Fundamentally Flawed Stimulus Coverage

[Dardedar]

Fundamentally flawed stimulus coverage

by Jamison Foser

If there's one fact that should be made clear in every news report about the stimulus package working its way through Congress, it is this: Government spending is stimulative.

That's a basic principle of economics, and understanding it is essential to assessing any stimulus package. So it should be an underlying premise of the media's coverage of the stimulus debate. Unfortunately, that hasn't been the case. Indeed, reporters routinely suggest that spending is not stimulative.

Economist Dean Baker, co-director of the Center for Economic and Policy Research, explains: "Spending that is not stimulus is like cash that is not money. Spending is stimulus, spending is stimulus. Any spending will generate jobs. It is that simple. ... Any reporter who does not understand this fact has no business reporting on the economy."

Unfortunately, many of the reporters who have shaped the stimulus debate don't seem to understand that.

ABC's Charles Gibson portrayed spending and stimulus as opposing concepts in a question to President Obama: "And as you know, there's a lot of people in the public, a lot of members of Congress who think this is pork-stuffed and that it really doesn't stimulate. A lot of people have said it's a spending bill and not a stimulus."

That formulation -- "it's a spending bill and not a stimulus" -- is complete nonsense; it's like saying, "This is a hot fudge sundae, not a dessert." But nonsensical as it is, it has also been quite common in recent news reports.

There's another problem with Gibson's formulation, though -- in describing the stimulus as a "spending bill," he ignores the fact that the bill contains tax cuts, too. Lots and lots of tax cuts. And those tax cuts, by the way, provide less stimulus than government spending on things like food stamps and extending unemployment benefits. It probably goes without saying that Gibson didn't ask if the bill would be more effective if the tax cuts were replaced by additional spending.

MSNBC's Mika Brzezinski, among others, has repeatedly suggested "welfare" provisions in the bill wouldn't stimulate the economy. This is the exact opposite of true; those provisions are among the most stimulative things the government can possibly do. There are some fairly obvious reasons why that is true, beginning with the fact that if you give a poor person $100 in food stamps, you can be pretty sure they're going to spend all $100 of it; but if you give a rich person $100 in tax cuts, they probably won't spend much of it at all.

But we needn't rely on logic and common sense to know that welfare spending is stimulative; economists study these things. One such economist is Mark Zandi of Moody's Economy.com, who served as an adviser to John McCain's presidential campaign. Zandi has produced a handy chart showing how much a variety of spending increases and tax cuts would stimulate the economy. According to Zandi, a dollar spent on increasing unemployment benefits yields $1.64 in increased gross domestic product, and a dollar spent on food stamps yields $1.73 in GDP.

As for tax cuts, Zandi says the most effective form is a payroll tax holiday. A one dollar reduction in federal revenues as a result of such a tax holiday would produce a $1.29 increase in GDP -- far less than the benefit realized from extending unemployment benefits, increasing food stamps, providing general aid to state governments, or spending on infrastructure.

Yet if you turn on MSNBC any given morning, you're likely to find Mika Brzezinski saying something like, "I want to look at the plan and how much of it is sort of welfare programs and how much are things that we know, either from history or because economic experts somehow know this, actually stimulates the economy." Or like this: "Does this plan add up to the definition of stimulus? I don't think it does. And I don't question the value of food stamps and helping low-income people pay for college. It just shouldn't be in this bill." Or this: "If you're gonna have welfare programs in this bill, call them welfare programs and pass them, but don't call them facets of the bill meant to stimulate the economy. I do feel like there's some old politics at play here."

There's old politics at play, all right -- the old politics of demonizing "welfare spending" without any regard for the simple truth that such spending not only helps those Americans who are struggling the most feed their families, it also does more to stimulate the economy than anything else you can think of.

What you probably won't see is Mika Brzezinski or Charles Gibson or any other TV reporter suggesting that the tax cuts in the bill are not stimulative and should be stripped -- even though they are less effective as stimulus than unemployment benefits and food stamps.

At this point, it becomes impossible to ignore the elephant in the room: Television anchors like Charles Gibson are not going to qualify for food stamps anytime soon. But they would certainly benefit greatly from some tax cut provisions that wouldn't do nearly as much to stimulate the economy.

