In the first month of 2007, the panel of CNN’s “In the Money” made gloomy economic predictions [1], complained about fluctuating gas prices [2] and moaned about wages [3], among other things. On the February 3 show, they pondered whether or not the middle class was “stuck,” but the show should have made viewers question whether or not “In the Money’s” economic coverage is “stuck” in a rut.
CNN’s Ali Velshi, Christine Romans and Jennifer Westhoven ran with the negative, voicing Democratic talking points and dismissing solid evidence of a good economy.
“The state of our economy is strong.” The reporters briefly provided evidence of a strong economy following that statement from President Bush at the New York Stock Exchange. But they quickly zeroed in on another Bush comment: “The fact is that income inequality is real. It’s been rising for more than 25 years.”
That served as a segue into a discussion about the new Democratic Congress’ concern for what Velshi called the “problem facing the middle class.”
None of the show’s anchors stopped to wonder whether income inequality has truly been on the rise. A January 8 report [4] from the Cato Institute suggests that income inequality may not have significantly increased in the last 25 years.
The report’s author, Alan Reynolds, noted that changes in tax rules have made it very misleading to compare tax returns from the ‘70s and ‘80s to current tax returns. Reynolds concluded that, “Aside from changes in taxpayer reporting due to changes in the tax laws, there is no clear evidence of a significant and sustained increase in the inequality of U.S. incomes, wages, consumption, or wealth since the late 1980s.”
“I think the middle class is in pretty good shape,” said “In the Money’s” guest, Ohio University economics professor Richard Vedder. “Americans are living better than they ever have before.” Vedder noted that middle class Americans overall live longer and enjoy better quality of life than their ancestors. They also have opportunities that previous generations would have considered luxuries only for the very wealthy, he said.
Romans countered with more complaints about income inequality, citing “Clinton alumni” who had raised concerns. From the savings rate to college costs, the trade deficit and credit card debt, Romans pummeled Vedder with liberal talking points. Westhoven and Velshi did the same. He answered every concern, reiterating that the economy was strong and Americans, including the middle class, were doing well. But the reporters wouldn’t be satisfied.
Romans wanted to know why Americans are experiencing the lowest savings rate in 74 years. Vedder explained one reason was that people are taxed so heavily it doesn’t really pay to save, fighting against “double, triple taxation of savings, corporate taxation, private taxation, capital gains taxation, death taxation. All of this impacts negatively on saving.” Velshi brushed aside Vedder’s point by saying it was only “intellectually” valid.
Romans, searching for an economic downer, threw together debt and deficits from individual Americans to the overall country. “You’ve got more credit card debt outstanding today than probably 100 countries combined, their GDP, I mean, it’s incredible, it’s billions of dollars.” She added to her picture of debt the U.S. budget deficit and trade deficit.
The U.S. budget deficit recently was less than 2 percent of GDP – a smaller percentage than Europe’s or Japan’s, Vedder said. He also explained that the trade deficit is not necessarily bad, and the country can grow during times of a trade deficit.
“One reason we have a trade deficit is because we have capital pouring into our country because it’s a great place to invest,” Vedder said.