Obama the Tax Cutter: A Network Fairy Tale

Full Report

Once upon a time, there was a nation besieged by what many called The Great Recession. The unemployment rate was climbing, businesses and families were struggling, and everyone was holding out for a hero.

With his tune of hope and change, Sen. Barack Obama, D-Ill., convinced many he was the champion America was looking for and he could turn things around. The network news media certainly believed him, and aided his ascent to the White House.

One of his campaign refrains was about cutting taxes for 95 percent of Americans. At a speech in Elko, Nev., Obama declared, “I will cut taxes – cut taxes – for 95 percent of all working families.”

Instead of attacking tax cuts, like the news media had under President George W. Bush, the networks embraced Obama’s “ambitious agenda” on taxes. NBC’s Carl Quintanilla made Obama’s tax policies sound like a better deal for the “average” family on Sept. 22, 2008, saying “A middle-class household earning $38,000 to $66,000 a year would get an average tax cut under McCain of $325, under Obama $1,100.”

After Obama was elected president, the networks touted his “$287 billion” in tax cuts in the $787 billion stimulus package and said it the stimulus was “designed, in part, to get you spending again.” Despite his grand promises, that huge spending bill did not stop unemployment from rising to 10 percent.

But the media image of tax cuts was a fairy tale, a nice bedtime story for voters – one that mostly ignored Obama’s much larger tax increases on Americans and the violation of his campaign tax pledge.

Up to $4.2 trillion in tax increases will begin to hit Americans Jan. 1, 2011. At almost 20 times the size of his $214 billion temporary tax cuts, Obama’s tax increases will dwarf the cuts included in the stimulus bill.

Yet, the networks portrayed Obama as a tax cutter four times as often as a tax hiker (66 to 16) by the networks, according to a Business & Media Institute analysis.

BMI examined all 171 network evening news reports containing the terms “tax cut” or “tax cuts” between Sept. 1, 2008, (as the election loomed) and Aug. 31, 2010.

BMI found little mention in those stories of the tax increases Obama signed into law (tobacco hike, health care legislation) that would increase taxes, and zero stories that compared the size of his tax cuts and hikes side by side to show him as an aggregate tax increaser. Additionally, network reporters consulted very few economists in tax cut stories, failing to include them nearly three-fourths of the time (125 out of 171 stories).

Journalistic Fiction: Obama a Middle-Class Tax (Cut) Champion

Just as the Pied Piper’s song entranced the rats, Obama’s tax cut promises captured the attention of the news media. Network journalists have been so focused on his temporary tax cuts, which expire Dec. 31, 2010, that they’ve nearly ignored the tax increases he signed into law and those that are coming if no legislative changes are made by the end of the year.

In fact, the largest tax increases in history will be enacted Jan. 1, if the Bush tax cuts are allowed to expire. Sen. Barack Obama, D-Ill., actually campaigned on repealing those cuts for the wealthy and called a 3.6 percentage rate increase in taxes on some Americans “chump change.”

“Right now, they [people making over $250,000] are getting taxed at 36 percent. Under Bill Clinton in the 1990s, they were being taxed at 39.6 percent. You're talking about a 3.6 percent difference, and, you know, for, you know, the average person who is making half a million, a million dollars – people like you, Sway – that's chump change, that's nothing,” Obama told an MTV interviewer in 2008.

But based on figures from the left-wing Tax Policy Center, a person or family making $1 million a year would see an increased tax burden of nearly $30,000 next year. Even with higher taxes on only the “wealthiest,” all income levels would feel the impact to the economy.

Despite Obama’s claim, economists are very concerned about the impact of a partial or full expiration of the Bush income and investment tax cuts, not to mention the tax hikes included in the health care legislation. Another tax problem the lame duck Congress will need to address is the Alternative Minimum Tax (AMT) which will hit as many as 25 million Americans unless it is patched or fixed before Jan. 1.

The Heritage Foundation’s Center for Data Analysis estimated that under Obama’s plan to raise taxes on higher income earners GDP would fall by $1.1 trillion between 2011 and 2020, and that slower economic growth would cause employment to fall by an average of 693,000 jobs per year.

Before portraying Obama as a middle-class tax hero, the networks should have looked at his record, instead of being mesmerized by his rhetoric. As a senator, he voted against tax cuts 23 times. He also showed a willingness to increase taxes on the rich or on businesses to pay for various projects.

