No Shortage of Errors in Deficit Coverage
No Shortage of Errors in Deficit Coverage
Newspapers continue
faulty approach to tax cuts.
by Amy
Menefee
July 21, 2005
Higher-than-expected tax revenues and a lower federal deficit now
thats news. The White Houses July 13 announcement that revenue was
flowing in above projections prompted a flurry of deficit stories,
and more than half the coverage analyzed by the Business & Media Institute
repeated common errors exposed in
Tax & Spin: Five Ways the Media Distort Tax Issues.
In 11 newspaper stories between July 13 and July 15,
more than half contained at least one distortion. Journalists
emphasized record high deficits, bemoaned tax cuts as a cost to
the government, and cited tax cuts as a cause of the deficit. These
distortions failed to put the deficit in a historical perspective
and failed to explain the economics behind tax cuts.
High-Dollar Deficits
A July 14 Washington Post story by Jonathan Weisman
said, in dollar terms, the 2005 deficit of $333 billion would still
be the third highest on record. But focusing on todays dollars, as
several stories did, doesnt take inflation into account.
Later in the same story, Weisman admitted that Now,
the deficit is expected to finally begin receding, and it would come
in at 2.7 percent of the GDP, smaller in those terms than the
deficits of 15 of the past 25 years. This comparison with GDP is a
more accurate statement, because it allows a constant comparison
from year to year. When todays deficit is viewed alongside that of
1985, when it was 5.1 percent of GDP, the situation turns out to be
less dire than records would suggest.
Edmund L. Andrews of The New York Times included a
commendable bit of context in his July 13 story that revealed the
economic advantage America derives from its free market. Andrews
said, If current trends hold, the deficit could amount to less than
3 percent of the gross domestic product less than in many West
European countries that have been hobbled by slow growth and the
heavy cost of supporting social welfare programs. That was the only
comparison that put Americas deficit in a wider context.
Tax Cuts as Cost
Economists have pointed to President George W. Bushs
tax cuts as a source of the increased revenue. Lightening the load
of taxation has enabled businesses to grow, in turn growing the tax
base. But the media tended to blame tax cuts for causing the federal
deficit, choosing to focus on that instead of on rising government
spending.
Warren Vieth and Richard Simon did just that in their
July 14 Los Angeles Times article: Bush has asked Congress to
extend his previous tax cuts and to approve new tax reductions that
would cost the government $1.3 trillion over 10 years.
Likewise, Andrews reported in his July 13 New York
Times article: Mr. Bushs intention to extend his tax cuts
indefinitely, and to add new ones, would drain more than $1.4
trillion from government coffers over the next 10 years.
As the Business & Media Institute and the National Taxpayers
Union pointed out in Tax & Spin, a tax cut allows taxpayers to
keep more of their own money. Calling it a cost to the government
is based on the idea that all the money is the governments in the
first place. A more accurate approach is to consider the flow of
money in and out of government paying attention to the areas where
spending is growing.
Tax Cuts Causing Deficits
The media have been eager to blame the Bush tax cuts
for the current deficit. While deficit coverage often referred to an
economic downturn in 2001, only one story attributed that downturn
at least in part to the Sept. 11 terrorist attacks. Instead, the
norm which was upheld by five of the stories in this short time
period was a reference to the $128 billion surplus Bush inherited
in 2001, as Weisman put it in his July 14 Post story. The clear
implication was that Bush came into office and squandered a surplus
by spending it on tax cuts.
In a July 14 story, the Chicago Tribunes William
Neikirk quoted budget-watcher Robert Bixby as saying that we are
still more than $300 billion in the hole. Neikirk continued, He
said that confirms what many analysts had been saying at the time of
the Bush tax cuts that even a strong economy would not wipe out
the deficit they would cause.
Neikirk added, When Bush took office in 2001, the
Congressional Budget Office projected a $5.6 trillion surplus over
10 years, but that rosy picture evaporated as the economy went into
a recession and a stock market bubble burst. Again, the reporter
provided no link between the terrorist attacks, the cost of the war
on terror and the deficit; instead, Bush taking office and a
recession were the primary catalysts.
Simply put, there are no deficits without higher
federal spending. But as long as the media continue to portray tax
cuts as costly and bad for the budget, the audience wont get the
full story.
Related Links:
Tax & Spin: Five Ways the Media Distort Tax Issues
One Economy, Two Spins: Economic Conditions Portrayed as Positive
During Clinton Presented as Negative for Bush