(This is not the first time Gibson has shown himself to be badly out of touch on basic economic issues. During a Democratic presidential primary debate, Gibson challenged the candidates on their support for repealing President Bush's tax cuts for people making more than $200,000 a year by saying that a family in which both parents are schoolteachers would be hit by the repeal. Gibson's cluelessness was so apparent, the audience actually burst out laughing at him.)

So far, the news media's coverage of the stimulus debate has consisted largely of repeating false Republican spin and pontificating about which side has been making their arguments more successfully (all the while ignoring the media's own role in aiding the GOP.)

The bright side is that if reporters care about informing the public, it's pretty easy to do -- they just have to start basing their reports on the true premise that government spending is effective stimulus, rather than on the false premise that it isn't. Everything else flows easily from there; for example, asking Republicans why they want to lard up the bill with less-stimulative tax cuts rather than unemployment benefits.

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Jamison Foser is Executive Vice President at Media Matters for America.

[Dardedar]

Wanted: Personal Economic Trainers for the Senate

WaPo business columnist Steven Pearlstein lets the Senate have it:

As long as we're about to spend gazillions to stimulate the economy, I'd like to suggest we throw in another $53.5 million for a cause dear to all business journalists: economic literacy. And what better place to start than right here in Washington.

My modest proposal is that lawmakers be authorized to hire personal economic trainers over the coming year to sit by their sides as they fashion the government's response to the economic crisis and prevent them from uttering the kind of nonsense that has characterized the debate over the stimulus bill during the last two weeks.

At a minimum, we'd be creating jobs for 535 unemployed PhDs. And if we improved government economic policy by a mere 1 percent of the trillions of dollars we're dealing with, it would pay for itself many times over.

Let's review some of the more silly arguments about the stimulus bill, starting with the notion that "only" 75 percent of the money can be spent in the next two years, and the rest is therefore "wasted."

As any economist will tell you, the economy tends to be forward-looking and emotional. So if businesses and households can see immediate benefits from a program while knowing that a bit more stimulus is on the way, they are likely to feel more confident that the recovery will be sustained. That confidence, in turn, will make them more likely to take the risk of buying big-ticket items now and investing in stocks or future ventures.

Moreover, much of the money that can't be spent right away is for capital improvements such as building and maintaining schools, roads, bridges and sewer systems, or replacing equipment -- stuff we'd have to do eventually. So another way to think of this kind of spending is that we've simply moved it up to a time, to a point when doing it has important economic benefits and when the price will be less.

Equally specious is the oft-heard complaint that even some of the immediate spending is not stimulative.

"This is not a stimulus plan, it's a spending plan," Nebraska's freshman senator, Mike Johanns (R), said Wednesday in a maiden floor speech full of budget-balancing orthodoxy that would have made Herbert Hoover proud. The stimulus bill, he declared, "won't create the promised jobs. It won't activate our economy."

Johanns was too busy yesterday to explain this radical departure from standard theory and practice. Where does the senator think the $800 billion will go? Down a rabbit hole? Even if the entire sum were to be stolen by federal employees and spent entirely on fast cars, fancy homes, gambling junkets and fancy clothes, it would still be an $800 billion increase in the demand for goods and services -- a pretty good working definition for economic stimulus. The only question is whether spending it on other things would create more long-term value, which it almost certainly would.

Crooks and Liars

[L.Wood]

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I'd like to suggest we throw in another $53.5 million for a cause dear to all business journalists: economic literacy.
by Pearlstein

Not going to happened. I grew up when television commentators augmented their commentary with real economists, scientists and other experts.
Paul Krugman makes an occasional appearance on MSNBC. But the fellows who have an understanding of the situation rarely
appear on TV News, especially FOX News or the big Three TV networks. On the rare occasions when they do appear it's for the
20 sec soundbite which informs the viewer of nothing which can be understood or digested. Why?

Television news is mostly entertainment. The present zeitgeist calls for some yelling and shouting at one another during
these divisive times. But that too is entertainment. Bill O'Really! entertains by shouting down guests who express opposing
views. This contributes to his audience enjoying feelings of being correct because the person delivering what is considered
the news is out yelling and shouting the person who may actually have some truth. News has reached the status of the Jerry
Springer show.

The exception to News=Entertainment is PBS' NewsHour With Jim Lehrer. There you will find actual economists who spend
5, 10, or 20 minutes explaining a situation. You will see groups of experts engage in informed discussion.

