Both the editorial and news pages of the Post display an obsession with a notion of fiscal responsibility which often appears almost bizarre. For example, a front page article complaining that the presidential candidates may have problems paying for their campaign promises warns that the $340 billion deficit projected for 2009 is likely to grow "as the economy weakens." Yeah, as the economy weakens, we will collect less money in tax revenue and we will pay out more money in unemployment benefits, food stamps, and other transfer programs. Would the Post rather the deficit did not increase in the downturn? This would not only increase the suffering, but it would also worsen the downturn, since the deficit helps to create a source of demand that would otherwise be absent. Of course the more serious problem is the downturn. This leads to both hardships for millions of families and bigger budget deficits. If the Post had been willing to report on the housing bubble in the years before it burst, perhaps we wouldn't be facing such a severe economic crisis today. But that's another story. Anyhow, readers would be especially hard-pressed to make any sense of this piece because it never puts any numbers in context and it doesn't even use numbers consistently. For example, it tells readers that "economists expect the deficit to top $400 billion when the fiscal year ends Sept. 30, rivaling the all-time high set in 2004." This is wrong and wrong. The economy will be almost 25 percent larger in 2008 than it was in 2004. To have the same impact on the economy as the $413 billion deficit in 2004 the deficit in 2008 would have to be approximately $515 billion. Furthermore, measured as a share of GDP, the 2004 deficit was not close to a record. The deficit was 3.6 percent of GDP in 2004, compared to 6.0 percent in 1983. (Adding in money borrowed from Social Security can get you to 4.6 percent of GDP in 2004.) While these budget numbers refer to the unified budget deficit, which does not include the money borrowed from Social Security, the earlier paragraph refers to a debt that is approaching $10 trillion, a figure that does include money borrowed from Social Security. Later the article warns of projections that show the debt rising by $3.3 trillion by 2018 under Obama's proposals and $4.3 trillion by 2018 under McCain's proposals. These debt numbers do not include the $2.3 trillion in projected borrowing from Social Security over this decade. Of course, since the numbers are neither adjusted for inflation nor expressed as a share of the economy, almost none of the Post's readers has any idea what they mean. It would have been equally useful to substitute "really big number that should scare you" for either of these projected debt figures. The article also includes a comment about Social Security which does not make any obvious sense when it warns readers that:: "But the more immediate problem is the depletion of excess cash in the Social Security trust fund, which has been used for years to cover a portion of the annual budget deficit. Government economists predict that the Social Security surplus will start shrinking in 2011 and dry up completely by the end of the next decade, exposing government-wide budget deficits of a magnitude not seen since Bush's first term." This should prompt a huge "huh?" In fact, the Congressional Budget Office projects the annual Social Security surplus to continue grow in dollar terms until 2016 and even as a share of GDP until 2013 (see Table 1-1). The annual surplus is not projected to disappear altogether until after the end of the next decade. It is possible that the article is referring to the surplus of Social Security taxes over benefits, but this peaked in 2006 and has been declining ever since. Measured as a share of GDP, the surplus on payroll taxes peaked in 2000. There are other errors in this piece. For example, it reports that Senator Obama's plan to eliminate the donut hole in the Medicare drug benefit would add $400 billion to debt over the next decade, ignoring the fact that this money can easily be saved by negotiating lower drug prices with the pharmaceutical industry, as he has proposed. It also reports that his health care plan would add $65 billion to the annual deficit. This figure does not include the revenue from the fee that he has proposed for firms who do not provide health care insurance for their workers. In short, readers can learn from this article that the Washington Post is very concerned about deficits. They cannot learn much else.
--Dean Baker
