linn Washington Jr.
Critics of BlackLivesMatter# Practice Defiant Denial
Roger Annis
Canada’s Web of Lies Over Syrian Refugee Crisis
Chris Zinda
Constitutional Crisis in the Heart of Dixie
Rannie Amiri
Everything Stinks: Beirut Protests and Garbage Politics
Graham Peebles
Criminalizing Refugees
Missy Comley Beattie
In Order To Breathe
James McEnteer
Blast From the Past in Buenos Aires
Patrick Higgins
A Response to the “Cruise Missile Left”
Tom H. Hastings
Too Broke to Pay Attention
Edward Leer
Love, Betrayal, and Donuts
Louis Proyect
Migrating Through Hell: Quemada-Diez’s “La Jaula de Oro”
Charles R. Larson
Class and Colonialism in British Cairo
David Yearsley
Michael Sarin: Drumming Like Summer Fireworks Over a Choppy Lake