Sunday, February 20, 2011

Financial Journalism & The Girl with the Dragoon Tattoo

Left Margin


Financial Journalism and The Girl with the Dragoon Tattoo


By Carl Bloice - Editorial Board


February 17, 2011


In a good novel, writes blogger Randy Mayeux, "we can

find quotes that speak to the issues of the age." He's

referring to the much acclaimed "The Girl with the

Dragoon Tattoo" and its relevance to the state of

financial journalism in real life today. "Read it, and

think about the financial reporting (and, really, most

`journalism') in this country over the last two-three

years," he says.


Some critics have taken the author Stieg Larsson to

task for spending time on the state of economic

reporting, suggesting that dragging in the issues of

the day distracts unnecessarily from the enjoyment of a

good murder mystery. For me it was one of the book's

highlights. The story's central character, Carl Mikael

Blomkvist, himself a financial journalist, says some

pretty nasty things about his Swedish colleagues,

especially about their tendency to go along to get

along, to accept the official line or conventional

wisdom about events.


I was thinking about this the other day when I read on

the front page of the New York Times:


    "Yet their preference for spending cuts, even in

    programs that benefit them, dissolves when they

    [the public] are presented with specific options

    related to Medicare and Social Security, the

    programs that directly touch millions of lives and

    are the biggest drivers of the long-term deficit.'


The problem with that sentence is that the last dozen

or so words in it are simply not true. Social Security

is not one of the major contributors to the Federal

budget deficit; it's not a contributing factor at all.

Now it's possible that the reporter, Sheryl Gay

Stolberg, doesn't know any better, that she just read

it somewhere and assumed it to be true. The problem is

that the question has been explored so many times over

the past year and the mythical contention between

Social Security and the deficit exposed by so many

experts in the field that one has to wonder why such

misleading statements get past the Times' editors.


"Just to be very clear, absolutely nothing needs to be

done," economist Dean Baker of the Center for Economic

and Policy Research has written. "If we look at the

projections from either the Congressional Budget Office

or the Social Security trustees - they've yet to come

out with their new ones, but in any case, the one from

last year - the program could pay all scheduled

benefits well into the future, at least twenty-seven

years into the future. And even after that, it could

still pay the vast majority of benefits, assuming

nothing is ever done. Now, somewhere down the road,

we'll probably make changes in the program as we've

done in the past. But the idea that somehow something

has to be done anywhere soon, this is crazy. People

have paid for those benefits. So, in effect, what we'd

be doing is defaulting on the bonds that are held in

the trust fund to pay people their benefits that - when

they come due. So, nothing has to be done."


"Now, what's going on is that you have this real craze

about the deficit, because the reason we have the

deficit, of course, was we had a collapse of the

housing bubble," continues Baker. " But there's this

obsession about the deficit - `we have to do something'

- and you have people running around Washington saying,

`Well, you know, we can't do anything on healthcare,

because we tried that and the insurance industry was

too powerful, the pharmaceutical industry was too

powerful, so therefore we have to cut Social Security.'

It's close to a non sequitur and should have people

absolutely fuming at their representatives in Congress.

But that's where we are in Washington."


Evidently, Times columnist, Davis Brooks, doesn't see

it that way. Last week he was yapping away at how

"Spending on Medicare, Medicaid, Social Security and

interest on the debt" is driving up the deficit. He

even proposed a new united front of "foreign aid

people, the scientific research people, the education

people, the antipoverty people and many others" to

insist on action to" slow the growth of Medicare" and

"reform" Social Security. Keep in mind that if the

objective is to save money, any reform of Social

Security means less of it. Brook has assigned to his

new group the pompous title of "The Freedom Alliance."


Why any "antipoverty people" would join in an effort to

cutback Medicare and Social Security is hard to fathom

unless they just wanted more people to represent.


"That's right folks, you get to say whatever you want

in the media now to further the cause of cutting Social

Security," economist Baker has said. He made the remark

a year after hearing Cokie Roberts telling viewers

that, "You could close this capital or turn it into

condos and you could close down every domestic program

that we have and you would still have a deficit because

of Social Security and Medicare and interest on the

national debt."


"Well that's not quite right. Social Security is

running an annual surplus," wrote Baker. "The money

that program takes in each year in taxes and interest

on its bonds exceeds what is being paid out in

benefits. It's not clear what Ms. Roberts had in mind

when blaming Social Security for the deficit, but it

has nothing to do with reality."


David Brooks is quite aware that the vast overwhelming

majority of people in this country are opposed to cuts

in Medicare and Social Security. Elderly Tea Party

people aren't buying that one. That's why he trying to

trick advocates for the poor and defenders of education

into his absurd coalition. "Specifically, they have to

get behind an effort now being hatched by a group of

courageous senators: Saxby Chambliss, Mark Warner, Tom

Coburn, Dick Durbin, Mike Crapo and Kent Conrad. These

public heroes have been leading an effort to write up

the Simpson-Bowles deficit commission report as

legislation to serve as the beginning for a serious

effort to get our house in order."


