The Associated Press's unbylined 2:25 p.m. report on the government's April Monthly Treasury Statement contained an unhealthy dose of the historical revisionism we've come to expect from the outfit which really should be called in the Administration's Press.
AP's tallest tale is in ascribing the four annual deficits of over $1 trillion incurred from fiscal 2009 through 2012 entirely to the "deep recession" and the need to "stabilize the financial system," when the truth is that huge increases in government spending not related to those matters are primarily what shot the annual deficits upward — and are still keeping them at historical highs. Excerpts follow the jump (bolds and numbered tags are mine):
US ON TRACK FOR NARROWEST BUDGET GAP SINCE 2008
The U.S. government ran a big surplus in April, thanks to a flood of tax payments [1] that helped keep the budget on track for the lowest annual deficit in six years.
The Treasury Department said Monday that April's surplus totaled $106.9 billion, down slightly from last April's $112.9 billion surplus. The government typically runs a surplus during April, when individual tax returns are due and corporations make quarterly tax payments. [2]
Through the first seven months of the 2014 budget year, which began Oct. 1, the deficit totals $306.4 billion. That's down 37 percent from the same period last year.
The Congressional Budget Office is forecasting a deficit of $492 billion for the full budget year. That would be the narrowest gap since 2008.
In 2008, the government recorded a deficit of $458.6 billion, which was the deficit up to that time. But that record was soon eclipsed as the government ran annual deficits surpassing $1 trillion for the next four years. Those deficits reflected a deep recession. The downturn reduced tax revenue and increased government spending to stabilize the financial system and pay benefits for people who had lost jobs. [3]
So far this budget year, revenue totals $1.74 trillion, up 8.2 percent from the same period in 2013. Revenue has been boosted by a stronger economy, which means more people working and paying taxes [4], thereby reducing the deficit.
Government spending totals $1.6 trillion, down 8.2 percent from a year ago. The decline reflects efforts by Congress and the administration to trim spending. [5]
Notes:
[1] — That "flood of tax payments" on the individual side came in at $238.2 billion, and was $2 billion less than last year's "flood." $3.9 billion of the $7.5 billion increase in receipts from April 2013 to April 2014 was due to higher receipts from the Federal Reserve (from $5.8 billion to $9.7 billion) almost entirely relating to quantitative easing and not related to the day-to-day operations of the federal government.
[2] — It may seem like a quibble, but it's not. Individuals also make quarterly estimated tax payments, and their dollar amount surely dwarfed the $39 billion in total corporate tax collections in April.
[3] — The spending to "stabilize the financial system" occurred in the Troubled Asset Relief Program (TARP). The Fed's quantitative easing program also ostensibly added stability. With the exception of increased outlays for unemployment benefits and a few other items, Obama administration spending permanently ramped up and hasn't come down, demonstrating that the original ramp-up wasn't about addressing the recession as much as it was about permanently making the government larger and increasing the number of Americans dependent upon it.
[4] — It's not just the (sort of) "stronger economy" which has caused collections to increase. Tax increases, i.e., rate hikes, new forms of taxation, etc., are also a factor.
[5] — After adjustment for timing differences from year to year, spending on the day-to-day operation of the federal government is down by less than 1 percent (per the "Subtotal" line in the graphic, which is from the Congressional Budget Office's Monthly Budget Review issued on May 7; its grand total of spending is $5 billion below today's actual, meaning the real "Subtotal" decrease is only $4 billion, or 0.2 percent):
The other two elements listed below the red box are not relevant to analyzing the government's efforts to control spending on its operations.
As to the AP's confidence that the CBO's projection of "only" a $492 billion deficit will be met, I should note that it's not necessarily a good sign that the surplus in April, the big cahuna for collections was smaller than April of last year.
Cross-posted at BizzyBlog.com.
