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Home Publications Blogs Beat the Press Real Newspapers Report a Drop in Projected Deficits as a "Reduction," Not an "Improvement"

Real Newspapers Report a Drop in Projected Deficits as a "Reduction," Not an "Improvement"

Wednesday, 10 July 2013 07:09

A NYT blog post repeatedly referred to lower projections of a deficit as "improvements." The reductions in the deficit imply slower growth and fewer jobs. That may lead many to question the extent to which this development can be termed an "improvement."

While the piece did include statements from an Obama administration official boasting about the economy's growth it would have been appropriate to include the views of an analyst who would have reminded readers that the economy is not even growing at its trend pace. This means that the size of the annual output gap of almost $1 trillion (the amount of wasted potential output) is growing rather than shrinking.

Comments (5)Add Comment
go further, 1937 all over again....
written by pete, July 10, 2013 8:24
In 1937, wages rose rapidly, such as BART is asking for, and the budget was cut....sound familiar. A supply and demand shock at the same time.

Problem with deficit is folks forget ECON 102. Transfers do not stimulate. Spending on real stuff may. But if unemployment is structural, which seems increasingly probable given the amount of long term unemployment, then even spending will not be stimulative. Recessions are always a time of restructuring, its natural. This one might have been quite extreme in that regard.

The US really needs to encourage training of workers at an early age, before they are told they have failed by not getting a bachelors degree. Met a guy on the plane to Thailand, was a project manager for an oil company, simply had a high school diploma, but quite successful, having "worked his way up". This needs to happen more often, rather than less often. College does certainly not need to be subsidized.
whoa, is Dean getting it?
written by joe, July 10, 2013 10:35
"The reductions in the deficit imply slower growth and fewer jobs."
Holy smokes batman. Looks like Dean might have finally understood that the govt sector deficit is the non-govt sector surplus. Have you been reading MMT? C'mon now, you can admit it, you're among friends here...
written by JDM, July 10, 2013 1:46
Got a house for sale to the NYT; years worth of improvements, which means I just pocketed the money that was needed for repaint, roofing, plumbing, etc. Funny thing, for some reason even after all those improvements the house doesn't look so good.
Too Much
written by keenan, July 11, 2013 4:55
Baker has gone a little overboard on this one. It is reasonable to describe a reduction in the deficit as an improvement. Yes, such a reduction may have negative consequences, but the reduction in and of itself is not mislabeled by being called an improvement.

To turn the tables, Baker routinely describes a boost in production as positive. But such a boost will surely increase global warming. So why is he painting this in positive terms?

Answer: For the same reason reducing the deficit is an "improvement." Both are positive actions that have negative consequences.
written by watermelonpunch, July 11, 2013 10:23
Improvement is in the eye of the beholder?

Who is the beholder here?

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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.