10 Percent at the WSJ Isn't the Same as 10 Percent for the Rest of Us

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Thursday, 08 April 2010 05:31

That is the only thing that readers can conclude from a statement in an article on Federal Reserve Board Chairman Ben Bernanke's urgings to reduce the deficit. The WSJ told readers that: "The government is running a budget deficit in excess of about $1.3 trillion, more than 10% of the nation's total economic output." Of course, the Commerce Department is telling us that GDP for the fourth quarter of 2009 was $14.5 trillion, which would mean that the deficit is less than 9.0 percent of GDP.

This trouble with numbers carries over to the substance of the piece which is supposed to be that the country faces an imminent crisis in being able to sell its debt. It warns readers that: "yields on 10-year Treasury notes have risen from around 3.25% in late November to just under 3.9% today, in part because of concerns in credit markets about the mountains of government debt investors are being asked to buy to fund U.S deficits."

Hmmm, we are paying 3.9 interest because there are concerns in credit markets about "mountains of government debt." Were investors also concerned about "mountains of government debt" when they demanded interest rates of more than 6.0 percent to hold federal debt back in 2000? Oh yeah, we had a $250 billion surplus back in 2000.

The reality is that the WSJ is just telling us that they don't like the government's debt. The markets did not tell them why interest rates rose from the extraordinarily low levels of last November. They are just making this stuff up and feeding it readers as truth.

We expect this sort of thing on the WSJ editorial page. We expect better in the news section.