August 15, 2014

AP’s Coverage of July Deficit Again Ignores the Impact of the Largest Tax Increase in the Past Two Decades

The federal government reported a $94.6 blllion deficit in July, only marginally better than the $97.6 figure posted in July 2013.

As has become its habit, the Associated Press’s coverage of that result contained omissions, spin and half-truths about government tax collections, spending and the origins of the Obama administration’s first four years of consecutive trillion-dollar deficits. Particularly annoying is the wire service’s insistence on ignoring the large tax increase in two decades as a factor — in the interest, of course, of supporting the Obama administration’s call for more of the same. Veteran Martin Crutsinger was responsible for this month’s rendition. Excerpts follow the jump:



The federal government ran a lower deficit this July than a year ago, keeping it on course to record the lowest deficit in six years.

… For the first 10 months of this budget year, the deficit totals $460.5 billion, down 24.2 percent from the same period a year ago.

The Congressional Budget Office expects this year’s deficit to total around $500 billion, down from $680.2 billion last year. That would be the lowest deficit since an imbalance of $458.6 billion in 2008, which was a record at the time. The Great Recession and efforts to deal with the financial crisis sent deficits above $1 trillion for four straight years. [1]

… For the first 10 months of the current budget year, which began in October, government revenue totals $2.47 trillion, up 8 percent from the same period a year ago, reflecting a stronger economy which has boosted employment and led to rising income tax revenues and higher corporate tax payments. [2]

With two months left in the current budget year, government spending is up 1.2 percent to $2.93 trillion, compared to a year ago, reflecting government efforts to restrain outlays in an effort to get control of the budget deficits. [3]

Republicans have accused President Barack Obama of failing to propose significant cuts to reduce soaring entitlement costs. [4] Democrats counter that Republicans would rather impose sharp cuts on needed government programs than impose higher taxes on the wealthy. [5]


[1] — Though Crutsinger did tell readers that the deficit peaked at $1.4 trillion in fiscal 2009, he should have told readers that the four-year deficit total was just shy of $5.1 trillion — specifically $1.416 trillion in fiscal 2009, $1.294 trillion in 2010, $1.297 trillion in 2011, and $1.089 trillion in 2012.

[2] — Another element of the increase in federal government “revenue,” more accurately characterized as “collections,” is the slew of tax increases which have occurred under Obama, just one of which “represented the largest tax increase in the past two decades.” The AP’s Josh Boak also ignored this in covering June’s monthly results. Many of these tax increases are embedded in 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.

This deliberate omission is important, as will be seen in Item [5].

[3] — Last time I checked, increasing spending isn’t how you “restrain outlays.” Excluding sharp and real cuts in defense and referencing the Congressional Budget Office’s pre-release July estimate, year-over-year government spending through July was up by roughly 2.8 percent.

[4] — This isn’t about what “Republicans have accused.” It is a fact that President Obama has failed “to propose significant cuts to reduce soaring entitlement costs.” He withdrew the one trial balloon he floated relating to how Social Security benefit increases might be indexed to a slightly lower measurement of inflation.

[5] —Republicans don’t want to “impose higher taxes on the wealthy” (really “high-income earners,” which is not the same thing) a second time. As seen in Item [2], it’s already been done. Crutsinger’s omission of this crucial point gives readers the impression that Obama hasn’t gotten his chance to take his pound of flesh. But he has.

As to the full-year deficit, to achieve the CBO’s full-year projection of $500 billion, August and September will need to show a combined deficit at or below $40 billion. The combined deficit in August and September 2013 was almost $73 billion. Especially given that September 2013′s spending was far lower than typically seen because of special items, there is reason to believe that CBO’s prediction won’t pan out.

Cross-posted at


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