October 30, 2017

Fiscal 2017 Deficit Coverage Ignores Most of Obama Era, Smaller Debt Increase

A week ago Friday, the federal government reported that it ran a deficit for the fiscal year ended September 30, 2017 of $666 billion. The three major establishment press wire services failed to note that the national debt, instead of routinely rising annually by far more than reported deficits during the Obama era, rose by roughly the same amount during fiscal 2017; that the rise in the national debt was far less than the reported deficits during the first eight months of Donald Trump’s presidency; or that this year’s deficit pales in comparison to most of the Obama era.

Opponents of Republicans’ efforts at tax reform in Congress are citing fears of rising deficits as a result of expected tax cuts said to be contained in that plan.

The left’s interest in fiscal prudence is hard to accept as genuine, given the track record of deficits and national debt growth during the Obama era. But there was Martin Crutsinger at the Associated Press, sounding the alarm when the Treasury Department’s final monthly report for the fiscal year was published on October 20 (bolds are mine):

Budget deficit hits $666B, an $80B spike for the year

The federal budget deficit rose to $666 billion in the just-completed fiscal year, a spike that comes as Republicans are moving to draft a tax code rewrite that promises to add up to $1.5 trillion to the national debt over the coming decade.

The sobering deficit numbers, released Friday by the Treasury Department and the White House budget office, followed Senate passage Thursday night of a 10-year budget plan that shelves GOP concerns on deficits and debt in favor of a tax overhaul.

… President Donald Trump and his GOP allies on Capitol Hill promise this year’s tax legislation will spark a burst of economic growth — and hope it will pay big political dividends for their party.

Friday’s budget figures represent an $80 billion jump over last year’s $585 billion deficit, which itself was way up over the previous year’s $438 billion.

… “With the deficit as large and growing as quickly as it is, Republicans pursuing a reckless plan that would blow a huge hole in the deficit and put Medicare and Medicaid at risk is the height of irresponsibility,” said Senate Minority Leader Chuck Schumer, D-N.Y.

Crutsinger failed to mention that this year’s deficit, while obviously unacceptable and higher than the previous two years, was lower than every other year during the Obama administration, which ran three deficits of over $1 trillion dollars during its first three full fiscal years, and even ran a deficit of over $1 trillion in its first eight months.

Schumer’s fears of “blow(ing) a huge hole in the deficit” are hyper-hypocritical, given that it’s Obama and the Democrat-controlled Congresses from 2007 to 2010 which set the nation on the path of fiscal recklessness never seen in U.S. history. After that, Obama opposed GOP efforts, which in hindsight were insufficiently aggressive, to get spending under control. Additionally, Schumer knows that Medicare’s trustees have been reporting that the program is at risk in their annual reports for at least a decade, and that Medicaid costs are spiraling out of control.

Here is the full history (supporting detail):

DefictsAndDebtFY2009to2017

The table shows that the national debt rose by almost $2.5 trillion more than reported deficits of $7.4 trillion during the Obama era (going back to the beginning of fiscal 2008 is fair game, as that marked the beginning of the Troubled Asset Relief Program which Obama supported). It also shows that debt held by the public, which excludes “intergovernmental holdings,” primarily Social Security and Medicare “Trust Fund” obligations, rose by $1.1 trillion more than those reported deficits.

Oddly enough, the increase in the national debt since Trump’s inauguration in January has been far lower than reported deficits during the past eight months of his administration. This is good news, but why is this happening? Well, reporters like Crutsinger should be looking into this and telling us, but they aren’t. It seems more reasonable to evaluate the results of any tax overhaul plan and the Trump administration’s government stewardship by looking at national debt increases instead of reported budget deficits. Given what has happened thus far under Trump, maybe tax reform will add less, and perhaps far less, than the $1.5 trillion currently estimated.

Crutsinger’s failure to go back to the first six years of the Obama administration ensured that the AP economics writer could create the impression of a seriously deteriorating situation without bothering to tell readers that current circumstances, again while unacceptable, are nowhere near as outrageous as they were during Obama’s presidency.

Related reports seen at Bloomberg News and Reuters each failed to note the dollar amount of the national debt or the amount of its increase.

Bloomberg at least showed readers a chart showing the nation’s historical and projected debt-to-GDP ratio. Its report also described the fiscal 2017 deficit as the “largest budget deficit since 2013,” but provided no specific prior-year numbers.

On the plus side,both Bloomberg and Reuters relayed information about total receipts and spending. Reuters noted that this year’s results occurred as “record spending more than offset record receipts,” specifically that “Fiscal 2017 revenues increased 1 percent to $3.315 trillion, while spending rose 3 percent to $3.981 trillion.” The AP’s report failed to do this, which makes “sense” if you think that the average low-information reader might blow a gasket if he or she knew that federal spending is about to cross the $4 trillion threshold.

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