Daniel Wagner

In their deeply deceptive Friday morning story ("Deep spending cuts pose a new threat to US economy") about how the bicameral bipartisan supercommittee is supposedly going to hurt the economy with whatever results from its handiwork, Christopher Rugaber and Daniel Wagner of the Associated Press, aka The Administration's Press, "somehow" forgot to include one "little" detail, and deferred another until very late in their report.

The omission, which is that the "cuts" under consideration are really reductions in projected spending increases in future years, is sadly typical. The fact is the $1.2 trillion in "savings" the supercommittee hopes to engineer will only slightly reduce the rate of spending growth. The deferral is that the pair waited until Paragraph 18 to tell readers, and even then only incompletely, that the "deep cuts" would be spread over nine years, thereby amounting to roughly 3% of the $40.3 trillion if projected 2013-2021 spending (Page XI here). The AP pair never explains how "cuts" which wouldn't kick in until the October 1, 2012 beginning of fiscal 2013 and which are (as they have almost always been) heavily skewed towards later years would affect the current economy. Excerpts from the pair's report follow (bolds are mine):

If we're to believe Associated Press reporter Daniel Wagner, this morning's report from the Department of Labor on unemployment claims revealing that initial claims during the week ended August 6 fell to 395,000, was "good news." Why, according to Wagner, that drop, all by itself, it was "enough to catapult stocks," pushing the Dow up by 423 points in Thursday's trading.

Uh, not exactly, Daniel. First, though the decline in initial claims was in the right direction, it was only 5,000, or 1.25%, less than last week's original number of 400,000 (naturally revised up to 402,000 this week), and an even tinier 3,000 fewer than the initial number two weeks ago. If (more like when, given the track record of previous weeks) it's revised up by 3,000 or so, it will be even less impressive. Huge advances in the Dow do not arise from such tiny improvements.

Here's how the Associated Press's Martin Crutsinger and Daniel Wagner reported the housing portion of their Tuesday report on the day's economic news ("Factories aid bumpy recovery, housing still weak"):

Single-family home construction, which represented nearly 80 percent of the market, fell 4.2 percent. And requests for building permits, considered a good sign of future activity, slid 3.1 percent.

... The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year.

"The bad news is that activity is likely to remain depressed for several years," said Paul Ashworth, senior U.S. economist at Capital Economics. "The good news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level."

Well, okay, but the situation is already closer to a zero-out than it is to the levels we were seeing just a few years ago--or any time in the 50-plus years such records have been kept. Looking at the raw data on a historical basis, one finds that July 2010 was the worst July on record for the both stats the AP pair cited:

It might seem odd, given its content, that I'm about to criticize yesterday's Associated Press report on the deficit.

After all, AP business writers Martin Crutsinger and Daniel Wagner did give us the facts about Uncle Sam's October Monthly Treasury Statement, put them into historical context, and told us that we face $1 trillion-plus shortfalls in fiscal 2010 and 2011.

But the pair missed a couple of receipts-related items that would have hit readers right between the eyes if noted, and would have indicated just how dire the government's financial situation has become.

The first omission: Collections of corporate income taxes were negative, as the government paid out an astonishing $4.5 billion more in refunds to corporations than it collected. The second: In a month mostly unaffected by individual estimated payments (these are normally paid in April, June, September, and January), year-over-year collections of individual income taxes were down by 29%.

Here are the key paragraphs from Crutsinger's and Wagner's coverage: