Thursday, June 9, 2005

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Spin better!!!

One of my favorite Simpsons moments is when Homer is watching a TV set showing Prairie Home Companionís Garrison Keillor -- at which point he bangs on the set and says, "Be funnier!!"

That moment came to my head when I read this Jackie Calmes report in the Wall Street Journal that this year's budget deficit is smaller than projected:

While the administration and Congress won't officially revise their separate annual deficit projections until midsummer for fiscal 2005, which ends Sept. 30, government and private-sector analysts agree the shortfall is more likely to be about $350 billion, rather than the $427 billion the administration forecast in January. Treasury Secretary John Snow is expected to carry the tidings to London for this weekend's summit of finance ministers from the Group of Eight leading nations, who have harped on the growing American debt and foreign borrowing.

Administration officials say the improved fiscal picture suggests the president is on track to deliver more quickly on a campaign promise to cut the annual deficit in half as a share of the total U.S. economy, to 2.3% of gross domestic product. (By comparison, last year's $412 billion deficit was 3.6% of GDP.) Private analysts don't put much stock in that promise, however; even if Mr. Bush claims victory, the nation still faces long-term deficit problems. Overall federal spending is increasing, including for war costs. More broadly, spiraling health-care costs for Medicare and Medicaid programs, including a prescription-drug benefit for seniors starting next year and a wave of baby-boomer retirements after 2008, will drive federal deficits to unsustainable sizes....

"With the president's focus on spending discipline, we are seeing positive signs for the American economy, and for the federal government's balance sheet," Budget Director Joshua Bolten said in a statement. (emphasis added)

Why did I think of that moment? Because Bolten's comment was so absurd that I was tempted to bang the computer and yell "Spin better!!"

Finding out that the annual budget deficit is 20% smaller than previously should be manna from heaven for the administration. And there's an excellent line for the explanation -- the administration's policies have fostered faster-than expected economic growth which has increased tax revenues. So if I were working for the administration, I'd say, "With the president's focus on growing the economy, we're seeing an improved balance sheet for the government." That's spin in the best sense -- accentuating your positive attibutes.

What I wouldn't mention is "the president's focus on spending discipline," which brings up two unformortable facts: a) this administration has no spending discipline; and b) combine that with a Congress that loves to spend as well and you've got widening deficits for some time.

posted by Dan on 06.09.05 at 10:20 AM




Comments:

Six of one, half dozen of another, it seems to me. Spending discipline doesn't exist now, but could be imposed later; economic growth is better than expected now, but could be worse later -- especially if the housing bubble, one of its primary drivers, starts to deflate.

It's true that this administration, even more than the last one, is zeroed in on its domestic audience, especially when it is talking about the economy. This doesn't mean its every statement conforms to a sophisticated design. Lots of administration statements, including this one, are improvisations on the spur of the moment. Right now it is getting (or anticipating) criticism for lack of spending discipline, and Bolten's statement is the response to that, nothing more.

posted by: Zathras on 06.09.05 at 10:20 AM [permalink]



They've got me so confused I can't ever tell what they're trying to tell me. Do these numbers include the cost of the war? They move those costs in and out of the budget so often, I can't get a handle on what set of books they're talking.

posted by: Steven on 06.09.05 at 10:20 AM [permalink]



"Unformortable"?

posted by: Bob McHenry on 06.09.05 at 10:20 AM [permalink]



How is a reduction from $412 billion to $350 billion a 20% reduction?

posted by: Bernard Yomtov on 06.09.05 at 10:20 AM [permalink]



I think the idea is that deficit estimate is about 20% less as a share of the overall economy. That is, the projected deficit is smaller, the economy is larger. But Dan's post doesn't include all the numbers one would need to say for certain that the 20% figure is right.

posted by: Zathras on 06.09.05 at 10:20 AM [permalink]



What I don't understand is why the goal here is simply a slighty slower rate of increasing the debt. Shouldn't the goal be something difficult, like balancing the budget? Whenever I hear pols talk about their goal of ever so gently reducing the deficit, I want to ask them, "Do you think I'm an idiot?"

posted by: Horatio on 06.09.05 at 10:20 AM [permalink]



Even better goal: pay down debt.

posted by: Horatio on 06.09.05 at 10:20 AM [permalink]



I think the idea is that deficit estimate is about 20% less as a share of the overall economy. That is, the projected deficit is smaller, the economy is larger. But Dan's post doesn't include all the numbers one would need to say for certain that the 20% figure is right.

