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Simply put, it gives them power. Scaring the living shit out of everyone drives ratings and makes people vote out of fear. It's a whole industry now.
The Politicians push imaginary or extremely exaggerated threats, people vote for them. The media goes even further with their speculation, relying on the lies told to them by politicians, and that drives their ratings. The insiders who get paid to fight the wars reap extreme amounts of profit. And assholes like Dick Cheney get to go ahead with his cynical game of global conquest under the guise of "protecting us from terror".
They both scratch each others back. They're not going to do anything significant in exposing lies because they depend on those lies for ratings and political power. A new war, new Armageddon scenario's, new enemies would improve their bottom lines. Exposing the con-game from Iraq, (and for that matter Al Qaeda) would just make people cynical about their motives and it would erode their power. For politicians it would make people less likely to support their outrageous actions from Gitmo to the Patriot Act. For the media, it would undermine their credibility, exposing them for the tabloid news they are, and they would lose viewers.
They're going to do anything they can to ignore this stuff. It's a win-win situation for them.
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