August 12, 2008

AP, As Usual, Botches Its Monthly Report on the US Deficit

Last month, it was the Associated Press’s Jeannine Aversa’s turn to mishandle the reporting on Uncle Sam’s Monthly Treasury Statement on the government’s receipts, spending, and deficit.

Aversa’s usual specialty is hallucinating over “blizzards of pink slips” and “jobs vanishing into thin air” when she does her “report,” aka her downbeat propaganda piece, on the government’s monthly jobs release.

In covering June’s Monthly Treasury Statement, Aversa selectively rounded the data she presented (covered at NewsBusters; at BizzyBlog) to make receipts look less impressive and to minimize the true extent of the government’s current year spending spree.

To cover July’s Monthly Treasury Statement, the AP brought in Martin Crutsinger, who once again botched the report in his own unique way (saved at host for future reference).

Crutsinger actually did pretty well through most of the report, but he blew it up in its final two paragraphs, which are also the final two paragraphs in the following excerpt (bolds are mine):

The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.

The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007.

The deficit outstripped the $97 billion gap that Wall Street economists had been expecting for July.

….. So far this year, the budget deficit totals $371.4 billion, more than double last year’s deficit through the same time period of $157.4 billion.

….. Through July, government revenues total $2.094 trillion, down 1 percent from the same period a year ago. Revenues have been weaker this year, reflecting the sharp slowdown in the overall economy.

Government spending so far this budget year totals $2.466 trillion, 8.5 percent higher than a year ago. That’s in part due to the $168 billion stimulus package Congress passed at the beginning of the year in an effort to keep the country out of a deep recession and because of increased spending for the wars in Iraq and Afghanistan.

The points Crutsinger attempted to make in his final two paragraphs are directly contradicted by the year-to-date data in this graphic:

UncleSamTreasStmtSumm0708

As to receipts, Uncle Sam considers the fiscal stimulus payments to be “negative receipts.” If it weren’t for those payments, as you can see in the red box, reported year-to-date receipts would be 3.4% higher. Since receipts from all other sources are up by only 1% or so less than the rate of inflation, Crutsinger’s contention that their reported decline reflects “the sharp slowdown in the overall economy” is demonstrably false. It’s ALL because of the stimulus payments, Martin.

Crutsinger then compounds his error in discussing outlays. In a way, it would be nice if the ridiculous 8.5% increase in spending seen in the orange box was partially due to “the $168 billion stimulus package Congress passed at the beginning of the year.” But that stimulus package has absolutely nothing to do with that increase. As you can see, the stimulus payments of over $92 billion, which are a large part of Crutsinger’s $168 billion, are considered “negative receipts.” They aren’t part of “outlays.” The rest of the stimulus package consisted of tax breaks given to businesses, predominantly for purchasing new equipment. To they extent they are reflected in current year results, they will reduce receipts, as businesses that indeed invest in capital equipement will be able to make lower estimated payments throughout the remainder of the calendar year.

Crutsinger’s partial explanation for the $192 billion increase in year-to-date spending (over $56 billion of it in July alone) has everything to do with ongoing government spending. His allusion to avoiding a “deep recession” is farcical. We’re nowhere near a recession. His reference to “increased spending for the wars in Iraq and Afghanistan” can probably also be disproven, given that a substantial portion of the surge’s ramp-up occurred in fiscal 2007. But I’ll defer looking into that, because poor Martin has been sufficiently flogged already, and his reporting, as usual, thoroughly discredited.

Cross-posted at NewsBusters.org.

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