November 20, 2011

AP Story: ‘Deep Cuts’ (Which Aren’t) Are a ‘Threat’ to the Economy

In their deeply deceptive Friday morning story (“Deep spending cuts pose a new threat to US economy”) about how the bicameral bipartisan supercommittee is supposedly going to hurt the economy with whatever results from its handiwork, Christopher Rugaber and Daniel Wagner of the Associated Press, aka The Administration’s Press, “somehow” forgot to include one “little” detail, and deferred another until very late in their report.

The omission, which is that the “cuts” under consideration are really reductions in projected spending increases in future years, is sadly typical. The fact is the $1.2 trillion in “savings” the supercommittee hopes to engineer will only slightly reduce the rate of spending growth. The deferral is that the pair waited until Paragraph 18 to tell readers, and even then only incompletely, that the “deep cuts” would be spread over nine years, thereby amounting to roughly 3% of the $40.3 trillion if projected 2013-2021 spending (Page XI here). The AP pair never explains how “cuts” which wouldn’t kick in until the October 1, 2012 beginning of fiscal 2013 and which are (as they have almost always been) heavily skewed towards later years would affect the current economy. Excerpts from the pair’s report follow (bolds are mine):

Deep spending cuts pose a new threat to US economy

Just as the U.S. economy is making progress despite Europe’s turmoil, here come two new threats.

A congressional panel is supposed to agree by Thanksgiving on a deficit-reduction package of at least $1.2 trillion. If it fails, federal spending would automatically be cut by that amount starting in 2013.

Congress may also let emergency unemployment aid and a Social Security tax cut expire at year’s end.

Either outcome could slow growth and spook markets…. The 12-member bipartisan panel, or supercommittee, was created in August to defuse a political standoff over ra

ising the federal borrowing limit. If it can’t agree on a deficit-reduction plan, automatic spending cuts would hit programs prized by both parties: social services such as Medicare for Democrats, defense for Republicans.

… Many economists hoped that an extension of the Social Security tax cuts and unemployment benefits would be part of a supercommittee deal. Congress could extend those benefits separately. But it would be under pressure to offset the cost to avoid raising the deficit.

The Social Security tax cut gave most Americans an extra $1,000 to $2,000 this year. Unemployment benefits provide about $300 a week. Most of that money quickly and directly boosts consumer spending, which drives the economy.

If the automatic spending cuts take effect, the defense budget could be cut by nearly $500 billion over nine years. Some contractors are nervous.

It takes eighteen paragraphs for readers to learn that the supposedly “deep cuts” involved are actually spread over nine years. Even then, the AP pair, by tying the spread-out only to defense, may give many the impression that other cuts all occur in fiscal 2013.

One can’t help but think that the entire point of Rugaber’s and Wagner’s story was to create something, anything, to append to a predetermined “deep cuts” headline which would show up on news tickers, computers, smartphones and other devices for the sole purpose of creating anger and anxiety. There aren’t any “deep cuts” as an ordinary person would understand the term, and they don’t pose any immediate “threat” to economic growth. Those facts hardly seem to matter.

Cross-posted at



  1. Why do lefties get everything backward? It’s spending and deficits that are a threat to the economy and deep cuts are the only way to save it. Yeesh.

    Comment by zf — November 20, 2011 @ 11:12 am

  2. I am writing about your recent post concerning the AP’s piece about spending cuts and their bias towards the downplaying of certain facts therein. You are correct in pointing out those missing facts.

    This brings me to my point. Given the facts you point out, it seems reasonable to also state that raising taxes, via the bush cuts expiration, wont hurt the economy since they also wont go into effect until a later date. Conversely, cutting taxes also wont help for the same reason.

    Thanks for your time!

    Comment by Jeff — November 20, 2011 @ 11:26 pm

  3. I answered this in an email before I realized you commented here. Raising taxes affects spending and investment decisions now. Venture capitalists and other investors definitely consider tax impacts, and on the margins they’ll decide not to get in on certain deals when taxes are higher. Don’t forget that the Bush cuts’ most important provisions were investment-related (cap gains and dividends).

    Comment by TBlumer — November 21, 2011 @ 6:30 am

  4. #2, Tax increases are like taking money from Albert Einstein and giving it to Ernest P. Worrel. It saps resources and energy from those most likely to use it the best to whose who without fail rarely use it wisely. Plus, if the government is just going to take more of my money, why work hard to get more money and why bother investing (especially in risky ventures where my possible gains are now greatly diminished) in anything other than the bare minimum when I can just coast along and still keep more of what I already have?

    Comment by zf — November 21, 2011 @ 10:13 am

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