MediaWatch: March 1993

Vol. Seven No. 3

Goodbye, American Way

CBS Plugs Europe

CBS News reviewed the wonders of European tax and infrastructure policies. "No, President Clinton is not on 60 Minutes Sunday, but we hope he'll be in the audience. Lester Thurow has the best explanation yet of what's wrong with us." That's how CBS promoted its February 14 piece on European-style socialism. Reporter Steve Kroft traveled with the MIT Professor to Germany where Thurow peddled some of his proposals to model the U.S. after Europe.

Thurow argues that the U.S. doesn't spend as much money on infrastructure as Europe. Kroft accepted the premise, asking: "Why hasn't the American government been investing in infrastructure?"

According to the Hudson Institute's Alan Reynolds, the U.S. has spent quite a lot. In 1991 federal, state, and local infrastructure expenditures totaled $139 billion. In National Review, Reynolds explained the U.S. private sector "takes care of much of the investment that is left on the taxpayers' backs in many other countries, where governments mismanage national telephone companies, airlines, universities, hospitals..."

60 Minutes should have explored Thurow's previous predictions. In 1982, prior to Reagan's boom, he wrote: "The engines of economic growth have shut down here and across the globe, and they are likely to stay that way for years to come."

A few days later CBS suggested how to pay for all of Thurow's spending: a Value Added Tax (VAT). On the February 19 CBS Evening News, Tom Fenton promoted the tax on the increase in value of a product levied at each stage of production: "Consumption taxes are nothing new in Europe. They help pay for high-speed trains that cruise at almost 200 mph; German highways that are so well built they have no speed limit; and social benefits that will pay this unemployed Frenchman two-thirds of former salary for the next two years."

Fenton briefly noted a VAT's regressiveness and that such a tax in the U.S. could "slow consumer spending and stall the economic recovery," but he asserted: "A VAT does help provide social benefits to everyone, rich and poor alike. That even includes treatment at health spas at government expense....A mere five percent VAT could raise a hundred billion dollars a year. That would knock a big hole in the deficit."