October 10, 2013
According to polling data the Republicans are taking a beating over their decision to shutdown the government and risk default on the debt to stop Obamacare. The Washington Post decided to help them out. Using their new journalism model, where there is no distinction between news and editorial views, they used the news section for this purpose.
In a front page article in the implications of missing the debt ceiling, the Post discussed a report from Moody’s which argued that the government could structure its payments so that the debt is serviced and there is no default. It therefore reasoned that the impact on financial markets would be limited. The piece discussed this assessment and then told readers:
“The memo offered a starkly different view of the consequences of breaching the debt limit than is held by the White House, many policymakers and other financial analysts. Over the weekend, economists at Goldman Sachs said the economy would take a devastating hit even if Treasury kept making payments on the debt, because the pullback in federal spending would amount to roughly $175 billion, or 4.2 percentage points of gross domestic product.”
Actually Moody’s view (as described in the Post piece) is not a “starkly different view.” Moody’s report focused on the financial market implications. It did not discuss (at least by the Post’s account — I couldn’t find the memo), the macroeconomic effects of the cuts discussed by Goldman Sachs and other economists.
It would be striking if analysts at Moody’s really did have a “starkly different view” of the economy than almost all the other analysts who follow it. However the Post did not actually produce any evidence that this is the case. It just misled readers by implying that the huge macroeconomic hit from sharp cutbacks in spending is a debatable point, as opposed to something like the shape of the earth, which serious people do not waste time disputing.
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