AP Blows The Deficit Reporting, Part II: The Invisible April Receipts Dive
In Part I (at NewsBusters; at BizzyBlog) of my coverage of Martin Crutsinger’s Associated Press report about Uncle Sam’s Monthly Treasury Statement and the Obama administration’s deficit projections, I noted that the government “miraculously” shrunk the deficit through March, the first six months of its fiscal year, by $175 billion, by employing an “accounting change.”
Even though this “accounting change,” which does not report TARP disbursements as outlays because they are considered “investments,” violates fundamental cash-flow reporting principles, Crutsinger gave the change an unskeptical treatment. He also failed to tell readers whether the administration used the old or new method in calculating its latest full-year deficit projection of $1.84 trillion. If Team Obama used the new method to determine it, the deficit under the old and more correct method will more than likely be over $2 trillion.
Crutsinger also failed to report the steep dive in federal receipts that took place in April, which is the government’s highest month for collections, compared to last year’s all-time record April haul, which I referred to as the “Supply-Side Stunner,” and which Crutsinger and others also failed to report when it occurred last year (at NewsBusters; at BizzyBlog).
Here is how April 2009 collections compared to April of 2008:
(Sources: Monthly Statements – April 2009, April 2008; Daily Statements – April 30, 2009; April 30, 2008)
Here is all Crutsinger had to say about federal receipts in his report:
The government normally runs surpluses in April as Treasury’s coffers swell with people paying their annual tax bills by the April 15 deadline. But the deficit is being driven higher by the billions of dollars being spent to rescue the financial system from its worst crisis since the 1930s and deal with the worst recession in decades.
The recession also has boosted government outlays for benefit programs like unemployment insurance and food stamps while slashing tax revenues.
….. Through the first seven months of this budget year, the government has collected $1.26 trillion in receipts, a drop of 18.9 percent from a year ago.
That’s it. He was right there, and refused to tell us how much April’s drop was.
By doing so, Crutsinger conveniently ignored the bigger receipts story. Here is how collections during the first seven months of fiscal 2009 compare to fiscal 2008:
It is at least as important for readers to know that April continued a steady and alarming downward trend in receipts that actually begin a bit less than a year ago as it is for them to know the fiscal year’s overall result thus far.
April is supposed to be a strong month for receipts not only because of April 15 payments, but also because the first quarterly installment for individuals who pay estimated taxes is due on April 15 — something Crutsinger “somehow” forgot to tell his readers. Those who make estimated payments are largely the self-employed and those who are required to report income from partnerships and corporations on their individual returns. Receipts from those individuals are on the third and fourth line items in the first chart above.
As you can see, they’re drying up, as are collections from corporations, by far more than one would expect as a result of the 3.3% non-annualized contraction that has occurred during the past three quarters.
I attribute at least part of the decline to the much-discussed “going Galt” phenomenon, which really began last summer, as businesspeople, investors, and entrepreneurs began discerning the true nature of the administration that was the media favorite to gain power. “Going Galt” is yet another very real development that Crutsinger and the establishment media refuse to acknowledge.
Cross-posted at NewsBusters.org.
Thanks for pointing out the elephant in the room regarding
estimated income tax payments [which for April were over 50%
of total receipts]. Estimated tax payments are a forward looking indicator. The April 09 decrease of 36.2% speaks volumes about the current economic outlook of businesses and individuals.
Comment by Helen G — May 14, 2009 @ 12:23 pm
#1, that is exactly right.
Conversely, April 2008’s all-time receipts record is proof that at the time those who make estimated payments were optimistic about their profitability prospects for the year.
That’s just another tidbit, along with 2.8% second-quarter growth and April 2008 unemployment of 5.0%(!), supporting the idea, contrary to the pinheads at the NBER, that we were NOT in a recession at the time. The recession didn’t really begin until the third quarter, shortly after the POR Economy began.
Comment by TBlumer — May 14, 2009 @ 2:05 pm
Listening to radio news while driving, I keep hearing the latest unemployment numbers being reported with a positive spin
Employers cut fewer jobs in April as signs emerged that the worst of the U.S. recession had passed….Payrolls fell by 539,000, after a 699,000 loss in March, the Labor Department said today in Washington. http://www.bloomberg.com/apps/news?pid=20601087&sid=aO4SUdppQTZ0&refer=home
But the real story is that jobs are continuing to be cut, the real unemployment rate if you count everybody is closer to 15.8% http://www.usnews.com/articles/news/national/2009/05/08/unemployment-rate-climbs-to-89-percent.html
The price of gasoline is back up, and going higher everyday. I paid $2.65/gallon today for the cheap stuff. The willful refusal to report the inconvenient facts is not surprising, if the election had gone the other way we would be hearing nothing but bad news (aka the truth).
Comment by Boots — May 14, 2009 @ 8:25 pm
#3, Your observation about the price of gasoline highlights the recent EIA gasoline report. http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html
I mentioned a week ago or so how the price of gas is rising. This week’s EIA report is showing some extremely disturbing trends: a 4.6% decline in gasoline consumption from last year’s already depressed rate when the price of gasoline was $3.72/gal. The increase in gas from $2.078 to $2.240 is slowing the economy represents a 7.8% rise in cost.
My shameless plug on the subject:
…It takes a lot of Happy Talk to convince the nation that the jump from 8.5 to 8.9% unemployment is good news by saying the light at the end of the tunnel has just appeared by dismissing it as a lagging indicator. However, such talk ignores the fundamentals of the economy such as energy consumption. Energy consumption is a direct indicator of real time economic health. Trouble is still brewing with the economy, consumption has fallen again against last year and the previous.
5/1/09 – 8,923,000 gallons/day versus
5/2/08 – 9,311,000 gallons/day
Change – (-388,000) gallons/day
4.2% drop in consumption
SOURCE
Nationally, prices went up to 2.078/gal from 2.049 the previous week. If you have noticed prices just jumped again this week. But when you compare this to last year at this time of $3.613/gal, which was when gas prices were accelerating upward to $4/gal, it shows the economy has become hypersensitive to even small price fluctuations. Since fuel consumption is proportional to economic activity, any further erosion against last year’s decelerating consumption (2007-08) in the face of the normal up tick in summer consumption means a significant drop in relative economic activity. Note that the 2007-08 dashed line was already lower than the previous year trend of 2006-07.
http://www.publiusforum.com/2009/05/12/happy-talk/
Comment by dscott — May 15, 2009 @ 9:30 am