The Associated Press Strikes Again, This Time on a Budget Deficit Story

At the end of a report about how the estimated deficit for the current fiscal year that will end September 30 has again been revised downward, this time to $260 billion, Andrew Taylor of The Associated Press writes:

The Bush White House has gained a reputation for overstating deficit figures early in the year in order to report better news later. In February, the White House predicted a $423 billion deficit for the current year.

What Taylor fails to note is that the people who have made such a claim are predominantly partisan Democrats (example: July 11, 2006 at DNC blog) and partisan columnists (examples: Brad DeLong [July 2006], BuzzFlash [Feb. 2004]).

As to the substance of the claim –

• The Congressional Budget Office (CBO) uses “static analysis,” naively assuming that tax cuts will result in no new revenues from additional economic activity, and conversely assuming that tax increases will achieve every dollar of projected revenue increases, when it calculates its deficit estimates. This puts the White House in a position of either doing their own estimates using static analysis, a path of least resistance, or doing “dynamic” estimates that attempt to predict revenue growth resulting from tax cuts.
• Rather than engage in a day-by-day knock-down, drag-out battle with CBO about economic assumptions, the White House has chosen to do its own estimates using static analysis, in effect saying, “OK, we’ll give in on static analysis now so we can crow when the dynamic economy does its thing and causes revenue increases.” That is turning out to be a sound political strategy.

Hey, it’s not The White Houses’ fault that the static analysis crowd continues to be wrong. But it IS Andrew Taylor’s fault that he either doesn’t, or won’t, recognize the origins of the announced improvements, or the partisan nature of the whining about them.

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UPDATE: Porkopolis provides two timely and unfortunate reminders. The first, as has been the case for at least 40 years, is that the reported annual budget deficit is much less than the annual increase in the national debt, as USA Today noted on Friday (previous BizzyBlog posts on that are here and here). The second is, as I noted last year, that the federal government has failed the audit of its books for the past nine consecutive years.