Many in the press seem to have difficulty distinguishing between the economy as a whole and individual governments' fiscal situations. Because of that, they seem to be believe that if a state government is having difficulty balancing its budget, there must be a recession in the whole state's economy.
That's what you would think if you read Andrew Welsh-Huggins's Associated Press report on Friday morning:
Many states appear to be in recession
The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes.
The situation looks even worse for the fiscal year that begins July 1 in most states.
Story Continues Below Ad ↓"Whether or not the national economy is in recession - a subject of ongoing debate - is almost beside the point for some states," said the report to be released Friday by the National Conference of State Legislatures.
..... The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.
Mr. Huggins needs to learn that economies have recessions; individual state governments don't.
Jim Taranto at the Wall Street Journal's Best of the Web also noted the weakness in Welsh-Huggins's piece:
When a state's budget falls short, that means two things: (1) Legislators are spending too much. (2) Tax revenues are less than expected. To infer a recession from a budget shortfall is to ignore the first part of the equation and, quite possibly, to exaggerate the second. Recession, after all, consists of two quarters of negative economic growth; and growth can still be positive while falling short of budgetary projections. The AP, as usual, is jumping the gun on declaring a recession.
Many states have been overspending like crazy for years, as if the economic expansion that media outlets like AP seem to deny ever took place was going to go on forever. Of course, they never do.
The word "spending," associated with governments spending less, doesn't appear until the first of the three bullet points in the final paragraph of Welsh-Huggins's report.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
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Good Grief
April 27, 2008 - 11:38 ET by forestNote to jounalists:
Don't use a word (like "recession") if you don't know its meaning.
And we don't live in a communist or fascist state. The economy and the government are still two different things here.
That's just it: to these
April 27, 2008 - 13:25 ET by scamoramaThat's just it: to these fools, the Government IS the Economy -- or it should be.
You have to admire the reasoning: governments can't make their budgets, which means tax "revenue" was short, which means there wasn't enough economic activity to generate the taxes. Makes perfect sense.
Don't use a word (like
April 27, 2008 - 14:40 ET by motherbeltDon't use a word (like "recession") if you don't know its meaning.
"I do not think it means what you think it means"....Inigo Montoya (The Princess Bride)
About what you'd expect
April 27, 2008 - 12:19 ET by bbeemanHow many of AP's writers have any understanding of Economics?
This kind of thinking (endemic on NPR as well as AP) confabulates economics with government. Welsh-Huggins fails to understand what a recession is, and blindly accepts the bleat of the bureaucrats that they don't have enough money to waste.
Has anyone ever seen a government body (above the very smallest towns) that thought they had enough money, and that couldn't dissipate any windfall revenue in an instant?
Déjà vu for states - 2000-2001
April 27, 2008 - 14:03 ET by Gary HallDéjà vu for states - 2000-2001
Tom. Thanks for the post. Painful to understand how such pathetic writing for AP can make it past the editor to print. Naturally, that was only a rhetorical observation.
While looking for something from 1999-2000 (that predicted that the federal and state budgets would quickly return to huge deficits again, once that bubble popped) I ran across a very interesting analysis from the left on the topic of calling it a recession prior to it being a recession. From the folks at CEPR:
VP elect Cheney, of course, not only was correct in his prediction, he was careful in using the proper language, "may be.. on the front edge of.."
Now, of course, we see that this shrill effort in talking down our nation's economy for the purpose of political game, by the Democrats, the Democrat's candidates, and by the MSM has become the accepted - perhaps expected by the left - standard method of operation. It would be interesting to know whether or not Mark Weisbrot and Dean Baker and/or others see the need to address this shameful tactic this time around - I mean other than their own personal concerted efforts at destroying the economy.
(;~> gary
Any State...
April 27, 2008 - 15:31 ET by ScrapironTake any state that was/is running a surplus, add two democrat governors in a row and you will have a recession. By the time they pay off those who put them in office there is nothing left to operate the state. Every tax increase and every fee increase that can be pushed through or increased by the governor will happen. I know people who bought licenses for years who now hunt and fish without one due to the increases and say they will never buy another. They are welcome on my property. Take a close look at Va for a state that went from good to bad in a hurry.
Old, Retired and glad of it.