July 12, 2014

In Covering June Budget Surplus, AP’s Boak Conveniently Forgets ‘Largest Tax Increase in the Past Two Decades’

One of the reasons President Barack Obama and the left can continue to make their cherished “budget stalemate” arguments against conservatives and Republicans is that the establishment press has memory-holed tax increases, including “the largest tax increase in the past two decades,” which have already taken place. It now acts as if taxes on “the wealthy,” which are really taxes on “high-income earners,” have never been increased during Dear Leader’s administration.

Josh Boak’s coverage of the June budget surplus yesterday at the Associated Press, aka the Administration’s Press, is a case in point. After regaling readers with the administration-manipulated recent history of budget deficits (without mentioning the manipulation, of course), Boak uncritically relayed the Democrats’ version of the argument that the standoff between the White House and the House of Representatives is over “sharp cuts on needed government programs” versus “higher taxes on the wealthy.” Excerpts follow the jump (bolds are mine throughout this post; numbered tags are mine):



The U.S. government ran a monthly budget surplus in June, putting it on course to record the lowest annual deficit since 2008.

The Treasury Department said Friday that its June surplus totaled $71 billion, following a $130 billion deficit in May. The government also ran a surplus in June 2013, bolstered by dividends from Fannie Mae [1], the mortgage giant under federal conservatorship for the past six years.

For the first nine months of this budget year, the deficit totals $366 billion, down 28 percent from the same period in 2013. Tax receipts are up 8 percent compared to the prior year-to-date [2], while spending has increased 1 percent.

… In 2008, the government recorded a deficit of $458.6 billion, which was the record high for deficits up to that time.

But with the outbreak of the recession [3], deficits soared to unprecedented levels, exceeding $1 trillion for four consecutive years. Tax revenues fell during that period, while government boosted spending in an attempt to stabilize the financial system and provide relief to people who had lost jobs. [4]

The yearly deficit peaked at $1.4 trillion in 2009 during the worst of the financial crisis. [5] It gradually fell from there, plunging to $680.2 billion last year.

… Republicans have accused President Barack Obama of failing to propose significant cost cuts to reduce soaring entitlement costs. Democrats counter that Republicans would rather impose sharp cuts on needed government programs than impose higher taxes on the wealthy. [6]


[1] — Boak “somehow” forgot to tell readers that the surplus in June 2013 was $117 billion, meaning that the June 2014 surplus came in $46 billion lower. That’s a big difference, and should have been mentioned.

[2] — Since Boak never acknowledged tax increases which have already been passed and have taken effect, he leaves readers with perception that the increase in collections is entirely due to an improving economy. As seen in [6] below, it’s not.

[3] — “Outbreak of the recession”? It’s as if the recession was some kind of communicable disease which just so happened to infect the economy when it did. Actually, the recession was the result of a decades-in-the-making housing bubble directly caused by federal legislation like the Community Reinvestment Act, lowered lending standards at “frauds by design” Fannie Mae and Freddie Mac, and deliberate deception by those two agencies in packaging their loans for the securities markets. Obama’s deepened the recession by talking down the economy relentlessly during the 2008 presidential campaign and by sowing additional fear and uncertainty into the business community during the presidential transition period.

[4] — Yes, the government “boosted spending” during the recession, primarily by enacting what was advertised as a temporary “stimulus plan.” What came to be known as the “Recovery Act” led to a “recovery” which still looks more like the awful post-Depression 1930s than any other post-downturn recovery since World War II. However, spending levels never came back down to where they were before the stimulus plan passed, because the stimulus was more about permanently raising federal government spending levels across the board (except for the military) than it was about genuine stimulus.

[5] — As shown here, the Obama administration deliberately increased the reported deficit in 2009 through the use of a $115 billion non-cash accounting entry. The objective was push as much bad news as it could into that year so that it could brag about “improvements” in future years. Boak, like almost everyone else in the establishment press, uncritically took the bait.

[6] — Tax increases on “the wealthy,” which are really taxes on “high income earners” who may or may not be wealthy, have already been passed. Many of them are embedded into Obamacare. Others came about to head off a budget stalemate in early 2013, as the Wall Street Journal reported at the time:

Congress Passes Cliff Deal

Congress broke a rancorous stalemate Tuesday to pass legislation designed to avert the so-called fiscal cliff. But the compromise bill, which blocked most impending tax increases and postponed spending cuts largely by raising taxes on upper-income Americans, left a host of issues unresolved and guaranteed continued budget clashes between the parties.

The bill represented the largest tax increase in the past two decades and was passed over opposition from conservative Republicans in the House who objected to the fact that it contained no long-term spending cuts of any significance.

President Barack Obama appeared in the White House press briefing room minutes after the House passed the bill. With Vice President Joe Biden standing behind his right shoulder, he said: “Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America.” Mr. Obama said he would like to take additional steps to reduce the nation’s deficit.

The AP’s relay of Democratic howls over “sharp cuts” is, as has been noted often in the past, a dishonest rendering of the argument, as the dispute is primarily over “reductions in projected spending increases” — not genuine year-to-year spending reductions.

Josh Boak should not have failed to note these tax increases. That failure gives readers the impression that Republicans and conservatives haven’t budged in negotiations, when the fact is that President Obama and Democrats are insisting on having their way a second time, and appear to have no genuine interest in reining in government spending in any meaningful way — except, based on the track record of the past several years, on defense.

Cross-posted at NewsBusters.org.


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