Wall Street manipulates deficit angst with fiscal cliff fear

Deficit hawks rely on media allies to report budget doom to advance their agenda of cutting Medicare and social security

Dean Baker
guardian.co.uk, Monday 3 December 2012 13.49 EST

Many of the nation's most important news outlets openly embrace the agenda of the rich and powerful that colors its coverage of major economic issues. This is perhaps nowhere better demonstrated than during the current budget standoff between President Obama and Congress, which the media routinely describes as the "fiscal cliff". This terminology seriously misrepresents the nature of the budget dispute, as everyone in the debate has acknowledged. There is no "cliff" currently facing the budget or the economy.

If no deal is reached this year, then on 1 January, daily tax withholdings will rise by an average of about $4 per person. Any money actually deducted from pay checks will be refunded if a deal is subsequently reached that returns tax rates to 2012 levels. Government spending probably won't change at the start of the new year, since President Obama has considerable discretion over the flow of spending. No one can think that this modest increase in tax withholdings would plunge the economy into a recession, but the Wall Street types seeking to dismantle social security and Medicare have used their enormous wealth and allies in the media to generate this kind of fear-mongering across the country.