The Washington Post is trying yet again to scare readers about the budget deficit by misrepresenting the basic facts. It reports today that the budget deficit hit an "all-time high of $413 billion in 2004." Okay, that is the highest deficit in nominal dollars ever, but their reporters and editors should know that this is absolutely meaningless. Big economies have big budgets, which can mean big deficits.
The relevant question of the size of the deficit relative to the size of the economy. The 2004 deficit was 3.6 percent of GDP. This is far below the deficit of 6.0 percent of GDP hit back in 1983. Even adding in the money borrowed from Social Security would only get you to 4.6 percent.
In short, it is simply not true that we had a record deficit in 2004 or that deficits are especially large by historical standards at present. It would be good if the Post used its budget reporting to try to inform readers about the budget, instead of advancing its editorial position that promotes balanced budgets as a first principle.
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