September 13, 2011

AP’s Crutsinger Predictably Avoids Most August Numbers, Raised Spending Baseline in Deficit Report

The August Monthly Treasury Statement released by the government today reveals that Uncle Sam ran a $134.2 billion deficit in August. That figure was $44.7 billion, or 48%, higher than the $90.5 billion deficit seen in August 2010. The year-over-year deficit increase occurred because outlays increased by 19% to over $303 billion, while receipts went up by 3% to $169 billion.

Gee, that wasn’t difficult to express, was it? But it was apparently too difficult for the Associated Press’s Martin Crutsinger to communicate to his readers. Of the eight figures and percentages noted in the opening paragraph, only one — the August 2011 deficit — appears in his report.

Crutsinger’s defense may be that he wanted to concentrate on year-to-date figures. But that objection, if raised, rings hollow, given that he wasted several paragraphs falsely rehashing the past decade’s fiscal history while completely failing to explain why spending continues to increase even though the 2009-2010 stimulus program is supposedly over.

Here are excerpts from Crutsinger’s Tuesday afternoon report (bolds and numbered tags are mine):

Federal deficit totaled $1.23T through August

The federal budget deficit reached $1.23 trillion in August. The third straight $1 trillion-plus deficit adds pressure on Congress and the White House to reach agreement on a long-term plan to trim government spending. [1]

The Treasury Department said the deficit grew by $134.2 billion last month. At that rate, [2] the nonpartisan Congressional Budget Office projects the deficit will total $1.28 trillion when the budget year ends in September. That would nearly match last year’s $1.29 trillion imbalance and come in below the record $1.41 trillion hit in fiscal 2009. [3]

… Interest on the debt is the fastest growing category of the budget, according to the Treasury report. Payments totaled $233 billion through August, up 15 percent from the same period a year ago.

Revenues totaled $2.06 trillion through August, up 7.6 percent from a year ago. Tax receipts have increased as more people have gone back to work. Government spending totaled $3.3 trillion through August, an increase of 3.8 percent from the same period in 2010. [4]

… Obama has also recommended a series of tax hikes to pay for his $447 billion job-creation proposal. [5] He wants Congress to limit itemized deductions for charitable contributions and other deductions taken by families making over $250,000 a year, close loopholes for oil and gas companies, [6] change the tax treatment of corporate jets and require investment fund managers to pay higher taxes on certain income.

… The government last recorded a budget surplus in 2001, when revenues were $127 billion greater than spending. The surpluses were expected to total $5.6 trillion over the next decade. [7]

But the deficits grew again after President George W. Bush won approval for broad tax cuts … [8]

Higher spending on unemployment insurance and food stamps, and a sharp contraction in tax revenues, widened the deficit. And it grew even more after the Obama administration backed a $787 billion stimulus program [4] to boost the economy.


  • [1] — Why this situation hasn’t put pressure on President Obama to refrain from new spending initiatives — especially of the type that did not work the first time around — is unexplained.
  • [2] — “At that rate” of $134 billion per month, the deficit will be well over the number Crutsinger identified. The words weren’t needed.
  • [3] — As explained previously (go here for the original methodology write-up), in fiscal 2009 the government recognized huge losses relating to TARP investments before they actually occurred or could reasonably be predicted. This was designed to dump all of the bad news into that year and to artificially create an impression of spending control in future years. In fiscal 2010, the government “discovered” that its losses wouldn’t be so large to the tune of $115 billion, and arbitrarily reduced outlays by that amount. A similar smaller such adjustment has also occurred in fiscal 2011. A graphic showing an adjusted rundown yearly receipts, spending and deficits is here. Unsurprisingly, it shows that spending has increased significantly in every fiscal year since 2007.
  • [4] — If the stimulus spending is done, all other things being equal, spending should have decreased by $393 billion, or about half of the two-year, $787 billion cost of the stimulus plan. But spending has continued to climb. Crutsinger never explains why. The truth is, again as seen at this graphic, that spending increased by 30% from fiscal 2007 to 2010, and is on track to increase yet again this year.
  • [5] — Only in AP Land could $447 in current spending be “paid for” with tax increases spread over 10 years. Someone who knows Crutsinger should ask to borrow money for lunch, tell him they’ll “pay him back” slowly over 10 years, and record his reaction. Let me know if he says “yes”; I’ll be right over.
  • [6] — Unless I’m missing something, what I’ve learned about the so-called “oil company loopholes” is that they represent legitimate out-of-pocket business expenses that any business would expect to be able to deduct from revenue to arrive at taxable income. If anyone can demonstrate that this is not the case, I want to hear about it.
  • [7] — The $5.6 trillion in “expected” surpluses was a CBO projection which failed to recognize the Internet bubble which was already well under way when the report was released. It was obviously bogus the day it was published, and remains so over a decade later.
  • [8] — This is so tired. As shown numerous times, in the four years after the “Bush tax cuts” of 2003 were enacted, federal receipts increased by 44%. Blaming the tax cuts for “lost revenue” assumes economic behavior would have been the same during those years if the cuts hadn’t been enacted, which is ridiculous.

The bottom line is that, as so many predicted when it happened, the Obama administration used the stimulus to increase the government’s spending baseline to the point where any suggestion that outlays should be reduced to below $300 billion a month is considered outrageous — even though the government was spending less than $230 a month just four years ago. You’ll never see Martin Crutsinger or anyone else at the AP acknowledge that basic truth.

Cross-posted at



  1. Something you might want to help frame Obama’s proposed permanent tax increase of over $400 billion for temporary measures that would only last a year or two. That’s right, the reason why Obama wants Congress to pass the bill NOW is because it is a stealth tax increase masquerading as a jobs bill.

    At this time even IF you were to tax EVERYONE’s income at 100% (never mind just rich people) it would not be enough to cover the annual deficit. So what do you expect will happen if Congress foolishly passes such a tax increase? A collapse in investment capital available for plant and equipment with the result of zero job creation.

    Comment by dscott — September 14, 2011 @ 12:43 am

  2. The dirty little secret of Obama’s success:

    Obamavilles – a lasting legacy of know it all government telling businesses what to do killing jobs and leaving people homeless.

    Comment by dscott — September 14, 2011 @ 12:45 am

  3. Thankfully, Boehner was on the temporary spending permanent tax gambit today.

    Comment by TBlumer — September 14, 2011 @ 1:21 am

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