Now as president, Obama has cut and raised taxes. The promise of many campaign speeches, the biggest tax cut Obama signed into law was a 2-year $400 (individual) tax credit in his massive stimulus bill that was mostly spending. That temporary $400 credit was a small cut for people who pay taxes, but was refundable to those who don’t, making it a redistribution of wealth from those who already pay taxes to those who have no federal income tax burden.

Although the media touted the bill as having $287 billion in tax cuts, the Joint Committee on Taxation score for the stimulus bill indicates that there was $214 billion in tax relief and the rest was spending due to the refundable nature of the “credit.” Obama’s planned tax increases will soon dwarf those temporary tax cuts.

Obama was barely in office as president when he signed a bill that would raise tobacco taxes by 156 percent in order to “pay” for children’s health insurance. The Joint Committee on Taxation estimated the higher taxes would bring in $65.5 billion over the next 10 years.

But that tax increase specifically violated Obama’s campaign promise to not raise “any” of the middle-class’s taxes.

At a rally in Chester, Pa. Obama said, “If you make less than a quarter-million dollars a year, and that includes by the way 98 percent of small businesses and 99.9 percent of plumbers, you will not see your taxes increased one single dime. Not your payroll tax, not your income tax, not your capital gains tax, no tax – ‘cause the last thing you need is higher taxes when we’re in a recession like this. And you won’t get one under the Obama administration.”

White House spokesman Robert Gibbs said on April 15, 2009, that “the statement didn’t come with caveats.”

Yet Obama’s massive health care takeover will come with a very heavy tax burden, more than $500 billion, according to conservative tax group Americans for Tax Reform. The breakdown of new taxes that take affect between 2010 and 2014 included $123 billion from a surtax on investment income, $86.8 billion from an increased Medicare payroll tax and $60.1 billion from taxing health insurance companies annually.

The Alternative Minimum Tax (AMT) has yet to be permanently fixed and will require another “patch” in the lame duck session in order to prevent up to 25 million Americans (including middle-class earners) from seeing a big tax increase.

On top of that, Obama wants to let the portion of the Bush tax cuts for the wealthy expire – a $700 billion tax increase. He claims it is too expensive to leave the tax cuts in place for top income earners, but press secretary Gibbs revealed White House disdain for the rich saying in a Sept. 13, 2010 CBS “Early Show” interview: “The president does not believe we that should be borrowing money, most likely from overseas, to extend tax cuts for folks, quite frankly, that weren’t asking for them and don’t particularly need them.”

The showdown over the Bush cuts could come during the lame duck session between the election and the beginning of the year, but if Congress and Obama cannot come to terms, taxes will go up Jan. 1 for everyone. In fact, The Hill reported on Oct. 7, 2010 that a full expiration of the Bush tax cuts will “hit poorest hardest.”

Nick Kasprak of The Tax Foundation warned that Congressional gridlock is enough to result in tax increases on everyone: “But the current Congress has shown itself to be unusually susceptible to gridlock, so the threat of automatic, full expiration of all these cuts is quite real.”

Yet, the network evening news programs have portrayed President Obama as a tax cutter more than four times as often as a tax raiser in the past two years – downplaying or ignoring his tax increases, or framing stories around his “middle-class tax cuts.”

NBC “Nightly News” was substantially worse than ABC “World News” and CBS “Evening News,” presenting 14 times more tax cutter reports.

Pete Sepp, Executive Vice President of National Taxpayers Union, told the Business & Media Institute, “Whether it’s political overoptimism, economic shortsightedness, an incomplete understanding of what’s driving budget deficits, or something else, it’s difficult to explain why the mainstream media haven’t delved deeper into the overall effect of the administration’s tax policies.”

“The White House has made it clear from day one where it intends to raise taxes, and the record of what’s been signed into the law is clear,” Sepp concluded. “Many media accounts emphasize how President Reagan signed several bills into law containing tax increases after cutting taxes in 1981. Where’s the same kind of linear analysis with Presidnet Obama?”

Carl Quintanilla of NBC proved that his network would make the president look good on taxes, even when Obama himself was pushing tax increases on the rich.

On Sept. 22, 2008, as Sen. John McCain, R-Ariz., and Obama neared their Election Day face-off, Quintanilla found an “easy way to look at taxes.”

“A middle-class household earning $38,000 to $66,000 a year would get an average tax cut under McCain of $325, under Obama $1,100, Quintanilla said before delving into Obama’s desire to “rollback” the Bush tax cuts for “the wealthiest Americans.”

