A Letter to Fox News

The following is a letter I'm sending to Fox News. I'm not sure whether their main concern is being "balanced" and whether they are really interested in reporting all the news. I've written to various members of their team earlier this year about the 2012 budget problems.

If you have a concern about what they're reporting (or in this case not reporting) you might want to write to them too!
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April 10, 2011

Sarah Courtney
White House Producer

Chad Pergram
Sr. Producer – U.S. Congress

Carl Cameron
Chief Political Correspondent
400 N Capitol ST NW
Washington, DC 20001

Re: 2011 and 2011 Budget Coverage

Dear Fox D.C. Political Staff,

All the stories you write about the 2011 and 2012 budget debates are nice, but what they actually are is cover for the White House and Democrats as they pull off the big story. The Financial destruction of our Nation. I understand why Politico, the NY Times and the Washington Post do it, but I had hoped Fox News might be different. I think I’ve found out that’s not the case.

The big story isn’t the budget deal and who won (the radicals in the WH won), the big story is how dishonest the WH OMB 2012 Budget is and how no one seems to be concerned about it. But I’ll keep telling people about it until they listen AND DO SOMETHING about it, or until I can no longer write.

The WH OMB began using unreasonably low budget assumptions for inflation beginning with the 2010 budget. They’ve continued that through the 2012 budget. Inflation:

2010 Actual = 1.6%
2011 Projected = 1.3% (Why lower when we are in a recovery?)
(We reached this in February with 7 months to go!)
2012 – 2021 Ave. Projected = 2.0% (Haven’t had a decade that low in 50 years)
2012 – 2021 Max. Projected = 2.1% (Only 7 yrs in past 45 and those were recessions)

Inflation was at 1.314% after 5 months meaning we will surpass their ave. and max. for 2012 – 2021 in 2011! But not only is the inflation assumption understated, so are the interest rate assumptions. They assumed an average 3.0% 10 Treasury rate for 2011. That was a decrease from the 3.9% they had projected in the 2011 budget. We surpassed 3.0% in December and have been above it each month since.

So why would the WH OMB and Goolsbee (a world recognized economist) use such understated assumptions in the budget? Compounding and Interest Rates!

The compounding factors for the last five years in the budget projections would be much higher if they had used 3.5% as compared to using 2.0% as the average inflation assumption. This means the deficits for those years are understated. And since interest rates are tied to inflation, using lower inflation assumptions allows them to use lower interest rate assumptions. 1% times $20 trillion = $200 billion. Six of the 10 years the projected National Debt exceeds $20 trillion. The average for the 10 years is $21.4 trillion. And those numbers are understated! Imagine what Net Interest Expense should be!

So as Moody’s talks about a downgrade (which will increase interest rates), as the head of WalMart talks about serious inflation, as the IMF talks about abandoning the dollar and as China raises their long term treasury rate to over 6% (and ours is at 3.5%) we hear all kinds of reports on the 2011 budget deal, but not one report on how dishonest the WH OMB was in coming up with their budget assumptions.

I’m also still hoping that someone at Fox will cover the fact that Democrats have been lying about Social Security and the budget. It might be an important story too. I first heard Sen. Durbin make the claim on Meet the Press. Then Sen. Reid, Franken and Sanders held the big rally. Then Rep. Berrerra made the claim on Cavuto. They claim that Social Security isn’t in the budget and doesn’t add 1 penny to the deficit. That’s not exactly what Table S-4 on page 176 shows, is it! Why the media and the Republicans haven’t pointed that out is beyond me!

And why do we give Democrats any credibility on the budget? As this year shows, Congress passes our budgets. And the last time a budget passed by a Democrat controlled Congress finished with a surplus was 1969. But let’s not tell anyone. It wouldn’t be fair would it?

Keep up the “good” work. At this rate we have less than two years before the entire collapse of the Federal Government’s finances. Now that will be a story worth covering. And we’ll know why it happened.

With great concern.


Alan R. Davis
Private Citizen