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DAR
That is so well said Larry. I was on Moser's blog over here and when I made the comment that he was apeing the behavior he watches on FOX he responded thus:

2-I am not, as you put it, "apeing the behavior observed on the FOX Channel", rather I watch it for the simple fact that the style of reporting and subjects reported on (since no one can argue that all networks, regardless of their claims, include some bias) are more befitting of my personality and views.

Here is what he said, all written because Nancy Pelosi got a single number wrong (said "million" instead of "thousand"). See if this sounds like a regurgitation of Fox Noise:

This is Nancy Pelosi, the top Democrat in Congress, saying this. I don't think she can declare ignorance. Just in case you didn't get the memo, as of July 2008, the estimated population of the entire nation of America was 303 million and some change...

My opinion on this (me pretending to speak for Pelosi): "Look at me, my name's Nancy Pelosi! I'm a big liberal/socialist in charge of Congress! Fear me! I want everyone to be scared that the world is caving in on itself and the only way it can be saved is if me and my liberal/socialist friends with our extravagantly ridiculous plans like trillion dollar 'stimulous' packages succeed! Submit your will to me or else! Listen to me 'sheeple' of America! Now get me my private jet so I can go eat caviar with Hugo Chavez! OR ELSE!" .....I kid....but, not really

DAR
My point for posting this is his comment saying he likes their "style of reporting." WTF? Their style of reporting is childish, idiotic and as you say, not unlike The Jerry Springer Show. And that's not even considering the inaccuracies and propaganda. It's too the point where if someone actually listens to Rush, Hannity, O'Reilly and Fox News (as this Moser guy does) and is not either laughing at the stupidity or squirming with discomfort that anyone could honestly consider this news for adults, they are... (to put some sugar on it) profoundly misinformed. Sorry Michael.

D.

[Dardedar]

[L.Wood]

DAR
My point for posting this is his comment saying he likes their "style of reporting." WTF? Their style of reporting is childish, idiotic and as you say, not unlike The Jerry Springer Show.

Again, keep in mind 'their style' is no more than entertainment. Recall Ann Coulter who must get more and more absurd with each new book. Her accusations and falsehoods must hit a higher fervor than
her previous outrage. She has no new information, ideas and really everything she writes or screams about has been said by others. She just bundles it up in new ways and yells louder in a more extremist manner. She must do this to sell books and get paid TV appearances. It's a friggin entertainment game, like Jerry Springer. First Springer began his shows with accusatory, 'tell-it-all' stories of infidelity.
Then it morphed to physical fights over alleged infidelities. Next he added partial nudity. Then came incest and then bisexuality. Then pole dancers, now he has it up to X-rated shit that has no relation to relationship troubles.

Coulter and the Rwing are no different. Just trace their issues from one of "welfare queens" of the 80s into all liberals being "godless" and wanting the terrorists to win. Each new accusation has to be more
extreme and more bizarre than the previous one. Like Jerry Springer there are no reasoned arguments which provide evidence. Just outlandish accusations which by their entertainment nature must grow more and more bizarre. Church shootings are taking it to a new plateau and getting the crazies all interested again.

Radio talk shows must also push the envelope. Michael Savage got lots of criticism and coverage for showing contempt for a child with autism, blaming the kid for having no discipline and saying how the kid should be punished. This is not ignorance. This is entertainment for the stupid masses who are too lazy or too dumb to learn about the complex of complications which accompany the mental defect known as autism. It's also called "market share." Since they feed on extremism and class resentment each new level of marketing must be more extreme than the previous level. It's like ice cream flavors.
After the standard flavors have run their course then new, usually more intense flavors are introduced.

Here's a recent one:
On his radio show yesterday, far right talker Bill Cunningham — who Sean Hannity considers a “great American” — claimed that people who are poor in America are not poor “because they lack money.” “They’re poor because they lack values, morals, and ethics,” said Cunningham. Listen here:

This is the second day in a row that Cunningham has verbally attacked the poor. On his Monday show, he declared, “Among the so-called noble poor in America…irth control is not used so illegitimate children can be brought into the world, so the mom can get more checks in the mail from the government.”

Now watch others in some way or another begin a moralistic attack on poor people. Sure as the sun rises in the East. A few will take it to new extremes. They must to stay in the entertainment game.

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