Written by Econintersect Guest
— this post authored by Julie Holar, Fair
As soon as Democrats took over Washington with big plans for reviving the economy, corporate media started sounding the alarm about government spending (FAIR.org, 1/25/21). With the party’s infrastructure bill – which could come in around $2 trillion over four years – now pending, the media deficit hawks are on high alert, tossing around big, scary numbers to throw cold water on the bill.
It’s hardly surprising to find deficit hawkery from the Washington Post editorial board (3/11/21), which urged Democrats to “offset some or all of the cost [of the infrastructure bill], through higher revenues, reduced spending on lower-priority items or a mix of the two.” But proposals for government spending on long-overdue infrastructure investment are also spurring “straight” news reporting full of largely unfounded assumptions and concerns.
On ABC‘s This Week (3/14/21), host George Stephanopoulos framed his first question about the infrastructure bill to House Majority Leader Nancy Pelosi with bold certainty: “That’s going to require new taxes. Can you keep Democrats united behind a proposal like that and attract any Republican support?” When Pelosi avoided the question of taxes, Stephanopoulos pressed further: “But it is going to take new taxes, right?”
Journalists seem desperate to make this the big question. There’s nothing inherently wrong with asking corporations or the rich to help pay for infrastructure investments, given that they benefit greatly from those investments. But given that even so-called moderate Republicans have openly laughed at the prospect of supporting an infrastructure bill funded even partially by rolling back the Trump tax cuts, pushing Democrats to build taxes into the bill means an opportunity for more headlines about Democrats abandoning the bipartisanship media revere above all else (FAIR.org, 1/22/21).
The Hill (3/16/21) told readers that “one of the biggest questions – whether Democrats go it alone or ultimately make it bipartisan – will be how to pay for it.” The piece stated this as an incontrovertible fact, which makes the immediately following quote from Sen. Ron Wyden (D-Ore.) – that some in the party believe that with “interest rates being so low, their interest is not paying for infrastructure” – seem like fantasy.
Politico (3/11/21) devoted an article to conservative Democrats worried that the cost of infrastructure spending will be “put on our children’s credit card.”
Politico (3/11/21) gave away its take with the loaded headline: “Democratic Centrists Balk at More Red Ink After Covid Spending Spree,” accompanied by the subhead: “Some in the President’s Party Are Ready for an Infrastructure Plan That’s at Least Partly Paid For.” Reporters Sarah Ferris and Burgess Everett tsked-tsked that both Democrats and Republicans “have shrugged off oceans of red ink over the past year,” and noted that some “Democratic centrists…[are] arguing there has to be some limit to Congress’s deficit spending.” (Note: No politician is proposing limitless spending.) Later, they rephrased the idea of Congress’s irresponsibility slightly to hammer the point home: “Some moderate Democrats say it’s time for Congress to recover some semblance of fiscal pragmatism.”
Politico uncritically quoted several Democrat deficit hawks spouting guilt-inducing platitudes, like Angus King (I. – Maine): “It’s got to be paid for. It’s just a question of who pays. Are we going to pay or our kids going to pay?”
This kind of framing – “pragmatism,” moderation, avoiding “oceans of red ink” and not just passing the buck on to our kids – gives readers the overwhelming sense that anyone at odds with such ideas can scarcely be trusted with control over our federal budget.
The piece did eventually quote two such Democrats, who alluded to economic arguments that deficit spending isn’t actually a problem, but Politico didn’t bother to talk to economists themselves for any kind of expert take on whether deficit spending for an infrastructure bill should be a concern.
If they had, they would have had to write a different kind of article. First of all, infrastructure spending is an investment; the government puts money into upgrading public resources – everything from roads to green energy to broadband to education – which in turn increase productivity and the tax base. That means more money back in government coffers. As economist Noah Smith writes in Bloomberg (3/15/21):
Private companies borrow to fund big investments all the time; to demand that the government pay for the transition to green energy entirely out of tax revenues would be like insisting that companies pay for major capital projects out of current revenues. In other words, it makes no sense.
Media fret about the size of the national debt even though interest rates over the past few years are the lowest they’ve been in US history (New York Life/Visual Capitalist).
What’s more, as economist Dean Baker (Beat the Press, 1/13/21) notes, interest rates hit extraordinary lows with the pandemic, as the Fed dropped short-term rates to zero in an effort to prop up the economy. They’ve gone up slightly in anticipation of the impact of the stimulus bill, but they remain well below the rates in the US for decades before the Great Recession. This means borrowing is incredibly cheap.
More borrowing will raise interest rates a bit more – still below any level that should cause much inflation or much alarm, Baker explains. But it will make the stock market bubble more likely to deflate. The incredibly low interest rates have driven investors into the stock market as the only place to make money (which explains how the stock market could go up in the midst of a shutdown). So as interest rates rise, money will flow back out. Guess who that will mostly impact? The wealthy, which includes top media personalities like George Stephanopoulos: The top 10% in this country account for 84% of equity holdings (New York Times, 1/26/21).
As for that debt we’re saddling our children with? Journalists offered descriptions of the national debt that made it sound like a giant ticking time bomb. For instance, the Wall Street Journal (3/14/21), in an article titled “White House Weighs How to Pay for Long-Term Economic Program,” pointed to
a nearly $4.5 trillion increase in federal debt held by the public, to $21.9 trillion as of March 1. At roughly the size of the nation’s entire economic output, the debt is the highest since the aftermath of World War II.
Fortune (3/16/21) actually nodded briefly to experts like Baker who aren’t overly alarmed by deficit spending – but promptly dismissed them:
For all the talk about how budget deficits may not matter, the fact remains that even before Biden signed the American Rescue Plan into law last week, the federal deficit was on track to hit $2.3 trillion in the 2021 fiscal year – more than 10% of the US’s total gross domestic product, and the second-highest debt-to-GDP ratio since World War II.
And the Post‘s editorial pointed to “exponential growth” of the national debt as the justification for its admonishment to either go small or raise taxes. (The debt-to-GDP ratio rose 30 percentage points as a result of the Covid-19 pandemic, the worst disaster in US history; before that, the ratio had remained virtually flat since 2012.)
As Baker points out, all those big numbers tell us nothing about the actual burden of the debt – which, in fact, is a pretty small, unthreatening number:
Last year, we paid $338 billion in interest; this year we are projected to pay $290 billion. Measured as a share of GDP, last year our interest payments came to around 1.6%; this year’s payments are projected at 1.4%. By comparison, in the early and mid-1990s (a very prosperous decade), our interest burden was over 3.0% of GDP.
Such sober accounting would make borrowing for infrastructure investments seem quite pragmatic and responsible – so those voices are largely ignored by reporters addicted to austerity.
This article appeared on Fair 19 August 2021 and is reproduced here under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
About the Author
Julie Hollar is senior analyst for FAIR’s Election Focus 2020 project. She was Extra!‘s managing editor from 2008 to 2014.
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