My algebra suggests that this implies a 6.2% growth in GDP.

I don't think we're seeing that. Isn't growth around 3.5%? To be fair, that gives 18%, assuming the numbers are kosher.

posted by: Bernard Yomtov on 06.09.05 at 10:20 AM [permalink]



Drez: Because Bolten's comment was so absurd that I was tempted to bang the computer and yell "Spin better!!"

Suffice to say that you're not exactly within the target audience of this spin.

posted by: fling93 on 06.09.05 at 10:20 AM [permalink]



Frickin' Boomers.

posted by: Yo on 06.09.05 at 10:20 AM [permalink]



Bernard Yomtov: you also have to account for inflation. $412M is in 2004 dollars, $350M would be in 2005 dollars. So, "20% less" requires 6.2% growth in nominal GDP (not real GDP) which is plausible.

posted by: Adrian on 06.09.05 at 10:20 AM [permalink]



Just for the sake of correctness...Homer says: "Stupid TV...be more funny!"

posted by: Seth on 06.09.05 at 10:20 AM [permalink]



Why doesn't Mr Drezner give his readers the REAL facts?

Fact One, the federal debt projected for 2010 is now
$11.1 TRILLION. That is TRILLION more than the $6.7 Trillion
that Bush
promised only 4 years ago, in his Feb 2001 release of the
2002 budget.
References:
(a) Bush's 2006 budget release at
http://www.whitehouse.gov/omb/budget/fy2006/tables.html ,
Table S-14 (bottom of page),
Entry "Debt outstanding at end of year", subentry "Total,
Gross Federal Debt
(b) Bush's 2002 budget release at
http://www.whitehouse.gov/omb/budget/fy2002/budiv_18.html ,
Table S-18, entry "Debt Outstanding End of Year", subentry
"Total, Gross Federal Debt"


Fact Two, $4.9 Trillion of that debt consists of money Bush
and the Republican Congresses have stolen from the Trust Funds
for Social Security and Medicare.
Ref: http://www.whitehouse.gov/omb/budget/fy2006/tables.html ,
Table S-14, Entry "Debt Outstanding by End of Year" subentry
"Debt held by Government Accounts"

Note that I say "stolen" because when Bush takes $200,000 from
your Social Security account and gives you a US Treasury in
return, the US Bond says that your Social Security account gets
the money back only if YOU --not Mr Bush and not the Republican
Congresses -- pay the money back in future taxes. What would we
call a banker who pulled such a scam?

What's hysterically funny about this con game is that millions of
middle class Republicans have been screwed like a dog by Bush and
are too stupid to realize it yet. Bush's $Trillions in debt will
HAVE to be paid off in the next 20 years -- the rubber hits the
road when baby boomers start retiring in 2008. AARP will be even
stronger than now and millions of blue collar retiree have little
retirement savings other than what they have paid into Medicare and
Social Security over the past 40 years.

But in order to pay off Bush's debt , future administrations --
regardless
of whether they are Republican or Democrat -- will have to levy
very high taxes on withdrawals from Middle Class 401Ks and IRAS.
All those savings are trapped in "before tax" accounts and can be
taxed at as high a rate as the government wants -- certainly at 60%
and maybe as high as 90%. In other words, those millions of
middle class Republican IRAs and 401Ks are toast.

The second thing that's hilarious is that the voters don't realize
that Bush --via his tax cut for the rich --has created the very Social
Security crisis that Bush is complaining about. But I suspect some
Democrat --maybe Howard Dean -- is going to make sure that those
chickens come home to roost in the next year or so.

So why doesn't Academician Daniel Drezner mention these major
pieces of information to his readers? (I assume that he's
intelligent enough to be aware of them. ) Does pointing out such
facts to the voters damage a career tied in any way to politics?

Second question, when Drezner hits the TV , why does he yell
"spin better"? Wouldn't "Tell the Truth!" be a more appropriate
emotional reaction for
a academican devoted to the pursuit of truth? Given the subsidy
that University of Chicage gets from the US Taxpayers, shouldn't
Drezner also want the public interest served by informed voters --
instead of having the voters misled? What master does Mr Drezner's
Department
serve, by the way?

posted by: Don the Greater on 06.09.05 at 10:20 AM [permalink]



Oops. Left out a number in the above post. What I meant to say was:
"Fact One, the federal debt projected for 2010 is now $11.1 TRILLION. That is $4.4 TRILLION more than the $6.7 Trillion in 2010 debt
that Bush had
promised only 4 years ago, in his Feb 2001 release of the
2002 budget. "

Note also that the top 8% of the income bracket should pay most of the federal debt --given that they own most of the national wealth and receive most of the national income.

What Bush did via his income tax cut, however, was
to shift several $Trillion in debt from the wealthy to the blue collar workers and middle class. He did this by ensuring that the federal
debt would have to be paid --not by income taxes on the rich --but by a combination of screwing the workers (by not returning the real wealth that workers have put into their Social Security accounts over the past 40 years) and by heavy taxes on middle class IRAs/401Ks "before tax" assets.

Middle Class Republicans will have their life savings in 401Ks and IRAs confiscated because those assets are in "before tax" status and can be taxed as high as the government wants when the money is withdrawn at retirement. (One of the reasons why the government has encouraged the middle class to put its savings into the IRA/401K TRAP.)

Future governments won't be able to "soak the rich" to pay off Bush's debts --even though Bush
incurred that debt by transferring $Trillions from the US Treasury to the rich -- because
Bush's Tax cuts have allowed the rich to convert much of their capital to after-tax wealth -- which is immune to government seizure under the
Fifth Amendment "taking clause" --something the Supreme Court will be happy to explain to you just as soon as Bush has stacked it sufficiently.

Again, Mr Drezner should know this. So why isn't he warning you?

posted by: Don the Greater on 06.09.05 at 10:20 AM [permalink]



My step dad, a committed republican, but otherwise a gentleman of great scruples has tryed to explain why the deficit is like a balloon; it gets larger, it gets smaller, its different sizes have different effects, for better or worse. If thats true, and GW seems so sanguine about the deficit that he must believe the same thing, we should borrow more. If its ok to have 400 billion in debt, why is 800 billion so bad? Or 16 bil? Less debt is great but more is ( and always will be) more spending money. And thats what Republicans are all about. So carry on!

My beloved step dad could not counter this.

Newt rolls in his political grave. Or he should anyway.

posted by: exclab on 06.09.05 at 10:20 AM [permalink]



I remember when they buried Gingrich. The reason put out was that he had irresponsibly closed down the government to get it disciplined. His demise induced nodding and approval of sage heads. Republican and Democrat heads. "Had to be done," They all said. And the rave continues to this day fueled by an extasy of credit.

Let no good deed go unpunished.

posted by: exclab on 06.09.05 at 10:20 AM [permalink]



Adrian,

Good point.

posted by: Bernard Yomtov on 06.09.05 at 10:20 AM [permalink]



Are we still not including the costs of the wars in the budget reports? If not, that makes a huge difference.

posted by: Brian on 06.09.05 at 10:20 AM [permalink]



Note that I say "stolen" because when Bush takes $200,000 from your Social Security account and gives you a US Treasury in return, the US Bond says that your Social Security account gets the money back only if YOU --not Mr Bush and not the Republican Congresses -- pay the money back in future taxes. What would we call a banker who pulled such a scam?

Dunno -- what would we call a consumer who believed he had a bank account based on the mere fact that the bank opened up a branch in his neighborhood?

(Hint: there is no "your Social Security account." It's not yours. That's why the government can exchange the money for government bonds.)

posted by: David Nieporent on 06.09.05 at 10:20 AM [permalink]






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