More Journalistic Malpractice from WAPO

The Yellow Kid of Yellow Journalism

Predictably, WAPO propaganda specialist Lori Montgomery and her cronies have produced more junk journalism based on bias instead of any actual knowledge of economics or interviews with folks that would actually know about economics.  This time she teamed up with Rosalind Helderman to push her same disinformation about Social Security within the framework of the super committee.  Then there’s the added confidence fairy story. It’s about time we consider WAPO to be a source of malinformation and place it on newsstands in the same category as Globe Magazine.  Well, maybe not quite the same category.  At least the Globe only spins lies about celebrities and alien invasions. Can WAPO just turn their coverage of the federal budget over to Pete Peterson and at least be honest about its obvious dependence on biased think tanks instead of real economics?  Why do we have to suffer through bad writers like Lori Montgomery when we can just cut out the middle man? Why hide the real source of this nonsense?

Even as supercommittee members struggled to chart a path to a compromise that would not alienate their respective political bases, a bipartisan group of lawmakers from the House and the Senate planned to renew a call Wednesday for the panel to pursue a more ambitious deal that would require major surgery to Medicare, Medicaid and Social Security, as well as historic tax increases.

Yup.  Just what we need.  More ambitious cuts that send us straight to a depression.  As usual, WAPO writers just can’t help wrongly inserting Social Security into any talk of the federal deficit. How many times do actual economists need to point out that Social Security is a stand alone program with its own source of financing?

Robert Kuttner of the American Prospect shreds WAPO and its biased coverage.  WAPO  also continues to spew the confidence fairy nonsense.  Some how, every one will feel all snug and warm and the economy will recover if we take money away from the vast majority of American households to protect the comfortable few.   Wow, just imagine the need for the safety net programs if we downgraded the 1% from filthy stinking rich to stinking rich.  Whatever would happen to sales at Tiffany and Mercedes Benz dealerships?  Oh, the humanity!  Oh, the economic devastation!  Hully Gee!  WAPO just keeps making up these story lines!

Wednesday’s Washington Post deserves some kind of perverse award for advocacy journalism—in this case, for advocating the proposition that dire economic consequences will ensue if the congressional Super Committee fails to cut a deal for drastic deficit reduction. This is, of course, one side of an argument.

Those on the other side, including myself, have argued that austerity in a deep recession makes no economic sense and that as a matter of politics, the Obama administration would be far better advised to let the automatic sequester formula take effect, knowing that it would have to be reopened because of Republicans’ horror of deep defense cuts and the expiration of the Bush tax cuts.

Moreover, Social Security does not belong in this conversation, and Democrats are better off, substantively and politically, defending it against Republican proposed cuts rather than lumping it in with budget talks.

But I digress. The Post has been an editorial champion of the Super Committee and austerity politics, and of the bogus claim that Social Security is partly responsible for the current deficit, which has seeped into the news coverage of the predictably biased Lori Montgomery.

In yesterday’s Post, the lead piece on deficit politics, by Montgomery and Rosalind Henderman, includes the subtitle, “Pressure mounts from all sides as deadline nears.” Reading the piece, we learn that “talks have focused on a tax package of as much as $650 billion over the next decade”—a Republican claim that the Post took at face value in order to drum up support for the deal. The Republican arithmetic has been thoroughly demolished by Bob Greenstein, whose analysis was just a keystroke away from Montgomery’s wishful keyboard.

Greenstein and Horney’s analysis at CEPR demonstrates that the Toomey plan is not a balanced approach to deficit reduction.  As I said yesterday, it is a bait and switch or some kind of Wimpynomics.  Toomey will gladly “reform” taxes Tuesday for devastating budget cuts in social programs today. Nearly all the Republican plans begin with saving the Bush Tax Cuts which have done all kinds of damage to the budget and have had little impact on the economy.  Republican suggestions include some weird bargain that would cut spending immediately and postpone overhauling the tax code.  I still argue that the Bush Tax Cuts must go or we will be permanently locked into a death spiral.

Senator Pat Toomey and other Republicans on the Joint Select Committee on Deficit Reduction (“Supercommittee”) portray their new offer to raise close to $300 billion in revenues (under a plan to reduce deficits by about $1.5 trillion over ten years) as a significant concession, and some observers have suggested it represents a welcome first step toward a balanced deficit reduction plan to put the budget on a sustainable path.  But a closer examination of the proposal raises grave concerns and indicates that, in fact, it adds little balance.

It uses savings from closing tax loopholes and narrowing other tax expenditures mainly to set tax rates permanently at levels well below those of President Bush’s tax cuts, and to make permanent both the highly preferential treatment of capital gains and dividend income under the Bush tax cuts and the temporary hollowing out of the estate tax for estates of the wealthiest one-quarter of 1 percent of Americans that Congress enacted in late 2010.  Consequently, the proposal seems designed to make only a modest revenue contribution toward deficit reduction and then to take revenues off the table for the larger rounds of deficit reduction that must follow.  Moreover, even while yielding modest savings, the revenue component would make the package less balanced by conferring large new tax cuts on the wealthiest Americans while forcing low- and middle-income Americans to bear most of the plan’s budget cuts as well as its tax increases.

