January 22, 2007

Washington Post Deficit Analysis Buries, Omits Key Facts

From last week's Washington Post:

Burden Set to Shift On Balanced Budget

Bush Likely to Force Democrats' Hand

When he takes the House rostrum next week for the State of the Union address, President Bush will list among his goals a balanced federal budget, a shift for a president who has presided over record deficits while aggressively cutting taxes.

Politically, analysts say, the president is calling the bluff of Democrats, who won control of Congress in part by accusing Bush of reckless fiscal policies. While Bush now shares the Democrats' goal to erase the deficit by 2012, the politically perilous work of making that happen -- cutting spending or raising taxes -- falls to the Democratic-run Congress.

The article says that the only way to erase the deficit is by cutting spending or raising taxes. However, the trend over the past few years is for the deficit to be reduced without either of those strategies. From Will Franklin:

Fiscal Year '07, in Federal Budget terms, is only three months old, a quarter of the way finished. But, just like the past couple/few years now, there is already a marked trend worth noting.

The federal budget deficit is shrinking, as robust tax revenues flow in faster than before the President's tax relief.

Here are the numbers (.pdf):

The government took in $573,524 million in the first three months of FY07, versus $530,210 million in the first three months of FY06. That's an increase of 8.17%.

The government spent $653,925 million in the first three months of FY07, versus $649,592 million in the first three months of FY06. That's an increase of 0.67%.

...In the short run, we're doing great. We'll have federal budget surpluses by sometime near the 2008 presidential election (actually, July 2008).

Late in the article (paragraph 14) we find a statement that is carefully crafted to acknowledge that the deficit has been dropping since 2004: "The budget returned to deficit in 2002, and the deficit peaked two years later." But of the few readers who get that far, fewer still will recognize this as such an acknowledgment.

This is a good example of how many readers of MSM get an inaccurate view of what's going on in this country.

Paragraph 15 of the article considers the view (often expressed on this site - see links below) that the GWB tax cuts have caused the increased tax revenues, and rejects it with little explanation: 

Since then, an unexpected gusher of tax revenue has flooded the Treasury, driven largely by stratospheric corporate profits. Bush credits his tax cuts with spurring the economy and producing more tax receipts, an argument that has been refuted by many conservative economists and Bush's own Treasury Department.

The article provides no information to back up the statement that the Treasury Dept. has "refuted" this view, and does not identify the "many conservative economists" it says have also done so. 

On the plus side, the article spotlights efforts by GWB to cut entitlement programs so as to avoid a potential crisis in unfunded entitlement commitments:

Bush has given two newcomers, Treasury Secretary Henry M. Paulson Jr. and White House Office of Management and Budget Director Rob Portman, the task of approaching congressional Democrats to look for potential compromises on entitlements. Paulson, a former chairman of Goldman Sachs, has identified the looming crisis as one of his top reasons for joining the administration. Portman, too, has a passion for the issue. Last week, he took part in the "Fiscal Wake-Up Tour" at Ohio State University organized by a variety of groups, including some strong critics of the administration.

Among them was Isabel V. Sawhill, a senior fellow at the Brookings Institution, who welcomed Portman's participation. Sawhill said she believed Portman and Paulson were responsible for the president's new enthusiasm for deficit reduction.

"I'm quite sure they want to get the word out about entitlements and educate the public. This could be a new way of putting Social Security and Medicare at the top of the agenda," Sawhill said. "I have this sense that these guys like Portman and Paulson have been unleashed."

See also these previous posts:

The GWB Tax Cuts Worked: Strong Growth in Jobs and Wages

The GWB Tax Cuts Worked: Tax Receipts Show Biggest Gain in 25 Years

The GWB Tax Cuts Worked: Tax Cuts Power Growth in Consumer Wealth *and* Cut Deficit

The GWB Tax Cuts Worked: More Great News on the Economy

The Tax Cuts Worked-Economic Expansion: Year Five

The GWB Tax Cuts Worked: Tax Cuts Power the Economy

The Bush Tax Cuts Have Resulted in Higher Tax Revenue

Lower Taxes Make the Economy Stronger

Lower Tax Rates Are Resulting In Higher Tax Revenue

A Myth Debunked: Bush Tax Cuts Did Not Favor the Rich

Tax Cuts Work: Government Forecasting Incorrectly Thought Tax Costs Would Reduce Tax Revenue