Tag Archives: CBO

State of the News Media

21 Feb

I traded some messages on Twitter last week with someone who was lamenting that there isn’t as much investigative journalism as there was in the past, and also that editorial standards had fallen.  Similarly, this echoes comments you hear often from people about how there aren’t any “unbiased” news sources that people trust anymore.  I couldn’t disagree with these criticisms more.  

For one, there’s more media, choice, and reporting than ever before.  It might not look like the media of +15 years ago, but it’s there and in huge quantities.  Pre-internet, you were relegated to a handful of media outlets.  Generally speaking, there were (any I’m missing?):

  • National newspapers like the NY Times and WSJ
  • Regional/local newspapers
  • Magazines like Time, National Geographic, Life, etc.
  • The major news networks – CBS, ABC, NBC
  • CNN as of the late 1980s
  • Radio news and personalities

When people lament the decay in supposed bias-free news, I think they’re really focusing on the newspapers of old and the traditional nightly news broadcast.  Newspapers and TV news anchors like Dan Rather, Walter Cronkite, and Peter Jennings were supposed to give you a summary of important events and supposedly do so in a biased way.  There are two problems with telling it this way.  

For one, there’s always a bias in the news.  There’s no such thing as an “unbiased” telling of an event.  By definition, a newspaper editor or TV producer’s job is to be biased since there are hundreds of events they could cover but can only choose to cover a few.  By choosing to place event X on the front page and event Y on page 20, the newspaper is exhibiting bias.  

Second, the newspaper and the nightly news broadcast are incredibly limited formats.  There are only a handful of events that a 30 minute news program (probably closer to 23 minutes of actual broadcasting) can cover, or even a large newspaper like the NY Times.  

The beauty of the internet is that it has allowed for an explosion of niche content and gives a distribution outlet for proper coverage of that content.  Anyone can write on just about any topic, and they do.  The better economics of online journalism means that it’s much easier to sustain a professional media business focused on a small niche than it is offline.  You have more access today to high quality coverage of all sorts of events, people, and regions that you had zero visibility into before.  Think of coverage of the technology industry or sports as an example.  This is a good thing.  

One byproduct of the explosion in content is that perhaps average editorial standards have fallen versus the standard of old.  In this new world, not everyone has the rigor of a New York Times editorial board.  But that’s OK, I’m willing to take that trade off if it means more access to news and opinion.  And, generally, if you’re smart about using your own filter and not being a 100% passive consumer of information, then I don’t think this is too much of an issue.  

Another aspect of this new world is that there is much more opinion journalism and strong points of view than in the past.  The best bloggers today – Nate Silver, Andrew Sullivan, Andrew Ross Sorkin, Ezra Klein, etc. – all have strong points of view.  That’s the point.  Their job is to have an opinion and to argue their case in favor of that opinion.  I’m no fan of Fox News, but I’d say the same thing about a Bill O’Reilly or Sean Hannity.  If you’re watching their programming in the same way you used to read say that Washington Post (“this is my daily source of ‘unbiased’ news”), then you don’t get it.  

A final and crucial point I’d make is that the internet provides a mechanism for fact-checking the media that never existed before.  Pre-Google, you had no way to actually check whether what a media source was telling you was true or not.  And you had no way to quickly educate yourself on issues.  Right now there’s a debate going on over whether a recent CBO report means that Obamacare is costing jobs or not.  Pre-internet, you’d have to accept the analysis of whatever news source you used at face value.  Today, you can go read the actual report online, you can read competing analyses of it, and you can form your own opinion.  In fact, today there is better coverage of and watchdogging of the media than ever before.  

To call our current news media environment “biased” or to pine for the days of old is to be lazy and is to paint the past with too rosy a brush.  

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Scoring on Our Own Goal: the US’ Self-Created Fiscal Problems

1 Jul

The CBO released a revised US national debt forecast last month, which I wrote about here.  Basically, a combination of the sequester, fiscal cliff, improving economy, etc. mean that the deficit as a percent of GDP will shrink over the next 2 years and then begin to slowly rise, all at a manageable rate.  In other words, we’ve accomplished Republicans’ #1 economic priority – deficit reduction.  This of course assumes that intermediate events don’t change that forecast, either for better or for worse.

It’s worth exploring what caused that deficit in the first place.  Ezra Klein wrote a great piece last week on Republicans’ odd willingness to trust 30-year CBO projections.  He used the chart below from a Pew Foundation report to show how wildly off the CBO can be in terms of even 10-year projections.  Note that the chart isn’t entirely up-to-date, but I think the broad conclusions are the same.