By permanently locking in tax rates well below the Bush levels, the plan would remove the potential to secure $800 billion in deficit reduction by letting the Bush tax cuts for households with incomes over $250,000 expire on schedule at the end of 2012, and it would remove the leverage that the scheduled expiration of these tax cuts provides to those who seek balanced deficit reduction with a substantial revenue contribution.  It also would remove the potential to secure a substantial deficit reduction contribution from tax reform.

The most absurd storyline in WAPO pointed out by Kuttner is that some how the failure of the super committee will act like the Grinch that Stole Christmas. Neil Irwin and Ylan Q. Mui write some absurd piece that suggests that people will be more apt to spend for the holidays–due to the perpetually present confidence fairy–after they completely gut Social Security, Medicare and Medicaid.  Wow.  That makes absolutely no sense.  How would causing income to go down and expenses to go up for seniors cause them to go on a shopping spree?  How would it give businesses more confidence knowing congress drained them of a source of revenue–in the case of the medical professions–and decreased the income to their customers?  WAPO must have some crazy back-asswards macroeconomic models at play!

I can’t wait for Dean Baker and some other economists to take this on again.  At the moment, Baker is taking on how the austerity meme is killing the Euro which–if it happens–will undoubtedly send us right back into a global depression and keep us there for some time.   Here’s two short paragraphs that point to the root of all our current economic problems.  It’s still a lack of demand brought on by the vast wealth and income destruction caused by banks that overleveraged and engaged in pure speculative activities.  Their bad investment portfolios wounded many western economies.  This austerity kick will most likely mortally wound us all.

The absurdity of this situation is that the eurozone countries would not need outside support from the BRICs if the ECB was prepared to pursue these policies today. Just as is the case now with the United States, there is no shortage of wealth in the EU, in the sense that it has the ability to produce vastly more goods and services than it is currently producing. The main problem is simply a lack of demand.

We have known how to generate demand since Keynes wrote his masterpiece in the ’30s. However, rather than pursue the simple steps needed to restore the eurozone’s economy to stable growth, the ECB is adhering to an ideological agenda that will destroy the euro and throw the economy into an even more severe recession than the last one. This is an extraordinary tragedy unravelling in slow motion in front of the world.

How much more can our civilization endure of policy via junk science and right wing ideology?   How can we actually solve any problems when we have huge national papers basically pushing ignorance agendas?  We are so f’d.

14 Comments on “More Journalistic Malpractice from WAPO”

  1. quixote says:

    Maybe calling it an ignorance agenda is too kind. I keep thinking that if they gut SS & Medicare, and as a part of the gutting hand over some trillions to Wall St or Big Insurance, then Wall St will go straight up. (Into a blowoff, but that’s another story.)

    Several economic indicators include market indexes, so that will make the economic numbers look better. I remember seeing somewhere that 60% of the spending these days is done by the affluent 30% of consumers. And they’re more interested in their portfolios than SS. So they really might spend more. As for seniors, they never spend anything anyway, right? Who cares about them?

    All of these are short term effects that could be expected to hit headlines before November 2012. And after that… who cares about after that?

    Does any of this tin foily stuff make sense? Or is there something I’m missing which means this can’t be behind the insanity?

    • dakinikat says:

      Money does not fall up. Yet the United States has experienced a massive upward redistribution of income over the last three decades, leaving the bulk of the workforce with little to show from the economic growth since 1980. This upward redistribution was not the result of the natural workings of the market. Rather, it was the result of deliberate policy, most of which had the support of the leadership of both the Republican and Democratic parties.
      Unfortunately, the public and even experienced progressive political figures are not well informed about the key policies responsible for this upward redistribution, even though they are not exactly secrets. The policies are so well established as conventional economic policy that we tend to think of them as incontrovertibly virtuous things, but each has a dark side.

      Book published by Dean Baker over at CEPR that’s worth reading and it’s free!

  2. dakinikat says:

    Calculated Risk sends us to two papers by Amir Sufi and Atif Mian using county-level data to investigate the causes of the recession. Their work strongly supports the balance-sheet view: a fall in demand from highly indebted households is the big story, and you can confirm that by showing that the big declines in nontradable employment — that is, employment in industries that sell locally — is in those countries where debt levels were high.

    I like their work a lot, for three reasons: it’s very good work, it confirms the type of model I’ve been working on with Gauti Eggertsson, and it uses economic geography!

