President Bush announced some great news about the economy Tuesday, but the media weren't in any mood to celebrate. Though the budget deficit for 2006 looks to be significantly lower than forecast just five months ago, TV news outlets were quick to rain on the president's parade.
CNN's Ed Henry cynically compared this announcement to the president declaring an end to major combat operations in Iraq in 2003. Meanwhile, NBC's Brian Williams downplayed the good news by stating “administration critics say the White House has deliberately inflated its own deficit projections in the past few years to score political points when the actual numbers came in lower.”
At the same time, ABC's “World News Tonight” and CBS's “Evening News” used this positive report as a segue into downbeat financial stories about how little people save for retirement and the “sharply rising” cost of cancer drugs.
President Bush was more upbeat when he announced that surprisingly strong tax receipts in the first nine months of this fiscal year would reduce the budget deficit to $296 billion. This is well below the previous estimate of $423 billion, and would be the smallest amount of red ink created by the federal government since 2002.
Unfortunately, the media didn’t cheer this report, with CNN adding to the gloom. Kitty Pilgrim, on “Lou Dobbs Tonight,” quickly dismissed the good news by stating, “Democrats said the new numbers cannot hide the fact that middle class Americans are being squeezed” before passing it off to correspondent Ed Henry.
After playing some quotes from Bush, Henry took his sarcastic swipe. “But the president's celebration reminded some budget experts of another moment in his presidency when the champagne may have been popped a little early,” said Henry. This conveniently led into one expert claiming, “This is the budget equivalent of the president landing on an aircraft carrier and declaring mission accomplished.”
Henry followed this with a statement lacking economic perspective. “It's still the fourth largest deficit in American history,” he argued. Now, in straight dollar terms, that was accurate. However, $300 billion today is much different than $300 billion in the ’30s. So this description ignored the way many economists look at the data. Economists, when comparing deficits of one year versus another, like to quote the data as a percentage of the Gross Domestic Product.
With that in mind, the current projections say the 2006 deficit will be roughly 2.3 percent of GDP – only the 42nd highest since 1930. That’s a far cry from the fourth largest in history. In fact, there have only been eight years since 1974 that the federal government did a better job of balancing the budget.
That view of the president’s fiscal successes wasn’t evident at CNN Tuesday, and any historical reference to 2006’s deficit was conspicuously absent in “The Situation Room” as well. Wolf Blitzer echoed Kitty Pilgrim’s concerns: “But critics say the government still is awash in red ink and that's leaving a huge mark on the middle class in the United States.”
Both Blitzer and Pilgrim chose to ignore most of the details of this announcement, as well as what the Congressional Budget Office released July 7 on this subject. As The New York Times reported on July 9: “An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.” What did the Times claim was the cause? “The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big rise in individual taxes on stock market profits and executive bonuses.”
Taxes on capital gains and executive bonuses typically impact the highest wage earners. In addition, the huge surge in corporate taxes will generate almost 14 percent of the total revenues taken in by the government this year. This was almost double the 7.5 percent that was collected in fiscal 2001 under President Clinton’s final budget.
Add this up, and the percentage of the total taxes from lower- and middle-income Americans has actually declined in the past five years. The burden shifted to corporations and the wealthy, a fact that news outlets didn’t share with their viewers. This was particularly disturbing giving the media’s penchant for portraying tax cuts as only benefiting the rich as reported by the Business & Media Institute in May. Of course, this anti-tax cut mantra has been a mainstay of the press since shortly after Bush was first inaugurated as the Media Research Center reported in April 2001.
All three broadcast networks did report the deficit news and the worst was clearly turned in by the NBC “Nightly News.” After going through some of the numbers, Brian Williams chose to downplay the good news by suggesting something nefarious. “Now many economists and administration critics say the White House has deliberately inflated its own deficit projections in the past few years to score political points when the actual numbers came in lower,” he claimed. Williams didn’t point out that the Congressional Budget Office – which is not under the White House – also reduced its deficit projections just four days earlier.
The CBS “Evening News” gave some of the pertinent facts from the announcement, and even allowed the president to take a bow for the good news with anchor Bob Schieffer reporting, “He gave the credit to his tax cuts, saying they stimulated the economy and boosted the amount of money coming into the Treasury.”
However, without the slightest break, Schieffer charged right into the next downbeat story with the following segue: “The sharply rising cost of some prescription drugs is busting the budgets of many cancer patients and may have an effect on their long-term health prospects.”
ABC’s “World News Tonight” used a similar tactic to quickly get the viewer’s mind off the president’s good news and onto bad financial news. Substitute anchor Kate Snow finished her short report on this subject by stating, “President Bush said the improvement is the result of strong economic growth, which led to an unexpected surge in tax payments by corporations and wealthy Americans.”
Much like Schieffer, without any break, Snow immediately introduced a Betsy Stark piece on how Americans don’t feel they have enough money saved for their retirements. “Last year, Americans spent $42 billion more than they earned. With the Baby Boom generation approaching retirement, analysts say the savings rate should be rising, not falling.”
Even with these less-than subtle connections, the broadcast networks did a better job of reporting Bush’s announcement than CNN. None came close to doing justice to the news. Apart from leaving out how much it appears the tax burden has moved from the lower and middle class to the wealthy and to corporations, there are some other positives from the July 7 CBO report that went totally ignored.
For instance: “For the first nine months of fiscal year 2006, CBO estimates, total receipts rose by 12.8 percent compared with the same period in 2005. That increase represents the second-highest rate of growth for that nine-month period in the past 25 years (surpassed only by last year’s strong growth).” That’s an amazing two-year performance unnoticed by these news organizations.
Those same outlets also ignored the good news on wages. “Withheld individual income and payroll taxes grew by almost $88 billion (or 8 percent) during the first nine months of fiscal year 2006 compared with 2005. That rate of increase probably indicates that wages and salaries have been growing at a robust rate,” stated the report.
In the end, it is quite sad that this truly positive information was not shared with viewers Tuesday evening, and only adds to why Americans don’t feel the economy is doing well.