The graphic about the prospective budget deficit that's been floating around for a few days is a prime example of liberal media bias, and many people who ought to know better have linked completely uncritically, accepting the media message at face value.
The graph, compiled by Reuters from Congressional Budget Office data, is titled "Bush Record Budget Deficit" and is a flat-out lie. Virtually everyone linked to that graphic passed it on at face value, noting "Not to be Outdone by Daddy," one calling it a simple, clear picture which aided, rather than undermined, understanding of the issue. Others who ought to know better remarked "enough said," gave credit to "The Clinton Era" (as if Clinton's economic policies have nothing to do with today's economic condition), and finally, endorsing it as something that "can't be seen too many times." (Yes, but not for the reason you think.)
Here's why the Reuters graph is misleading, and deliberately so. It uses raw dollar numbers, unadjusted for inflation and gross domestic product (a rough estimate of the size of the American economy). Even the greenest budget journalist would know that such a comparison is worse than meaningless, it is outright fraudulent. The CBO itself reports that the actual deficit will peak in 2003 at 1.9 percent of GDP, returning to surplus in 2007. (Source: The Budget and Economic Outlook: Fiscal Years 2004-2013, Chapter One (Congressional Budget Office, January 2003). Even assuming a larger absolute deficit of $300 billion, as suggested by the Reuters chart, total deficits would never exceed 3 percent of GDP.
Is this a "record" deficit, as Reuters claims? Absolutely not. The true record was set in World War II, when the deficit hit a stunning 30.3 percent. Since the end of WW II, the largest post-war deficit came two year into Reagan's first term, in 1983, of six percent. That, nearly double the proposed Bush budget gap, would be the post-war record.
There's a reason economists talk about government budgets in terms of GDP. The budget of the U.S. government is funded from the activity of the American economy. The larger and stronger the economy, the more revenue comes in to government coffers. The size of the budget, and any deficit, should be considered in light of financial support it had - in this case, the entire economy.
To paint an example... right now my wife and I have "record" debt in absolute terms. But we're in better financial shape than ever. Why is that? First off, much of that six-figure debt is for our house. Instead of paying rent, we're paying almost exactly the same amount of money towards a home loan.
Second, we make much more money now than we did even five years ago. When Dineen had a government job and I worked for a small Florida law firm, our income was a fraction of what it is now that she's got a big firm job and I have my own firm. So, if we had, say $10,000 in debt five years ago, that would have been serious. The same amount of debt right now would be easily manageable, even adjusted for inflation.
The reason budgets are considered in light of GDP is pretty closely related to that second reason. In 1965, a $300 billion deficit would have broken the bank. This year, it's less than 3 per cent of the economy.
So the Reuters graphic is downright fraudulent, and the fact no one has called out Reuters for this blatant propaganda baffles me. I am especially surprised that Jason didn't say something, since he is well versed in the art of breaking down the true meaning of graphical information design. But I suspect that thoughtful critics were few because so many found it fit so neatly with their preconceived notions of what they want to believe about the economy under this President. Unfortunately, it's just another liberal media lie.Posted by wasylik at February 8, 2003 05:10 PM | TrackBack