Still, Quintanilla made it sound good overall: “Here’s what an Obama world would look like. The vast majority of households would pay less tax, not more. The wealthiest could see taxes go up $94,000, the very rich $500,000.”

Then Quintanilla quoted liberal economist Len Burman of the Tax Policy Center, a group he labeled “non-partisan.” Burman criticized McCain’s tax plan and warned that with his tax cuts the federal deficit would worsen.

Favoring Liberal Tax Experts over Conservatives

Tax policy is a complicated topic, yet networks seldom (roughly 27 percent of stories). consulted economists. When they did, reporters turned mostly to liberals including administration officials and advisers and left-wing groups like Brookings Institution and the Tax Policy Center (TPC).

Left-wing economists were included in tax cut stories more than four times as often as conservative ones (38 to 9). CBS was the most tilted toward liberal tax experts with its more than 6-to-1 ratio (13 liberals to 2 conservatives). Tilting experts in favor of left-wing policies is the same method of bias the networks used to promote the stimulus bill.

On tax day, April 15, 2009, while hundreds of tea party protests were taking place around the country NBC depicted Obama as a tax cutter and found a liberal tax economist to call for more taxes.

Savannah Guthrie emphasized the president’s “vow” not to raise taxes on those making under $250,000 annually, even though he had already signed into law a bill that raised tobacco taxes by 156 percent.

“But some tax experts say that is irresponsible,” Guthrie warned as she turned to Leonard Burman of the TPC. TPC calls itself “independent” and is often labeled as “non-partisan” by the network media, but it is actually a joint project of two liberal groups: Urban Institute and Brookings Institution.

Burman then told NBC viewers: “He’s [Obama] said that 95 percent of the population is off limits for tax increases. Given the size of our budget challenges, that’s – that can’t be sustained. Over time, it’s going to have to be more than the top 5 percent that are paying for government.”

“Nightly News” also turned to former Clinton budget director Alice Rivlin of liberal think tank Brookings on Jan. 5, 2009, for her “worry” over tax cuts. In the past, Rivlin has advocated liberal tax policies including a value-added-tax (VAT) here in the U.S.

Carl Quintanilla teased Rivlin’s pro-tax hike comments saying tax cuts “may deny the government income it needs, too.” Rivlin warned, “We have big, big deficits looming ahead of us as the entitlements grow over the next few years.”

Ultimately, “We’re going to need more taxes, not less,” Rivlin declared without calling for less government spending.

Conservative economists are also concerned with the rising cost of entitlements, but argue that tax cuts have not been the cause of deficits – rather excessive government spending. Jim Powell of the libertarian Cato Institute wrote Aug. 8, 2010, that “taxes cannot save the entitlements” because increasing tax rates “reach of point of diminishing returns when revenue declines.”

Instead, Powell advocated the “shock therapy” of spending cuts, tax cuts and elimination of “price controls, wage controls and the other obstacles to enterprise.”

But NBC didn’t challenge Rivlin’s policy prescription at all, or mention the government’s massive increases in spending.

Administration officials and advisers, including Treasury Secretary Tim Geithner, former Budget Director Peter Orszag and Chief Economic Adviser Larry Summers made up more than half of the liberal economists’ appearances (18 of 38). Moody’s Mark Zandi was consulted six times, making up two-thirds of the conservative appearances even though he supported massive government stimulus. Zandi was counted as a conservative because of his “very modest” role as an adviser to the McCain campaign, although he has also advised Obama.

Networks Still Against Bush Tax Cuts

The three broadcast networks made a point of reporting Obama’s temporary tax cuts and credits, especially his Making Work Pay credit which put less than $8 a week in people’s pockets (and expires Dec. 31, 2010), but continued their assault on Bush’s tax cuts.

Chip Reid of CBS repeated the White House’s anti-Bush tax cuts rhetoric on Feb. 26, 2009. “The White House says the goal is to reverse the trend of the Bush years, when rich got richer and the middle class got poorer. Republicans say the tax increases will make the economy even worse,” Reid said without questioning the liberal assumption about the impact of the tax cuts.

ABC’s David Muir was even worse on Feb. 1, 2010, providing the old left-wing attack that the Bush tax cuts created the deficit problems the U.S. is facing.

In a “World News” segment called “Mountain of Debt,” Muir was answering the question of how the nation reached the “historic” deficit of $1.6 trillion.