    This paper (pdf) does an especially good job of showing how their data contradict other stories, especially structural unemployment; the data just don’t fit any kind of “recalculation” story in which workers are unemployed because they have to be reallocated to new sectors, and fit very well with a story in which spending is just too low.

    In general, cross-sectional comparisons are proving to be a very good way to test some propositions in macroeconomics. I’d cite, for example, the Nakamura-Steinsson paper (pdf) that uses fluctuation defense spending — which has very unequal impacts across states — to estimate the multiplier on fiscal policy (it’s about 1.5).

    A warning, however: the empirical evidence, more and more, exhibits a clear Keynesian bias.

  3. Peggy Sue says:

    If, in fact, the Bush tax cuts are guaranteed into perpetuity, we can all realistically say: the fix was in. And not merely by Republicans but by weasal Democrats and Obama, who are slurping at the neoliberal trough. We have absolute proof staring us in the face that austerity is ‘not’ the solution. The European Union is in meltdown. We can’t carve our way out of this on the backs of the middle class and the poor. We create more unemployment there will be less revenue and more pain. Both parties seem hellbent in bringong the economy down. Although Bruce Bartlett [Reagan’s former economic advisor] has said repeatedly that the Republicans have gone insane.

    As for the press, be it the Washington Post or the NYT? Advocacy journalism seems to be in style in the same way advocacy judges have made a joke of our judicial system.

    And then people wonder why protesters are in the streets.[peggy sue shakes her head].

  4. bostonboomer says:

    I love this post! Very snarky. I’ve been keeping an eye on Lori Montgomery ever since my e-mail exchange with her. I think she’s definitely a plant from the Peterson Institute. Love the Kuttner takedown! And I’m really looking forward to what Dean Baker will say also.

    Thanks for another great read, Dak.

  5. The Outlier says:

    There is a weak link in our democracy. So much depends upon the citizenry possessing relevant and factual information about the effects of our existing policies as well as reasonable approximations of the consequences of legislative proposals. The so-called “fourth estate”, also known as the free press, is pretty much free to report the story however they see fit.

    This is not to say that the commercialized free press tends to report out-and out-lies, sometimes they do, but promoting an out-and-out lie is hard to sustain. When the lie is finally exposed, credibility is compromised. A much better way to mislead the public is to focus on red herrings and present the story within the context of a paradigm that obscures the truth.

    A contemporary example of this phenomenon is the way the commercialized free press is consistently mischaracterizing the Occupy Wall Street movement. A deceptive narrative that the mainstream media is pitching hard is that OWS is a Democratic Party alternative to the Tea Party, and whereas the Tea Party is opposing big government, OWS is opposing big money. The truth is that both occupiers and rank-and-file members of the Tea Party are opposed to the corrupting influence of big money on our political process. Another truth is that top Democrats as well as top Republicans are recipients of sizable corporate endowments and are beneficiaries of our system of crony capitalism.

    So why would the commercialized free press deliberately obfuscate these truths? Read more »

  6. Woman Voter says:

    Pro Obama fellow is saying that Obama wants cuts in Social Security and Medicare? So, then why not just say that, why pretend it is the Republicans, when it is Obama and the Republicans. I know I was upset when I learned Obama blocked the Public Option, to continue this form of deception will simply keep people at home on election day. Obama hasn’t built trust, he hasn’t delivered, he has delivered for the 1%, but not for the working people. He has made some rattling moves because he sees the people out protesting.

    • Peggy Sue says:

      I don’t trust Obama on anything he says or does. He’s a serial liar as are his supporters. And then, we have the Republicans who have turned lying into an art form. They’re perfect together!

      I read a really disturbing [no, make that scary as hell] piece over at Naked Capitalism written by Mark Ames on the Greek situation–Facism and Austerity. This is the sort of thing that gives me nightmares, particularly when it’s impossible ‘not’ to see, hear and read the parallels in these United States right now. We are truly living in dangerous times.

      The real 1% doctrine. Could easily keep you up at night. Of course, Naomi Klein gave us a heads up in Shock Doctrine. Still, it’s awful to see it playing out. It’s even worse listening to people defend this monstrosity.

      • madamab says:

        That is why I say Austerity=Murder. Today’s fascists have found a way to kill tens of millions with economic policy and fake “pro-life” piety, instead of gas chambers and concentration camps. It’s so much more genteel this way, you know.

  7. madamab says:

    Some how, every one will feel all snug and warm and the economy will recover if we take money away from the vast majority of American households to protect the comfortable few.

    Well, it’s getting to be close to Christmas. Maybe this is the elitist version of a fat guy in a red suit.

  8. This is not to say that the commercialized free press tends to report out-and out-lies, sometimes they do, but promoting an out-and-out lie is hard to sustain. When the lie is finally exposed, credibility is compromised. A much better way to mislead the public is to focus on red herrings and present the story within the context of a paradigm that obscures the truth.