CBO's projected debt projections changed between 2001 and 2011

I want to talk about a point different from the one Klein made, namely that much of the rise in debt is self-inflicted.  It’s us scoring on our own goal through legislative choices like unnecessary tax cuts that disproportionately benefit the wealthy and a wholly unnecessary war in Iraq.  And, as must be pointed out, the most egregious examples started under the last administration.

Four big facts stand out to me:

  1. The biggest single driver of debt growth has been the reduction in revenue caused by cyclical downturns in the economy, especially the recession that started in 2007-08.  As we are starting to see, the number one thing the US can do to stabilize deficit spending is to grow the economy.  We can’t cut our way to no debt.  This seems like a basic fact to me, but it’s not necessarily accepted wisdom in Washington, especially among Republicans.
  2. It’s hard to overstate how damaging the 2001/2003 tax cuts under GW Bush have been to debt levels.  After the economic downturn, these tax cuts were the single greatest contributor to rising debt.  If this doesn’t serve to dispel the fanciful notion that on their own tax cuts always raise revenue, I don’t know what will.
  3. The tax cuts and war in Iraq were entirely unnecessary.  They were very poor choices and, in the case of the Iraq War, it’s consequences reached far beyond helping to explode the debt.  These are examples of us self-inflicting pain.  I’d add the 2009 decision to continue and to escalate the war in Afghanistan – a decision made by Obama – to this list as well.
  4. TARP and the 2009 stimulus barely register as major contributors to the debt.  Combined, they account for <7% of the rise in the debt after 2001.  The two wars and the 2001/2003 tax cuts account for 4x the rise in debt.  If Republicans really want to address the debt issue and win back public support at the national level, they need to honestly reckon with this fact.  They haven’t so far and will continue to lose national elections until they do.

As best as we can predict the next 10 years, our near term fiscal house is in order.  The US economy continues to recover, albeit slowly and weakly.  The focus should be on stimulating demand to accelerate this progress.

Much of the fiscal and political problems we’ve had over the last decade are entirely self-created.  Compared with the much of the globe, the US has an excellent opportunity to lead the world out of recession and to have a more productive decade than the last.  That will not happen, though, if we enact dumb legislation and fail to pass sensible laws (think Immigration).  We need to stop scoring on our own goal.

 

Stop Freaking Out – The Deficit is Fine

15 May

Important new projections are out from the CBO showing that the US budget deficit is shrinking at an unexpectedly fast rate and will stabilize over the next decade (via CNBC):

…estimating that the deficit for this fiscal year, which ends on Sept. 30, will fall to about $642 billion, or 4 percent of the nation’s annual economic output, about $200 billion lower than the agency estimated just three months ago.

The agency forecast that the deficit, which topped 10 percent of gross domestic product in 2009, could shrink to as little as 2.1 percent of gross domestic product by 2015 — a level that most analysts say would be easily sustainable over the long run — before beginning to climb gradually through the rest of the decade.

“Revenues have been strong as the economy has outperformed a bit,” said Joel Prakken, a founder of Macroeconomic Advisers, a forecasting firm based in St. Louis.

Over all, the figures demonstrate how the economic recovery has begun to refill the government’s coffers. At the same time, Washington, despite its political paralysis, has proved remarkably successful at slashing the deficit through a variety of tax increases and cuts in domestic and military programs.

You can read the full CBO report here.  I’ve pasted the key chart below:
CBO Budget ProjectionsThis should lay to rest the constant clamoring from some that we are somehow facing an imminent debt crisis that requires debt spending cuts.  The biggest problem facing the US right now is high unemployment and a general lack of economic demand, not unsustainable levels of deficit spending and debt.  Bottom line: in the medium term, we’ve basically addressed the deficit.

One of the biggest threats to the economy right now, though, would be continued, premature cuts in government spending that further exacerbate the unemployment problem.  It’s somewhat ironic, but one of the biggest threats to growing the national debt would also be premature cuts in government spending.  If growth and consumption are hurt by government spending cuts, this will depress revenue and grow the deficit.

This shouldn’t be controversial.  Look at the UK and Europe to see what happens when you make deep cuts in government spending in the middle of a fragile economy.  Unemployment, no growth, rising deficits.   It isn’t pretty.

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