After citing the surpluses of the Clinton era, Muir declared, “Just two years later, we were in the red by nearly $158 billion. 9/11 paralyzing the economy and President Bush enacting his first round of tax cuts. By 2004, the deficit had more than doubled to nearly $413 billion. The U.S. had invaded Iraq and another round of tax cuts and expanded Medicare …”

Images of Bush signing the tax cuts into law were shown onscreen to accompany Muir’s anti-tax cut message. Then Muir turned to Robert Bixby, a spokesman for the conservative Concord Coalition.

Bixby blamed both parties for turning a “trickle,” into a “flood,” but Bixby’s remarks were given in a way that the viewer couldn’t tell it was spending that turned into a flood under Bush and Obama. Muir didn’t point that out, instead he left viewers with the impression that the tax cuts were the problem.

Liberals often blamed the tax cuts for the deficit, despite the fact that government revenues increased after the Bush tax cuts took effect. The problem was that spending outpaced even that tax revenue.

That myth is just one of the five ways the news media accepts liberal premises on the issue of taxes and spins tax policy issues toward the left.

A Special Report by the Media Research Center in 2001 examined network coverage of taxes and found that liberal spin prevailed. Back then, CBS “Evening News” led the attacks on the Bush tax cuts, ignoring the fact that his tax cuts offered a greater percentage tax reduction to lower and middle income families (than the rich).

CBS was also the least likely of the broadcast networks to present remarks by the Bush administration or other supporters of the tax cuts, although together ABC, CBS and NBC quoted liberal criticism about the size of the package five times more often than the supporters on that point.

In the years that followed, the networks kept up their attacks on the Bush tax cuts. On the Aug. 27, 2002, “Evening News,” John Roberts criticized them for cutting government revenue, saying: “The Budget Office says federal coffers will not substantially get back into the black unless President Bush’s tax cut is allowed to expire as scheduled in the year 2010.” Roberts framed the CBO information to agree with liberals that tax cuts were the problem, rather than overspending by the government.

Others, like ABC’s Terry Moran condescendingly dismissed the 2001 economic package as “a tax cut that was, frankly, cooked up during the heat of a political campaign.”

For years the news media portrayed the tax cuts as the cause of the deficit, as unfair to lower income Americans, or as the reason important things lacked funding.

Conclusion

The largest tax increase in history is imminent, and it is unclear whether Congress and Obama will take immediately action to prevent it from happening following the election. What is clear is that those tax increases will hurt every single American and the network news media aren’t talking about them enough.

This wasn’t an unexpected economic concern – the expiration date of the Bush tax cuts has been set since they were enacted. Similarly, if Congress doesn’t patch the AMT before the end of the year millions of people will be hit with higher taxes.

The broadcast networks should have paid more attention to those massive tax hikes when they were praising the president for his middle-class tax cuts. Because even if those making less than $250,000 a year get to keep their tax cut, a tax hike on the wealthy will damage the overall economy making it even harder to lower the unemployment rate and strengthen growth.

Deutsche Bank analysts said in July 2010 that the drag on GDP would “likely” be around 1.1 percent, but could be as high as 1.5 percent. CNBC reported that according to Deutsche Bank the “nascent U.S. economic recovery would be halted” if the Bush tax cuts are not extended for the “wealthiest.”

Lower GDP and higher unemployment may sound like economic jargon, but in reality they mean the difference between keeping a job or losing it and being able to pay the bills or not for many individual Americans. That is why the evening news programs need to dig deeper and present the full story, rather than telling tales about their latest liberal hero: Barack Obama.

Recommendations

Don’t Begin with Liberal Assumptions about Taxes:

Consult Experts from Both Sides:

Networks Should Monitor Themselves:

Stop Waging Class Warfare:

Methodology

The Business & Media Institute examined all 171 stories on the broadcast evening news programs that mentioned “tax cut” or “tax cuts” between Sept. 1, 2008, as the campaign season was coming to a close, and Aug. 31, 2010.

Economists were classified as liberal, conservative or neutral based on the organization they worked for such as Brookings (liberal), Tax Policy Center (liberal) or Cato Institute (conservative). Economists working for companies without a clear ideological position bios were consulted for affiliation with any political party. Moody’s Mark Zandi was counted as a conservative because he had advised Sen. John McCain’s presidential campaign, despite his support for Keynesian economics and also his role advising the Obama administration.

Read the Executive Summary