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Home Publications Blogs Beat the Press New York Times Gets It Fundamentally Wrong on the Budget Impasse

New York Times Gets It Fundamentally Wrong on the Budget Impasse

Monday, 31 December 2012 06:38

The NYT doesn't seem to keep up to date with writings on the budget deficit even in its own paper. As I have often pointed out, the large budget deficits of recent years are entirely attributable to the plunge in the economy caused by the collapse of the housing bubble. Paul Krugman has recently been harping on this point in his NYT column and blog. For this reason, its news story claiming that:

"Years of increased spending on everything from wars to expanded entitlement programs — combined with protracted, stubborn unemployment and a nation of workers whose earning power and home values have plummeted in recent years — have persuaded lawmakers in both parties that fiscal policy is the most pressing domestic concern."

Of course the "years of increased spending" would be beside the point if it were not for the economic downturn. The NYT badly misled its readers in making this assertion.

The article also misled readers in the next sentence which asserts:

"But a fundamental ideological chasm between the majority of lawmakers and an empowered group of Congressional Republicans — fueled by some Tea Party victories in both chambers in 2010 — has made it more difficult than ever to reach fiscal and budgetary compromises."

Actually, the vast majority of Tea Party backers agree with the vast majority of Democrats in their opposition to cuts in Social Security, Medicare, and Medicaid. The main difference is that the Tea Party backers seem to believe that there is some other area of government spending, other than defense, that can be cut back to reduce or eliminate the budget deficit. Of course this is not true. However the nature of the gap between most Democrats and Tea Party backers is informational, not ideological.

This makes the position of Republicans in Congress especially difficult. They need to produce spending cuts, but not in the programs that the Tea Party backers support and often depend upon. Since this is not possible, it makes the politics very hard for them.

Comments (6)Add Comment
written by AndrewDover, December 31, 2012 7:26
When you write "the large budget deficits of recent years are ENTIRELY attributable to the plunge in the economy", how do you discount the other factors shown in Figure 1 of
http://www.cbpp.org/cms/index.cfm?fa=view&id=3849 ?
What Andrew Said
written by Bart, December 31, 2012 9:10

We did have a lot of unfunded events.
I agree "large budget deficits of recent years" is misleading
written by John Wright, December 31, 2012 9:36
In response to Andrew Dover:

I looked at your link and perhaps Dean is referring to the incremental increases in the budget deficit above the levels the Republicans were comfortable with during GWB.

The figure 1 you point to is a great illustration of the current and projected contributors to the debt.

It also shows the projected growing contribution of the Bush Tax cuts to the accumulated debt.

And it also illustrates where America chooses to allocate considerable resources: foreign wars, tax cuts for the well off, and financial rescues of the well connected.

A good economic example for the rest of the world.
Follow the link
written by David, December 31, 2012 10:18
Jeez, Andrew, look at the chart that Dean linked to the text you quoted. Then look at the CBPP chart and match up the years. Economic downturn related expenses. And guess what? After today those tax cuts are history. So, you are making a non-point.
Nitpick - any cut will "reduce"
written by Melissa, January 01, 2013 6:45
"some other area of government spending, other than defense, that can be cut back to reduce or eliminate the budget deficit" - eliminate, no, but reduce, yes, although maybe not significantly. Theoretically, if you cut $1 from the budget of the Dept of Education or Interior, you've "reduced" the budget deficit compared to not cutting that $1. Just keeping you honest, since you hold the columnists you criticize to that standard of accuracy.
written by watermelonpunch, January 02, 2013 1:25
I don't think anyone else at the NYTimes reads what Paul Krugman writes. He does write the same thing over & over of course, you'd think it would sink in somewhere.

"Years of expanded entitlement"...
There's lots of that crap taken out of context.
Like ... "So many people on food stamps..." Yeah, because in a crappy economy where nobody's hiring, more people qualify for food stamps! But the way it reads in many articles it sounds as if they just started giving food stamps to people with more money... and I don't think that's the case. But you hear people comment about people on food stamps driving fancy cars... when, at least in my state, people can't qualify for food stamps if they have any real assets. So it's pretty confusing.

RE: the deficit attributable to the plunge in the economy...
I think the idea here is that yeah, there was a lot of war spending (too much in my opinion, but that's beside the point I'm making)... But the fact is, the U.S. has made war spending affordable in the past, by raising taxes... The fact that the war spending was accompanied by lowering taxes can explain the deficit there perhaps?
The entitlement spending, I think, is a red herring of sorts. It's made out to be a bigger thing than it is... And if the economy hadn't crashed & burned, there wouldn't be so many more people dipping into the entitlements.

It reminds me of this poll I read the results of... Where people almost invariably thought the government was spending more than it was on various things. Like when average Americans guessed what the percentage of the budget went to this or that, they almost always guessed that the government was spending more on something than it really was.
Where do they get these ideas?
The kind of sloppy purveying of information as sited in this blog post about the NYTimes article.

Plus, it's really easy to get people riled up about some other person somewhere else getting something for nothing that they're not. Which is why people really jump on anything about entitlements in general.
But then when you ask them, do you want this 5 year old boy to be malnourished? They say no of course not he deserves food stamps. If you ask them if they want grandma not to get social security & medicare... they say of course she deserves it!
But you say do you want these faceless nameless people to get something from the government... they freak.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.