The White House is apparently feeling pretty full of itself over the fiscal 2014 federal budget result it has just reported.
Reacting to the news that this year's deficit was "only" $483.4 billion, White House budget director Shaun Donovan crowed that "This is a return to fiscal normalcy." The press, of course including Andrew Taylor at the Associated Press, has accepted all of this with little challenge, including the administration's misleading "percentage of GDP" assertions, which completely ignore how much more the national debt has grown than the reported budget deficits. Taylor went one step further, blatanty deceiving readers as to how much money the federal government borrows for every dollar it spends.
Here is how the growth in the national debt and the government's annual reported deficits have compared during the past two fiscal years:
The table estimates that the the national debt on September 30, 2013 would have been $137 billion less than what the Treasury Department reported on October 17, 2013. On September 30, 2013, Treasury was still engaged in evasive maneuvers (i.e., moving money around) to keep the official national debt figure — but not the true debt itself — from rising about the legislated debt ceiling. $137 billion is the average of the September 30 - October 17 increases in the national debt seen during the two preceding fiscal years (2012 and 2011).
Readers can see that national debt growth as a percentage of national output (gross domestic product, or GDP) greatly exceeds reported deficits as a percentage of GDP, and that progress in bringing that percentage down has been unimpressive. Unfortunately, comparing debt growth to GDP if far more relevant, because it's the debt and not the deficits which indicate how solvent or insolvent the government is.
In that light, let's look at a few paragraphs the AP's Taylor wrote after the Treasury Department released its September report:
BUDGET DEFICIT DROPS TO $483B, LOWEST SINCE 2008
The deficit for the just completed 2014 budget year was $483 billion, the lowest of President Barack Obama's six years in office, the government reported Wednesday.
It's the lowest since 2008 and, when measured against the size of the economy, is below the average deficits of the past 40 years. The deficit equaled 2.8 percent of gross domestic product, which is the economy's total output of goods and services.
By comparison, the deficit for 2013 was $680 billion, or 4.1 percent of GDP.
Here's an easier way to understand why the new numbers are good news: The government borrows 14 cents for every dollar it spends; six years ago, it was 40 cents.
"This is a return to fiscal normalcy," White House budget director Shaun Donovan said.
Taylor's fourth paragraph is flat-out wrong:
During the past two fiscal years, the government has borrowed 25 cents for every dollar it has spent, not the 14 cents Taylor claimed.
Do Andrew Taylor and the AP have the integrity to issue a correction?
Cross-posted at BizzyBlog.com.
