December 12, 2012

AP Fails to Tell Readers November’s $172 Billion Deficit Is Worst November Ever

Back in the days when journalists practiced journalism, they would be on the alert for record-breaking news, whether positive or negative. These days, at least when it comes to the economy, it seems that they struggle to find positive records and ignore obvious negative ones right in front of their faces.

A case in point is today’s Associated Press report on November’s Monthly Treasury Statement. The government’s report came in with a deficit of $172.1 billion, the highest November shortfall ever (the runner-up: last year’s $137.3 billion). The AP’s Christopher Rugaber either failed to recognize the reported amount as a record — doubtful in my view given its size — or didn’t think its recordbreaking status was newsworthy. To be fair, unlike colleague Martin Crutsinger’s typical monthly attempts, Rugaber got to almost all of the requisite monthly and year-to-date facts on receipts, spending, and the deficit itself, including comparisons to last year. Excerpts, including the all too familiar historical revisionism on how we got to where we are, follow the jump (bolds and numbered tags are mine):

US BUDGET DEFICIT REACHES $172B IN NOVEMBER

The U.S. federal government’s budget deficit widened in November compared to October, a sign that the nation is on a path to its fifth straight $1 trillion-plus deficit.

The budget gap rose to $172 billion in November, up from $120 billion in October, the Treasury Department said Wednesday. The November deficit was also 25 percent higher than the same month last year. Last month’s deficit was pushed higher by a calendar quirk that pulled about $33 billion in benefits (sic) payments into November from December. [1]

… With the economy and hiring improving a bit, the government is receiving more tax receipts. Overall tax revenue rose 10 percent in the first two months of the budget year to $346 billion. But spending has risen faster, up $87 billion or 16 percent. [2]

The deficit, in simplest terms, is the amount of money the government has to borrow when revenues fall short of expenses. [3] Last year’s deficit was lower than the previous year but still painfully high by historical standards. The budget year ends Sept. 30.

Obama’s presidency has coincided with four straight $1 trillion-plus deficits [4] … He had promised in February 2009 to cut the deficit in half by the end of this first term.

… The government has run annual deficits for more than a decade and hit a record $1.41 trillion in 2009, Obama’s first year in office. That was largely because of the worst recession since the Great Depression. Tax revenue plummeted during the downturn, while the government spent more on stimulus programs.

The budget gaps in 2010 and 2011 were slightly lower than the 2009 deficit as a gradually strengthening economy generated more tax revenue. [5]

President George W. Bush also ran annual deficits through most of his two terms in office after he won approval for broad tax cuts and launched wars in Afghanistan and Iraq. [6]

Notes:

[1] — Note that the deficit would still have been an alltime record for any November even without the pulled-in benefit payments.

[2] — The only missing comparative in Rugaber’s report is that this year’s two-month deficit of $292 million exceeds last year’s $236 billion by 24%. Given that the cumulative increase is about the same as November’s, that qualifies as a non-glaring omission.

[3] — Unfortunately, as I’ve explained numerous times, the “simplest terms” explanation of what the deficit is doesn’t apply to Uncle Sam’s finances. Though November’s deficit was $172.1 billion, the national debt grew by “only” $108 billion (from $16.261 trillion to $16.369 trillion). Treasury Secretary Tim Geithner may already have begun engaging in accounting maneuvers to keep the reported figure below the legislated debt limit of $16,394 trillion.

[4] — “Coincided”? It’s as if those darned trillion-dollar deficits just showed up at the White House door like a stray cat on January 21, 2009 and just wouldn’t go away. It is primarily the actions of Obama and the 2007-2010 Pelosi-Reid Congress that built annual deficits to their current trillion-dollar level. Since then, the Republican-controlled House has been unable and/or unwilling to make a meaningful dent.

[5] — Actually, as shown below, the only reason why fiscal 2009 looked better than fiscal 2009 is because the Obama administration overestimated its anticipated losses in the Troubled Asset Relief Program during fiscal 2009 and increased reported “outlays” by at least $115 billion more than it should have:

RevisedFY2007to2010USresults

In fiscal 2010, it reduced reported outlays by a similar amount. In reality, as seen above, actual spending and the deficit itself were both higher in fiscal 2010 than they were in fiscal 2009. More background on this virtually unreported change in accounting method is here.

In my view, the Obama administration did this to artificially make fiscal 2010 look better than fiscal 2009. Of course, they were hoping/expecting that their stimulus program would generate a much stronger recovery and a much lower deficit, but it didn’t happen. Nonetheless, it’s clear that this accounting gambit has successfully fooled most reporters in the establishment press, including Chris Rugaber, whose explanation as to why the officially reported fiscal 2010 deficit narrowed a bit is clearly false.

[6] — Rugaber should have included the actual amount of the deficits accumulated under George W. Bush to present them in proper context. Of course, if he had, that would have minimized the significance of Bush 43′s deficits, which from the beginning of fiscal 2002 through January 2009 amounted to roughly $2.53 trillion, much of which can be traced to the bursting of the previous decade’s Bill Clinton Era Internet bubble. And I should add that Bush’s supposedly deficit-contributing tax cuts were instead largely responsible for an explosion in collections which narrowed the deficit to less than $162 billion in fiscal 2007.

It took Obama less than two years to pile up more in deficits than Bush did in just over seven. Beginning with February 2009, Obama’s accumulated reported deficits have been just shy of $5 trillion, while the reported national debt since his inauguration has increased by over $5.7 trillion. Though one could argue that a routine monthly report like Rugaber’s isn’t the place to bring up such cumulative amounts, the fact remains that we virtually never see them anywhere in straight establishment media press coverage — and we of course should.

Cross-posted at Newsbusters.org.

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