The Bias of Facts and the Debt Debate
by Brendan Hoyt
One of the chief problems that the mainstream media has is their almost complete inability to simply state facts. Most political journalism can best be described as glorified quoting. Politicians or their spokespeople give journalists some talking points and then those journalists dutifully report what each side says, without being bothered to look into whether the actual facts are on either side (because that would be “biased”). This problem is most prominent in the climate change “debate”, where one side has the vast majority of scientists in related fields, while the other side has pretty much nothing but politicians and businessmen who don’t like what the scientists have to say. Unfortunately, this problem also extended into the debt ceiling debate so incredibly deeply that the question was barely ever asked: Is cutting government in a recession going to help or hurt the economy?
Before going any further, it’s important to recognize that this was all a complete waste of time and energy. The U.S. ten-year bond interest rate remains extremely low. Any genuine widespread economic worry about the ability of the government to pay it’s bills in the coming years would have caused that interest rate to rise significantly. Clearly, our current budget deficit isn’t stopping anything resembling a significant portion of investors from investing in the government. That’s not to say that we wouldn’t encounter problems in a few years if we kept spending at current rates, but the business community knows what everyone who looks at the economy can easily see: The deficit problem is largely caused by the recession. In a better economy, which we have been slowly heading towards, tax revenues would go up because of increased economic activity. Even with a slow recovery, the idea that we would stay at current deficit rates for many years to come is not backed up by any semblance of logic or reason… unless we do something to utterly wreck the economy and stop our progress.
Despite the mainstream media’s refusal to actually discuss the effect of spending cuts on an ailing economy, the facts are actually fairly easy to check, especially if you crack open a history book. In 1937, when critics (including some of his own advisers) put pressure on FDR to drastically cut spending because the recovery was moving too slowly, he did so. The result was a complete reversal of the recovery. Unemployment skyrocketed while manufacturing output plummeted. In 1938, Roosevelt reignited government spending and the recovery went back into effect almost immediately. Unfortunately, the damage done was not reversed until the build-up to U.S. action in World War II was started in 1941. Of course, adding this to the reports about the debt deal would be “biased”.
Conservatives love to talk about Reagen and the 80s. It’s almost a political certainty that every Republican candidate for President will repeatedly and emphatically raise the spirit of Reagan to tie him to their policies. It’s almost impossible to imagine the modern Republican Party without the image of Reagan plastered over everything they get their hands on. The dirty little secret is that Reagan presided over a massive increase in Federal spending. When conservatives endorse the policies of Reagan, they usually try to only talk about his tax code changes, but nothing in the economy happens in a vacuum. You can’t trumpet the growth of the 80s while simultaneously pretending that government spending in that period wasn’t under a massive, massive expansion. This phenomenon is not limited to these two examples. There are virtually no examples of a recession being helped by government spending cuts.
The fact is that government cuts primarily mean three things: Firing people, cancelling or not signing contracts with businesses, and reducing social spending. None of those things cause economic expansion. All of them can be debated as to their effectiveness in a healthy economy. However, we are not in a healthy economy. Given the scarcity of jobs, adding more people to the ranks of the unemployed is not going to spur any kind of spending, Not only does it hurt those individuals, but it hurts the businesses that they would otherwise be giving their money to. Giving fewer contracts, and especially cancelling current contracts, is not going to spur economic development. That typically means more layoffs or paycuts for the businesses in question. Cutting social spending, such as help to needy families, will only encourage people to buckle down even more. We need increased demand, and decreasing someone’s income is not going to increase their propensity for buying products. All of these things only encourage the economy to spiral downward. This is not the time to be having this debate, and if the media actually reported that, it would be considered “biased”.