November 15, 2002
Media bias meets wishful thinking
Greenspan is not always crystal clear, but his recent comments on the Bush tax cut were relatively straight forward: since the tax cuts are already figured into the market, don't count on any additional stimulation from the planned for cuts as they are phased in. This does not mean that rolling back or canceling those rate cuts is a good thing, quite the opposite, nor that these cuts are helpful in the long term. Simple, eh? Look at how the media covered this issue (from MRC):
Peter Jennings versus the New York Times. Usually the
networks follow the lead of the New York Times, but when the
timing of events makes a TV reporter do a story before the New
York Times has gone to press, the network reporter sometimes ends
up producing a story with a more liberal spin than even the Times
Case in point: On Wednesday's World News Tonight, ABC anchor
Peter Jennings, in noting Fed Chairman Alan Greenspan's appearance
before a House committee, declared that though the Bush
administration has "been trying to get Mr. Greenspan to endorse a
permanent tax cut, he won't go for it." New York Times readers,
however, were greeted Thursday morning with this front page
headline: "Fed Chief Says He Backs Bush on the Tax Cut." The
newspaper story relayed how "Greenspan said that not making the
tax cuts permanent would disappoint investors and make things
ABC's Lisa Stark told Jennings, as quoted in the November 14
CyberAlert, that "Republicans are trying to argue that a permanent
tax cut would actually be a boost to the economy right now. And
they would love Mr. Greenspan's blessing of that as sound fiscal
policy. But as you say, he did not go for it. In fact, he said he
doubted it would be much help."
But as New York Times reporter Edmund L. Andrews related,
while Greenspan did say that he didn't think making the tax cuts,
which are set to expire in 2010, permanent would provide a short
term boost, he very definitely did not come out against making the
tax cut permanent as Jennings maintained.
Andrews reported that Greenspan "weighed in today in favor of
President Bush's campaign to make last year's tax cuts permanent,
lending a powerful voice to a high priority of the new Republican
"'It would probably be unwise to unwind the long-term tax cut,
because it is already built into the system,' Mr. Greenspan told
members of the Congressional Joint Economic Committee."
While Jennings chose to pick up on Greenspan's supposed anti-
conservative stance against making the tax cut permanent, The
Washington Post noted how Greenspan countered liberal hopes, an
angle Jennings didn't pursue: "Greenspan offered ammunition to
Republicans as well, saying tax cuts already enacted should not be
frozen or rolled back, as many Democrats have suggested."
Overall, however, the Washington Post was in tune with the way
Jennings saw things. "Greenspan Throws Damper On Permanent Tax-Cut
Plan," read the November 14 Post headline. The subhead: "Fed
Chief's Remarks Draw Defense of Effort from Bush." Jonathan
Weisman began his inside piece:
Federal Reserve Chairman Alan Greenspan yesterday splashed cold
water on President Bush's argument for a quick vote to make last
year's tax cut permanent, telling the congressional Joint Economic
Committee that voting now to extend the tax cuts in 2011 would
have no short-term positive effect on the economy....
Greenspan's statements echoed remarks in the 1990s when he was a
leading hawk on the federal deficit. The comments will likely
inform the debate early next year over whether Congress should
vote to extend last year's 10-year, $1.35 trillion tax cut beyond
its 2010 expiration date and whether to pass additional tax cuts
that the White House is considering to stimulate the economy....
Greenspan did not expressly say whether he supported or opposed an
eventual extension of the tax cut.
"I know there's a presumption that if you make those tax cuts
permanent it will add stimulus to the economy. I doubt it,"
Greenspan said. "I think only that the market's already presumed
that they are permanent and that the only thing that probably
could have a negative effect later on is that when the markets
find out they may be wrong. But that's not a short-term issue."
A White House official said Greenspan's statement appeared to be
narrowly aimed at the near-term economic response of financial
markets. And the president is concerned about the broader economy,
including families planning for retirement and businesses planning
investment, the official said.
Greenspan offered ammunition to Republicans as well, saying tax
cuts already enacted should not be frozen or rolled back, as many
Democrats have suggested....
END of Excerpt
For the story in full:
Now contrast the Post's spin with how the New York Times
presented the same testimony in its November 14 story by
Washington bureau reporter Edmund L. Andrews:
Alan Greenspan, the chairman of the Federal Reserve Board, weighed
in today in favor of President Bush's campaign to make last year's
tax cuts permanent, lending a powerful voice to a high priority of
the new Republican Congress.
"It would probably be unwise to unwind the long-term tax cut,
because it is already built into the system," Mr. Greenspan told
members of the Congressional Joint Economic Committee.
Mr. Greenspan refuted the Bush administration on a crucial point,
however, saying that continuing the planned schedule of tax cuts
would provide almost no stimulus to the economy because the move
would affect taxes that kick in mostly during the second half of
Mr. Greenspan's support for making the tax cuts permanent is
likely to make it even more difficult for those lawmakers, mostly
Democrats, who argue that the planned tax cuts should be postponed
or scaled back because the government is already facing years of
While cautioning that Congress will face difficult choices down
the road in bringing government spending more in line with
revenues, Mr. Greenspan said that not making the tax cuts
permanent would disappoint investors and make things worse.
"There are potential adverse consequences, which I don't think are
desirable," he said....
END of Excerpt
To read the story in its entirety: