AP's Rugaber Conveniently Fails to Note June Regression in Federal Finances
At the Associated Press, the task of reporting on the official results of Uncle Sam's June Monthly Treasury Statement fell to Christopher Rugaber instead Marty Crutsinger.
Next time, Chris, tell us what happened in the month you're covering instead of going almost exclusively with the federal government's year-to-date results.
If Rugaber had looked more closely at June, he would have had to relay not particularly pleasant news -- or maybe he did look at June, and decided that we didn't need to know anything more than what the deficit was (possible motivation will be identified later). Although the deficit came in lower ($43 billion vs. $68 billion), the AP reporter "somehow" forgot to tell readers that receipts trailed June of 2010, indicating that whatever economic recovery has occurred is well on its way towards fizzling.
Here are several paragraphs from Rugaber's riff:
The federal budget deficit is on pace to break the $1 trillion mark for the third straight year, ratcheting up the pressure on the White House and Congress to reach a deal to rein in spending.
The deficit totaled $971 billion for the first nine months of the budget year, the Treasury Department said Wednesday. Three years ago, that would have been a record high for the full year.
With three months to go, this year's deficit will likely top last year's $1.29 trillion gap, according to the Congressional Budget Office. But it is expected to come in below the record $1.41 trillion reached in the 2009 budget year. The budget year ends Sept. 30.
For June, the deficit was $43 billion, below the $68 billion imbalance recorded in June 2010. Much of the improvement from last year was due to a one-time drop in the estimated cost of education loans.
But the government is also receiving more tax revenue this year, which reduces the deficit a bit. Revenue rose 9 percent, or $137 billion, through June, the Treasury's report said.
Sure, revenue is up for the first nine months. But in June, which is an important month for collections because corporate and individual estimated payments are due on June 15, receipts totaled $249.7 billion, down from $251.0 billion last year. Sure, the result would have been almost $10 billion higher if the 2% Social Security tax cut Congress and President Obama agreed to last year was not in effect, but:
- Corporate income tax receipts, which are up about 1% over nine months, were down 5% in June ($48.8 billion vs. $51.5 billion in June 2010).
- Total income tax collections, which are up 24% over nine months, were only up by a bit less than 4% in June ($113.0 billion vs. $109.0 billion).
- The "miscellaneous receipts" category included $8.3 billion in payments from the Federal Reserve. These largely relate to the Fed's quantitative easing and other money supply-controlling efforts and have nothing to do with the government's day-to-day operations. Last June, receipts from the Fed were $6.8 billion.
- In June 2007, when the country's economic output in terms of real gross domestic product was barely lower than it is now, collections, at $276.5 billion, were 10% higher (about 6% higher after considering the Social Security tax cut). Receipts from the Fed that month were only $2.6 billion.
Instead of reporting what happened in June, Rugaber spent eight paragraphs describing the current budget-ceiling negotiations -- when the AP's David Espo and Andrew Taylor, Philip Elliott, Laurie Kellman, and Ben Feller are already covering various aspects of that -- and five more paragraphs rewriting the fiscal history of the past dozen years, including these two:
The government last recorded a budget surplus in 2001, when revenues were $127 billion greater than spending. The surpluses were expected to total $5.6 trillion over the next decade.
But the country was back in the red by 2002. The deficit grew after President Bush won approval for broad tax cuts and launched the invasions of Iraq and Afghanistan.
Lord have mercy.
The $5.6 trillion estimate of surpluses was published by the Congressional Budget Office in January 2001, before the effects of the Internet bubble-burst were felt and before the economically devastating 9/11 terrorist attacks. In other words, the CBO's projections ended up being not worth the paper they were written on or the bandwidth they consumed. So there was no reason -- except to falsely "blame Bush for everything" -- for Rugaber to bring them up in his Wednesday report.
As to the "broad tax cuts" somehow being involved in the vanishing surpluses, the fact is that once Bush got the across-the-board and investment-related tax cuts he wanted in 2003, total federal receipts increased by almost $800 billion, or 44%, during the next four fiscal years. It's right here in this pretty graph, Chris.
The "Iraq and Afghanistan" meme would seem to indicate that Rugaber is cribbing from Marty Crutsinger, who went to that false well so often that he was still citing the wars as an excuse in September 2009, when Iraq had long since stabilized. Stimulus and other radical spending increases during the first year of the Obama administration were obviously what was sent the deficit into the $1 trillion-plus range for the first time -- and even though the stimulus is supposedly over, spending just keeps on rising.
The fact is that Uncle Sam's financial situation deteriorated badly in June. If that decay were more widely known, it would strengthen the case against the trillion-dollar tax increases President Obama wants. Obama's desired tax increases are on top of the hundreds of billions in tax increases already built into Obamacare, most of which will take effect beginning in 2013, as the Wall Street Journal helpfully pointed out on Monday. It's awfully convenient that the AP's Rugaber failed to tell the wire service's subscribing outlets and news consumers what really happened in June, isn't it?
Cross-posted at BizzyBlog.com.