The Good, the Bad & the Ugly
Barron’s Recognizes the Threat of Obama’s Tax Proposal; 'Today' Rejects Personal Responsibility, Attacks Online Dealmakers; Media Call Obama's 'Economic Disaster' Exaggeration a 'Sharpened Attack'

August 27, 2008

The Good
     It seems like a no-brainer: Raising taxes is bad. It's a shame that Barron's is one of the few outlets to pick up on it.

     An economic plan floated by Democratic presidential hopeful Sen. Barack Obama, Ill., would raise taxes on incomes above $250,000 – with the highest rate at 39.6 percent – and redistribute the wealth to the poor and middle-class. But that would be a big mistake, according to an article by Jim McTague in the August 25 issue of Barron's.

     "It's almost as if Obama wants to repeat the mistakes of Herbert Hoover," McTague said. "During the Great Depression, Hoover raised the top marginal rate to 63% from 25% and hiked corporate taxes, too, says Michael Aronstein, chief investment strategist at Oscar Gruss & Son in New York. The moves siphoned needed investment capital out of the markets and into the hands of bureaucrats, delaying the turnaround."

     McTague explained that while Obama may be unable to avoid it this would ultimately be bad for investors.

     "Because of the budget deficit, now approaching $500 billion a year, the next president, regardless of party, will have his hands tied, many observers say. He will have little choice but to raise taxes and cut spending," McTague wrote. "Obama's tax plans, however, point to a philosophy that historically has worried market pros. Raising taxes on the investor class simply doesn't help investment."

The Bad
     Have you ever felt so embarrassed about a financially damaging mistake that you tried to blame everyone except yourself to cover your tracks? If so, you can always count on a network morning show to back you up.

     That's what NBC's "Today" show did August 26 in a segment attacking online dealmakers. Co-host Meredith Vieira warned shoppers could find "mysterious and unwanted charges on their credit cards."

     "Kathy Danzer wanted to reconnect with old classmates, so she bought a subscription on a popular high school reunion Web site," correspondent Natalie Morales said. "But when she got her credit card bill there was another unexpected charge: an additional $12.99 for something called ‘GREATFN.'"

     With all the complaining – not to mention the foreboding soundtrack the segment featured – a viewer might think Danzer and others like her had trouble getting refunds for the money they mistakenly spent. But that wasn't the case, as the company refunds money to unsatisfied customers, Morales admitted at the end of the segment.

     "Kathy Danzer, the person you saw in that piece, was able to get her money completely back," Morales said. "It took a couple of weeks and a lot of persistence on her part." Perhaps a couple weeks of persistence taught Danzer a lesson in reading the "fine print."

     As it turned out, "Great Fun" was a membership rewards club that offered online shopping discounts for a monthly fee, according to Morales. Danzer had signed up for the program via www.Classmates.com to get $10 off her subscription fee.

     "This offer may look great, but it's actually a marketing tool," Morales said. "And here's the catch: by just filling out this survey, you're actually signing yourself up for a rewards program that you may neither want nor need, but you'll be paying for it every month on your credit card."

     But the "catch" was clearly outlined as a seven-day free trial of the subscription-based program. And a disclaimer - partly cropped out by the "Today" video - warned customers that, "By typing your email address below, it will constitute your electronic ..."

The Ugly
     Perhaps it's the pied piper effect, but when Democratic presidential nominee Sen. Barack Obama speaks, the media follow right along in lockstep.

     The word "disaster" can invoke images of the aftermath of hurricanes, tornados or tsunamis. But on the campaign trail, where there are political points to be scored, it's one quarter of a slight economic contraction followed up by two quarters of shallow economic growth, according to Obama.

     At an August 19 town hall meeting in Albuquerque, N.M., Obama said an "economic disaster is happening right now." The media ignored the exaggeration. Instead, journalists across the board credited Obama with "sharpening his message."

     "Then he started running ads saying 'Oh, Obama's just going to raise your taxes and he'll lead to an economic disaster," Obama told his campaign audience. "Mr. McCain, let me explain to you, the economic disaster is happening right now. Maybe you haven't noticed."

     Compare that to the economic reality. Although the economy, which has yet to enter into a technical recession, leaves much to be desired, there are encouraging numbers for the economy as well, as CNBC's "Kudlow & Company” host Larry Kudlow pointed out on National Review Online.

     "If the economy is in recession, why are business durable-goods orders and shipments booming?" Kudlow said. "Non-defense capital goods (capex) excluding aircraft rose 1.4 percent in June, or 19 percent at an annual rate over the last three months. Capex shipments rose 0.7 percent in June, or 8 percent annualized over the last three months. Business looks pretty healthy to me."

     But rather than dissecting Obama's claim of "economic disaster," the senator from Illinois was noted for "sharpening" his attack - a buzz word used by broadcast media, in addition to other outlets.

The Good, the Bad & the Ugly tracks the best and worst media coverage of business and economics. Readers are invited to submit suggestions or news tips to Staff Writer Jeff Poor at jpoor@mediaresearch.org.