AP, Crutsinger Publish Three Clear Falsehoods in Report on August Deficit

APabsolutelyPathetic0109I tried to find a nicer way to put it in the headline. But I can't.

At the Associated Press, Economics Writer Martin Crutsinger's apparent plug-and-play report less than an hour after the issuance of Uncle Sam's August Monthly Treasury Statement on Monday (his item is time-stamped at 2:56 p.m., which follows the Treasury Department's 2:00 p.m. release by less than an hour) contains three obviously false statements that a news organization which really subscribes to its own "Statement of News Values and Principles" would retract and/or correct.

The specific AP standard in question is whether it has violated its promise not to "knowingly introduce false information into material intended for publication or broadcast." The only conceivable excuse at this point is that Crutsinger and his employer don't realize what they have done. The three falsehoods involved are not arcane or open to interpretation. Rather, they are significant, obvious, irrefutable, and in need of correction.

What follows are the three statements, the first of which contradicts itself in the report's own subsequent sentence:

1. "Deficits of $1 trillion in a single year had never happened until two years ago. The $1.4 trillion deficit in 2009 was more than three times the size of the previous record-holder, a $454.8 billion deficit recorded in 2008."

The fiscal year that ended on September 30, 2008 was "two years ago." The reported deficit that year was $454.8 billion, as reported. $454.8 billion is less than $1 trillion. There was not a $1 trillion deficit "two years ago."

2009 was one year ago. That's the year the deficit topped $1 trillion for the first time.

There is no way to twist the meaning of the bolded statement above to make it true, because it's false. Is this breathtaking carelessness, or an indicator that AP is bent on assigning any and all economic blame to the previous administration?

2. "Through August, government revenues totaled $1.92 trillion, 1.6 percent higher than a year ago, reflecting small increases in government tax collections compared to 2009."

Tax collections have not increased, as shown in the following graphics:

MTSreceipts0810

MTS0810TaxAndFedRecs.jpg

The first graphic comes from Page 2 of the Monthly Treasury Statement, and identifies the major sources of federal receipts. The second contains the August 2010 detail of "Miscellaneous Receipts" obtained from "Page 5(2)" of this year's Statement, and compares it to the related year-to-date detail found in the August 2009 Monthly Treasury Statement (there is a $235 million difference between the two reported "Miscellaneous Receipts" amounts that is not relevant to this post). The third boils things down, and proves that tax collections have declined.

Even if one dubiously considers every line except "Deposits of Earning by Federal Reserve" to be "taxes," those Federal Reserve Deposits are not. Don't take my word for it. Here is how the Congressional Budget Office described these deposits in its Monthly Budget Review last week:

MTS0810CBOFedRecsDesc

In case the AP and Martin Crutsinger need to be reminded: "Profits" are not "taxes."

Thus, as seen in the final graphic above, deposits from the Fed must be excluded when comparing year-over-year tax collections. When one does that, the result is that tax collections are down from a year ago by over $9.5 billion, or about 0.5%.

Crutsinger's statement that the overall increase in federal receipts "reflect(s) small increases in government tax collections compared to 2009" is false.

3. "Spending has totaled $3.18 trillion, down 2.5 percent from the same period a year ago."

Yes, reported "outlays" -- a contrived term the government uses as a proxy for "spending" (but is not the same thing) -- are down. But Crutsinger wrote that "spending" is down. The definition of "spending," taken from the word "spend," involves "pay(ing) out, disburs(ing), or expend(ing) funds."

As described back in April (at NewsBusters; at BizzyBlog) after it occurred in March, Uncle Sam's reported "outlays" were reduced by means of a $115 billion non-cash entry to reflect the government's revised estimate that it will ultimately lose less on its Troubled Asset Relief Program "investments" than originally thought. This entry did not involve "spending," nor did the extra identical amount incorrectly added to "outlays" last year. As I wrote in April:

In essence what happened is that the administration pushed as much “bad news” (asset writedowns) as it could into last year’s (i.e., fiscal 2009's) financial reporting, since last year was going to be a disaster no matter what. But since they overdid it with the writedowns last year (”Gosh, how did that happen?”), they can make this year (fiscal 2010) look better than it really has been. Good old Martin played along by calling it “dramatic.”

As noted, Crutsinger and AP should know about this $115 billion item. After all, the AP reporter discussed it in his April report on the March Monthly Treasury Statement.

After appropriately adjusting for the non-cash item, "spending" (the word Crutsinger chose to use) has not totaled $3.18 trillion; it has really been $3.29 trillion. Last year's "spending" wasn't the $3.26 trillion shown in Table 3 of August 2010's Monthly Treasury Statement; it was $3.15 trillion. "Spending" is not "down 2.5 percent from the same period a year ago," as the AP reporter claimed. "Spending" is up by $.14 trillion ($3.29 tril minus $3.15 tril). That's a 4.4% increase ($.14 tril divided by $3.15 tril). Since "spending" means what the dictionary says it means, Crutsinger's statement about federal "spending" is false.

As seen in the graphic at this link, which shows Monthly Treasury Statement data comparing 2010 and 2009 spending in all major functional areas, spending is up in the large majority of them.

The following is supposed to represent what the Associated Press does when it commits errors of fact in its reporting:

CORRECTIONS/CORRECTIVES:

Staffers must notify supervisory editors as soon as possible of errors or potential errors, whether in their work or that of a colleague. Every effort should be made to contact the staffer and his or her supervisor before a correction is moved.

When we're wrong, we must say so as soon as possible. When we make a correction in the current cycle, we point out the error and its fix in the editor's note. A correction must always be labeled a correction in the editor's note. We do not use euphemisms such as "recasts," "fixes," "clarifies" or "changes" when correcting a factual error.

A corrective corrects a mistake from a previous cycle. The AP asks papers or broadcasters that used the erroneous information to use the corrective, too.

For corrections on live, online stories, we overwrite the previous version. We send separate corrective stories online as warranted.

The three demonstrably false statements described here have misled and will continue to mislead readers and other news consumers into erroneously believing that trillion-dollar deficits go back to 2008; that fiscal year-to-date tax collections are greater than last year; and that federal "spending" in 2010 is down from 2009.

AP has "introduced false information into material intended for publication or broadcast" -- something it says it won't "knowingly" do.

Your move, guys and gals. You know what you should do. Will you do it?

If you choose to do nothing, could you guys at least spare us the sanctimony and remove your "Statement of News Values and Principles" web page?

Cross-posted at BizzyBlog.com.

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.