Lisa Mascaro at the LA Times: Nation’s Budget Problems Are ‘Substantially Improved From the Recent Recession’
A recurring theme at the Los Angeles Times during the past several days has been that the nation’s economic and fiscal circumstances really aren’t all that bad, and they’re getting better under Dear Leader Obama. (Oh, and throw in a healthy dose of “It’s Bush’s fault” for good measure.)
Lisa Mascaro, with the help of Brian Bennett, David Lauter and Michael A. Memoli, added to that effort late Saturday afternoon. In an item primarily about the politics of the Washington’s next scheduled fiscal standoff in mid-December, she did the usual spin on this year’s budget deficit (writing that it has “declined rapidly,” while conveniently forgetting that this year’s shortfall will be higher than any non-Obama deficit in U.S. history). She also gave undue credence based on poor historical accuracy to Congressional Budget Office projections which claim that “the national debt … is projected to be stable or even declining as a share of the economy well into the next decade.” But she ventured beyond the careful but misleading realm of the previous two statements into flat-out falsehood when she wrote: “The country is on a budget trajectory that, while substantially improved from the recent recession …”
Her Saturday writeup claimed that the national debt is “now $16.7 trillion.” No ma’am. It was actually $17.075 trillion as of Thursday, the latest figure available at the U.S. Treasury, thanks to the post-shutdown unwinding of the Treasury Department’s accounting and money-shifting tricks. These “undo” actions caused the debt to go up by a record $328 billion in a single day.
Substantively, yes, I realize that Mascaro added that our current path “remains unsustainable” at the end of the sentence I quoted above. That doesn’t change the fact that she has given her readers the completely false impression that the U.S. in far less fiscal and economic peril now than it was 4-1/2 ago, when the “recent” (cough, cough) recession ended.
Let’s specifically look at the “Debt Held by the Public” portion of the national debt, which itself took a leap from $11.930 trillion to $12.117 trillion on Thursday. This is the figure most economists and CBO monitor to gauge the nation’s debt situation, especially when comparing the debt to annual economic output, aka gross domestic product.
CBO’s May projections contained an historical rundown (obtainable here) of that debt-to-GDP percentage. It is graphically presented by yours truly below:
In June 2009, when the recession officially ended, public debt to GDP was in the midst of moving from 40.5 percent of GDP in September 2008 to 54.1 percent in September 2009. Spreading that result evenly over that full fiscal year, the percentage was about 51 percent when the recession ended. CBO’s May projections, done before the government’s Bureau of Economic Analysis added “research and development and entertainment” to its definition of GDP, predicted a value of 75 percent. (Thanks to BEA’s arbitrary and in my opinion questionable addition of $471 billion, or almost 3 percent, to current GDP for these “intellectual proprietary products,” that percentage is now about 72 percent.)
Well, as bad as things are now, maybe the long-term outlook really was worse back when the recession ended. Absolutely not, as this graphic grab from CBO (obtainable here) shows:
Back when the recession officially ended, CBO believed that we would currently be in the midst of the third consecutive fiscal year (the one which will end on September 30, 2014) of seeing the public debt-to-GDP percentage decline, and that the percentage would fall to 56 percent by the end of this decade before spiraling out of control (not shown) after that. As seen in the chart above, on an apples-to-apples comparison, we’re at 75 percent. CBO’s May 2013 projections estimated public debt to GDP of 71.5 percent in 2020, compared to the 56.2 percent seen above.
Only economic illiterates or blind partisans could pretend that a nation with a debt-to-GDP percentage in the 70s is “substantially improved” in comparison to four years ago, when the percentage was in the low 50s, and where the predicted situation at the end of this decade is now over 15 percentage points worse.
So which is it, Ms. Mascaro et al?
Cross-posted at NewsBusters.org.