"Hatched" is the right word here.


Imagine trying to tell students who are up in arms

about the draconian cuts being made to public education

these days that to their precarious futures should be

added reduced Medicare benefits and cutback benefits or

a privatized Social Security system turned over to Wall Street.


Actually, there is no Simpson-Bowles deficit commission

report and Brooks knows that. The commission was a

failure. It never produced a plan for dealing with the

deficit or anything else. When it became apparent that

the 14 out of 17 votes necessary were not there, the

co-chairs, Republican, former Sen. Alan Simpson and a

Democrat, former Clinton Administration Chief of Staff

Erskine Bowles released their own proposals in their own names.


Reality? Who said anything about reality?


This Monday on MSNBC's Andrea Mitchell Report, host

Nora O'Donnell ripped into President Obama, accusing

him of ignoring the recommendations of "his own fiscal

commission" in his budget proposal. What "is he really

doing about our deficit?" she sputtered. After saying,

"we've got to get this clear," she put up the above

quoted David Brooks erroneous allegation about Social

Security and the deficit.


Take this from the prestigious UK-based magazine The Economist:


    "A year ago Mr. Obama set up a deficit-reduction

    commission, which duly produced a sensible report

    at the end of last year. He has failed previously,

    and failed again this week, to endorse the

    commission's conclusions. He offered no specific

    proposals for cutting the cost of the biggest

    drains on the federal purse: health care, Social

    Security (pensions) and defense."


Again, Social Security pays for itself.


Again, the commission reached no conclusion. It didn't

even take a formal vote.


That last bit about defense is interesting. A lot of

people in our country favor reducing the bloated and

mostly irrelevant military budget. But you won't get

any support for that from the leading deficit hawks,

nor from any of Brooks' Congressional "heroes."


While Social Security and Medicare are usually linked

in these discussions, the problems are not the same.

The latter actually is linked to federal expenditures.

But the problem is not Medicare itself; it the

inexorable rise in medical costs. Don't hold your

breath waiting for anything to be done about that.

Affect the huge profits of the pharmaceutical and

medical devise industries, or the corporate hospital

chains? Give me a break.


Because of demographic changes, sometime in the future

Social Security is going to need more money to meet the

needs of retiring seniors. There is something that can

be done about it. When President Obama was candidate,

Obama he said: "I do not want to cut benefits or raise

the retirement age. I believe there are a number of

ways we can make Social Security solvent that do not

involve placing these added burdens on our seniors."


And, "Currently, the Social Security payroll tax

applies to only the first $102,000 a worker makes. If

we kept the payroll tax exactly the same but applied it

to all earnings and not just the first $97,500, we

could virtually eliminate the entire Social Security shortfall."


Why can't that be put on the table? Because it doesn't

fit the larger object Les Leopold wrote about recently

on the Huffington Post :


    "Wall Street has a plan and a new logic that is

    quietly infiltrating the media and policy circles.

    It's called `structural reform.' Although it is

    likely to involve some additional pain and

    suffering, it's being sold as the new magic bullet

    for our ailing economy."


Leopold continued, "Structural reform is Wall Street

speak for reducing what is often called the `social

wage' for working people in every way possible:

increasing the retirement age and cutting Social

Security benefits, government employment and benefits,

funds for public education, defined benefit pensions,

and health care expenditures....and of course, extended

unemployment benefits as well."


Sometimes this business can get downright cynical and

heartless. What is being promoted is not just to change

Social Security and Medicare. It is to diminish them.

It is - by any means necessary -- to devote fewer

resources to the sick and elderly.


Last July, columnist Michel Gerson wrote in the

Washington Post: "Devoting resources to the sick and

elderly counts many achievements and benefits. But we

are reaching a point where these important priorities

threaten to overwhelm everything else."


That's utter nonsense. But Larson's protagonist missed

one important point. Writers write but editors edit and

publishers publish. They all ought to be accountable.


"Media coverage reflects what sells, and the political

arena is no exception," Tarsi Dunlop, who is the

Director of Operations at the Roosevelt Institute

Campus Network wrote February 10 on the new deal 2.0

site. "Conflict and hypocrisy reign supreme, while the

realities of policy are often left to fend for

themselves. Social Security is a poignant example of

such casualties. It is often the victim of

misinformation and political agendas, which are

designed to obscure the fact that a majority of

Americans support the program. Most recently, Social

Security was hijacked by the conversation about the

national debt, yet another attempt by conservatives to

reframe the narrative and detract from the facts.

Consequently, the program's fundamentals were once

again lost to media spin, which sees no profitable

advantage in telling a non-partisan story. The media's

reluctance to move beyond Republican sound bites is a

fundamental disservice to Americans across the country.

How else are they supposed to get the full story?"

___________ Editorial Board member Carl Bloice

is a writer in San Francisco, a member of the National

Coordinating Committee of the Committees of

Correspondence for Democracy and Socialism and formerly

worked for a healthcare union.


No comments: