One thing which is almost as reliable as the sun rising in the east is the Associated Press, aka the Adminstration's Press, putting a better face on the federal government's fiscal situation than it deserves when a Democrat is in the White House. Almost as reliable is the arrival in a related report of some kind of statement about spending cuts which describes them as "deep," "steep," or some other awful adjective.
Both items were present in typical fashion in Martin Crutsinger's report Thursday afternoon following the release of the federal government's August Monthly Treasury Statement. Excerpts follow the jump.
Crutsinger also got help from the AP's headline writers (bolds and numbered tags are mine):
US BUDGET DEFICIT SHRINKS 35 PCT. FROM LAST YEAR
The U.S. government posted a narrower budget deficit in August compared with a year ago, keeping the annual gap on track to be the smallest in five years.
The deficit for August was $147.9 billion, the Treasury reported Friday. That brought the annual budget gap through the first 11 months to $755 billion, or 35 percent lower than the nearly $1.2 trillion in red ink for the same period last year. [1]
The budget year ends on Sept. 30. The Congressional Budget Office projects the government will run a surplus this month, lowering the annual deficit to $642 billion. That would be the first annual deficit below $1 trillion in five years. [2]
Steady economic growth has put more people back to work [3] and boosted corporate profits. And Social Security taxes rose at the beginning of the year, along with income tax rates on wealthier Americans. Both trends have raised tax revenue. In August, the government collected $185 billion in taxes, up 4 percent from the same month a year earlier. [4]
At the same time, steep government spending cuts [5] that took effect in March have lowered spending. The government spent $333 billion in August, down 10 percent from a year earlier. [5]
Notes:
[1] -- This feeds the ridiculous Democratic Party meme that the Obama administration's wonderful stewardship is bringing down the deficit faster than any other administration ever has. Well, that's only happening because the administration increased annual budget deficits faster than anyone else ever has from fiscal 2009 to fiscal 2012, racking up officially reported deficits of $4.7 trillion: $1.02 trillion from February through September 2009 during the first eight full months of the Obama presidency; $1.29 trillion in fiscal 2010; $1.30 trillion in fiscal 2011; and $1.09 trillion in fiscal 2012.
[2] -- The projected fiscal 2013 deficit of $642 billion assumes a September surplus of $113 billion. Though you can never be completely confident given the creative accounting in which the Obama Treasury Department engages, the September 2012 surplus of $75 billion only occurred because of artificially low reported spending of $186 billion during that month (14 of the past 23 months have come in above $300 billion), an occurrence which seems unlikely to be repeated. Working in the administration's favor is the fact that September 2013 has five Mondays, which should boost reported receipts (September 2012 only had four Mondays). More fundamentally, the $642 billion projected deficit will still be almost $190 billion higher than any deficit ever recorded until Barack Obama became President.
[3] -- Economic growth has not been "steady." Growth in the fourth quarter of 2012, the first quarter of the government's fiscal year, was an annualized 0.1%, the equivalent of someone with a $1 million per year business racking up a whopping $250 in additional quarterly sales (one-fourth of 0.1% times $1 million). As to employment, the government's Bureau of Labor Statistics says that almost 60% of the net increase in the number of people going "back to work" is in part-time employment.
[4] -- If it weren't for the roughly $12 billion increase in Security and Medicare tax collections in August 2013 compared to August 2012 (see Page 2 at both reports) predominantly due to the expiration of the two percentage point payroll tax cut effective this calendar year, total August 2013 receipts would have trailed August 2012 by over $5 billion. Even though one has to consider that August is typically a slow month for collections, what Crutsinger cited is really a reason to believe that the economy may be seriously slowing down.
[5] -- The impact of the "steep cuts" in August is nowhere near the "down 10 percent" Crutsinger cited. The Congressional Budget Office's Monthly Budget Review, a typically very accurate estimate of monthly results released just ahead of the Monthly Treasury Statement (that accuracy continued in August), estimated that the real comparable spending reduction after considering timing differences was about 5 percent.
More fundamentally, year-to-date outlays of $3.228 trillion, which Crutsinger oddly chose not to report, are only down by about 3.7% compared to last year's $3.352 trillion. But as CBO noted, over two-thirds of that difference ($87 billion out of $124 billion) is due to "Net transfers for the government’s activities related Fannie Mae and Freddie Mac ... (being) less than such outlays recorded last year at this time." That leaves the current year through August only $37 billion, or 1.1%, below last year. Big deal.
For full fiscal year spending relating to the government's day-to-day operations to come in below last year's $3.538 trillion, this year's total spending can't be more than $3.451 trillion (3.538 trillion minus the $87 billion just noted). That means September 2013 spending will have to be less than $223 billion ($3.451 trillion minus the $3.228 through August cited earlier). Monthly government spending excluding the Fan and Fred impact has averaged $298 billion during the past 23 months.
And of course, nowhere did Crutsinger mention that even at the lower projected deficit level, the government will still have spent well over $1.20 for every dollar it collected.
Cross-posted at BizzyBlog.com.
