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Home Publications Blogs Beat the Press Do We Have to Threaten Big Bird to Get NPR to Report the Budget Fairly?

Do We Have to Threaten Big Bird to Get NPR to Report the Budget Fairly?

Friday, 09 November 2012 06:20

The issue arises because Morning Edition decided to lead off its top of the hour news segment by telling listeners of the number of days until we hit the "fiscal cliff." While one could view this as a random fact, like the number of days until the winter solstice or Super Bowl XLVII, but that is presumably not how it was intended. Most likely this number would be viewed as a countdown against an important deadline.

Of course the end of the year is not an important deadline as every budget expert knows. If there is no deal by the end of the year, we will be subject to a higher rate of tax withholding come January 1, 2013. Since most of us will not get a paycheck on New Year's Day, we will not be immediately affected by the higher rate of withholding. We would only see an impact when we got our first paycheck of the year in the middle or the end of the month. If Congress and the President work out a deal before that point, there will be no increase in withholding.

Even if a deal is not reached in time to affect the first paycheck, if they come to an agreement later in the month, the extra withholding can be paid back in the second or third paycheck. This is likely to have a minimal impact on the economy, since most people will not change their spending patterns if they expect to get any extra withholding refunded in the near future. For people literally living paycheck to paycheck the extra withholding will be a hardship, but the impact on the economy will be minimal.

There is a similar story with government spending. If it looks like a deal will be reached, President Obama need not adjust the flow of spending at all in January.

For these reasons, there is no special importance to the January 1 deadline. There are of course many political figures, such as the corporate CEOs in the Campaign to Fix the Debt, who are trying to create a crisis atmosphere in order to force an early deal. They hope that this crisis atmosphere can create an environment in which hugely unpopular actions, like cutting Social Security and Medicare, will be possible.

If people at NPR want to support this political effort then they should do it in explicitly labeled commentary. They should not hijack the news section to advance their political agenda.

Comments (4)Add Comment
A Gordian unraveling
written by Robert Salzberg, November 09, 2012 6:57
Republicans could continue to comply with Grover Norquist's No New Taxes Pledge by passing legislation this year that allows taxes to rise come 1-1-2013 on higher income Americans but doesn't take effect till 12:01am on 1-1-2013 so it would technically be a tax cut for everyone instead of a tax increase.
Exploiting a Norquist Loophole
written by Robert Salzberg, November 09, 2012 7:39
Norquist's pledge includes:

"oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

Since both Democrats and Republicans have agreed to extending most of the Bush tax cuts, Democrats should use that as an opportunity to pay for it with tax increases they'll never get otherwise from Republicans.

SInce comprehensive tax reform won't happen before next year, the Bush tax cuts should be extended for 2 more years at most or else there'll be no real pressure for comprehensive tax reform.

A 2 year extension of most of the Bush Tax cuts could be offset dollar for dollar by 10 years worth of new tax revenue that includes ending oil and gas subsidies, ending the carried interest loophole, ending corporate jet subsidies, limiting the effect of specific deductions to a max of 25%, letting the estate tax rise and letting the long term capital gains rate rise to 20%.
written by skeptonomist, November 09, 2012 1:12
Although there is no actual cliff, keeping the economy guessing about what will happen after the deadline is harmful, since all kinds of economic decisions are affected. There should be pressure on Congress to act responsibly, meaning come to an agreement now instead of at the deadline or after. A deal now would not be an "early" deal, it would be a deal delayed by over a year from the 2011 debt-ceiling crisis. Of course if you think that the cuts which will come into effect at the end of the year are in themselves satisfactory and sufficient, you will be pleased if no action is taken.
written by Robert, November 10, 2012 11:19
Threatening Big Bird wouldn't do much to NPR. You're thinking of PBS.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.