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What Does It Say About Our News Media?

That this information is relegated to the "Opinion" section:

This year... the deficit will be $260 billion, or $111 billion less than the CBO estimated in March. For 2006, the government deficit will be 2 percent of gross domestic product, down from the old baseline prediction for 2006 of 2.6 percent. On Aug. 17, when the more extensive annual Update of the Budget and Economic Outlook appears, that 2 percent figure is likely to show up more definitively. But neither the budgeteers' news nor the prospect of a confirmation of it is generating much discussion.

This is surprising. The Economic Report of the President shows the federal deficit for 2004 was 3.6 percent. A narrowing of more than 1 1/2 percentage points in such a short time is itself a story.

The U.S. deficit is worth comparing, for starters, with the data for European nations. In the Maastricht Treaty of 1992, European leaders set a deficit goal of 3 percent of GDP. EU member countries have had trouble meeting that target since.

A shortfall of 2 percent of GDP is also news in the U.S. context. Sure, there was the surplus in the second half of the 1990s. But 2 percent is below the average for the federal deficit between 1980 and 1995.

Tax cuts stimulated an ailing economy. A robust economy has delivered record tax revenues. Indeed, although nobody can question President George W. Bush's tax-cutting credentials, he's technically raised taxes. "The rich" are paying more, post-tax cuts, than they did before. And although the American economy has been booming for the past three years now, tax revenues as a percentage of the economy are also higher than they were before the President's tax relief:

Extra corporate taxes also flowed in and are 27 percent higher than in the year-earlier period. Overall, the data suggest that tax revenue as a share of the economy for 2006 will be 18.4 percent of GDP, above the average for the past 30 years.

Had spending been kept in check, we'd have room for even more much needed tax relief. However, if we lump all spending into one big category, we're obfuscating the real story. Even if we had halted entirely the growth of non-military discretionary spending over the past half decade, we'd be in essentially the same fiscal position we are in today.

It's the end of the false peace dividend of the 1990s, coupled with the outer bands of the Baby Boom hurricane beginning to whip the shoreline, that have produced the bulk of government spending increases. Entitlements (Social Security, Medicare, and Medicaid) that are mostly on auto-pilot are responsible for deficits (that are either "record highs" or historically lower than average, depending on how you measure) we have today. Unreformed entitlement programs will be responsible for actual record deficits-- and potential government bankruptcy, even with staggering tax increases-- tomorrow, if we fail to modernize and reform them.

What does it say about our news media that we so rarely hear about any of this? And when we do, it's classified as mere "opinion."

I would just direct you back to this post from February, with this graph and accompanying information:

Since 2001, annual pork spending has gone up by several billion dollars.

Since 2001, annual Social Security spending has gone up by $121,782,000,000.

Since 2001, annual Medicare spending has gone up by $125,603,000,000.

Since 2001, annual Medicaid spending has gone up by $62,960,000,000.

Pork is bad for its own reasons. It is corrupting. It is wasteful. It breeds a sense of government having an expensive answer for every minor problem, anywhere. It is unfair, often going to states and cities for political, rather than policy, reasons. Pork confuses the spending issue, directing attention away from the fundamental fiscal crisis we face, onto more symbolic spending abuses. Pork is awful. But eliminating pork-- and stopping the growth of discretionary spending, overall-- wouldn't change the seismic demographic forces at play in America.

We've got to tackle entitlements. The fate of future tax rates depends on it. The fate of our economy depends on it. The fate of capitalism itself depends on it.

Our media have failed to tell these stories, about tax relief producing record tax revenue; about "the wealthy" paying more in taxes now than before; about how many among "the poor" pay little, no, or even negative taxes; about dramatically smaller-than-expected short-term deficits; about our resilient and robust economy itself; and about the potential for gargantuan long-term deficits in the absence of entitlement reform.

All of this is par for the course for this media establishment. It will be funny to hear how shocked, confused, and surprised folks in the media will be when, in the near future, we once again have federal budget surpluses without tax hikes. It won't be so funny to hear how shocked, confused, and surprised folks in the media will be when the Baby Boomer retirement tsunami hits and we have genuinely out-of-control federal budget deficits, with tax hikes.

Fortunately, we make our own destiny, and I wouldn't blog about this stuff if I thought the situation was hopeless. We just need a bit of economic literacy in our news media and the United States Congress.

Posted by Will Franklin · 13 August 2006 12:12 PM

Comments

Posted by: Dan Morgan at August 14, 2006 12:37 AM

Posted by: Eneils Bailey at August 14, 2006 06:38 AM

Posted by: reuben at August 14, 2006 06:45 PM

Posted by: Zsa Zsa at August 15, 2006 07:04 PM