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At one point in time, journalists were seen as servants of the people and as watchdogs guarding against government corruption. Hence the need for free press outlined in the Constitution - the founders wanted to assure the press the right to hound the government and try to keep it honest.
Unfortunately, over the years the role of a journalist has changed from uncovering stories to covering events. It's simply easier and safer to report that a person said something than it is to dig and try to find out if what that person said is the truth, or why they might have said what they did. Thus, whenever you read the paper these days, you find that the main tool of a reporter is attribution of quotes. They take whatever someone said - like, say, the government - and report that that entity said what it did. It's the perfect way to avoid ever writing down a lie, because you never make any claims other than that people said what the reporter heard them say. In other words, it's an objective method of journalism, and it is the standard to which all mainstream journalists these days aim.
The problem with this system is that the journalists have to choose who to quote. They have decide what sources are reliable enough to report, and what sources should just be ignored. After all, they can't go around reporting everything that the town drunk mumbles on about, even though it would be objective as long as they attributed the claims to him. Instead, professional journalists follow a hierarchy of reliable sources, and wouldn't you know it, the government is usually at the top. So when a journalist wants to report how many civilian casualties there were in some aerial bombing of a city block in Baghdad, for example, they go straight to the most reliable source: the Pentagon.
Yet it may not be in the Pentagon's best interest to report those numbers truthfully. Instead, they may choose to report only the numbers that make them look best, or they may choose to report fudged numbers. They may more subtly influence peoples' perception of the numbers by playing word games and using novel euphemisms. For example, the Pentagon could choose to define anyone in or around the target building (which they have decided to designate as a military target) as military personnel because of where they were. Hence, the numbers can be skewed even more subtly than just reporting fudged numbers or holding back unfavorable numbers.
Now, the journalists here seem on the surface to have done nothing wrong. After all, they were objective: they merely reported what someone (the Pentagon, in this example) said. However, when they have a presumably reliable source like the Pentagon, mainstream journalists are unlikely to go digging for further information. As mentioned above, it's simply easier to stick with what is thought of as "reliable" and report that.
Unfortunately, the average newspaper reader or T.V. news viewer doesn't take such subtle distinctions into account. They don't always look skeptically at the sources of a claim any more than the lazy journalists do. Instead, when the news reports that "The Pentagon announced today that seven Iraqis were killed by marines when a protest turned violent and the Iraqis began shooting at the American soldiers...", the average person simply hears "Seven Iraqis were killed by marines when a protest turned violent and the Iraqis began shooting at the American soldiers...". In reality, the Iraqis may not have fired a single bullet, or more than seven may have ended up dead from wounds, etc. The same problem would apply to claims of police brutality at a peace rally. Whenever such claims appear, the official police spokesperson goes in front of a camera and claims that the ralliers started it, and that the police acted appropriately. The news then goes back and reports this, and it becomes generally accepted that the police acted appropriately. Even today when cheap portable cameras can document exactly what happened, the videos of police brutality are more likely to never be seen outside of a niche web viewership.
Part of the problem here isn't just the news though. Sometimes journalists do offer the other side of a story. They might report that "some Iraqis claimed that the marines fired unprovoked" or that "some of the protesters at the rally claim that the police used unnecessary force." Generally these opinions get a fraction of the space that the "official" story does, but they are often there nonetheless. The problem is a more general one, I think, and that is that the average citizen tends to take the "official" word as the last one, and most dissenting opinions are simply ignored.
This probably stems from a habit on our parts today to submit to hierarchy and authority - the foundations of our particular society, really - when they confront us. Many people might look upon the claims of the president skeptically (particularly those who aren't of the same party), but that is a rare instance. When it comes to the more subtle layers of government, the layers of bureaucracy, people don't stop to question authority very often. The spokesperson (i.e. public relations representative) of a police station or army branch or whatever will be taken at their word more often than not because people are so used to getting their information from "official" sources. It is too much work to judge for one's self whether an official source is really reliable. Instead, people rely on the news to be objective and only report factual stuff. They trust the news.
And yet the way the journalistic system is set up, they have just as little interest as their readers and viewers in looking at things with a skeptical eye. It is simply easier and safer to just attribute quotes to official sources than to question those reports and try to find the truth behind them. And anyone trying to get their dissent of official claims heard has an uphill battle to fight: big, established entities like governments and large corporations have lots of money to throw at public relations, spokespeople, funding studies that support their claims, etc. So they have a double advantage over anyone else, and thus when the official sources are wrong, we are not likely to find out more of the time.
How can the problem be fixed (aside from convincing journalists to be more vigilant and skeptical)? For one thing, I think it is imperative that we fight against media consolidations. A recent FCC decision removed many of the last few restrictions on media conglomerates becoming too big. Before long, we might end up with one company owning all the major media and news in the country and they're likely to have a bias favoring government and big business - which is worrisome, because some of the worst governments in the world, past and present, have consolidated and held their rule through control of print and airwaves. When you control what people see, read and hear, to a large extent you control what they think.
So fight against media consolidation. Fight against the few monolith transnational corporations that now own and control almost all of the T.V. we watch, news and magazines we read and radio we listen to. Only in a society where independent voices can be heard will we have a chance at finding out the truth and keeping our government under control. Voice your opinion to the FCC. Express your concern to your representatives. Support indie radio and print. Whatever you do, just don't let the "objective" journalists convince you that what they report are facts. What they report are claims, and those claims come from groups for whom the truth may not be in their interest. Be vigilant. Be skeptical.