The Post Misreports the Budget Defcit (Again)

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=02&year=2008&base_name=the_post_misreports_the_budget ^

[newbie2008]

The Washington Post warns readers that the budget deficit for 2009 may rival the "record deficit of $412 billion in 2004." It then says that "administration allies argue that shortfalls of that size now represent a smaller share of the overall economy and are thus more manageable."

Okay, lets' start at the beginning. You don't have to be an "administration ally" to say that a budget deficit of $400 billion matters less in 2009 than a deficit of this size in 2004, you just have to be a believer in arithmetic. The economy will be almost 30 percent larger in 2009 than it was in 2004, which means that the same deficit in nominal terms is 30 percent less important, given the size of the economy.

This adjustment is also necessary in accessing the "record" $412 billion deficit in 2004. This deficit was equal to 3.6 percent of GDP. It is dwarfed by the deficit in 1983, which was equal to 6.0 percent of GDP. In fact, the deficits were larger relative to GDP in all but three years between 1982 and 1993. Even adding in the money borrowed from Social Security, the deficit in 2004 would only come to 4.9 percent of GDP.

The Post has been absolutely obsessed in both its news and editorial pages with the budget deficit. It has almost completely ignored the much larger current account deficit, which has been close to 6 percent of GDP for the last two years. Of course, it also managed to almost completely ignore the housing bubble the collapse of which is now throwing the economy into a recession. The amount of space that a news outlet devotes to an economic topic should bear some relationship to its impact on the economy.

[raybbr]

Okay, when does the budget balance? Ever?

[lewislynn]

The economy will be almost 30 percent larger in 2009 than it was in 2004,

Really? It's barely 2008! What will the stock market be in Jan 2009 Swami?

Were there government checks in the mail to boost the economy in 2004?...Were the then chest pounding free trade globalists begging the rest of the world for bailout money (how is that going to get paid back)? What was inflation in 2004? and please include food and energy this time.

[lewislynn]

Okay, when does the budget balance? Ever?

You'll have to consult with our leaders in China for that answer.

[expat_panama]

Good article.  It's probably wasted on freepers who can't handle good news ("our leaders in China") but they'll always think up some way to bash America no matter what the news is.