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Home Publications Blogs Beat the Press The NYT Has Determined that the United States Has a Spending Problem

The NYT Has Determined that the United States Has a Spending Problem

Tuesday, 05 February 2013 21:28

Okay all of you liberals who thought that the deficits were due to too little tax revenue and all you economists who pointed out that the large deficits were due to a collapsed economy, you're wrong. The United States has a spending problem the NYT said so.

A NYT article on President Obama's speech on the budget told readers:

"New deficit projections will define the scope of the nation’s spending problem."

See, it's a spending problem!



I see from readers' comments that the NYT has apparently fixed the spending problem in subsequent edits. It still tells readers:

"the budget office once again emphasized that the deficit will rise later in the decade, beginning in 2016, and continue do to so as the population ages and health care prices rise."

While Social Security is projected to rise modestly as a share of GDP and health care costs a bit more so, the largest reason for the projected rise in deficits from 2013 to 2023 is higher interest payments from the government. Net interest is projected to rise from 1.4 percent of GDP this year to 3.3 percent of GDP in 2023. This projected 1.9 percentage point increase in interest payments is by far the largest component driving the projected increase in the deficit over the decade.

In fact, the actual increase is somewhat larger since the amount of money that the Federal Reserve Board refunds from its holdings of government bonds is projected to drop from 0.5 percent of GDP at present to 0.2 percent of GDP in 2023. This drop of 0.3 percentage points of GDP, added to the 1.9 percentage point rise in net interest implies that higher interest costs will add 2.2 percentage points to the deficit in 2023.

This would have been worth mentioning both because it tells readers why deficits are rising and also because the rise in interest rates is a matter of policy. The CBO projections assume that the Fed will decide to raise interest rates. It is not something that just happens by itself.

(Morning Edition committed the same sin.)


Comments (9)Add Comment
written by Union Member, February 05, 2013 8:44

That must mean that Bill Clinton balanced the budget because he was a good accountant, not because the 90's enjoyed something akin to full employment.
The NYT also reports on spending problem priorities
written by JaaaaayCeeeee, February 05, 2013 10:08
In the same news article, they report our budget busters as Medicare, Medicaid, and Social Security, then note that health care costs continue to rise. So the news is that fixing health care costs is, if at all, our 4th most important spending problem. Military spending doesn't make the list at all.

This news article reports as news that the CBO blames future deficits on entitlements for the aging. And report the administration's warning that sequester cuts hurt the neediest, but that the WH is AGGRESSIVELY warning of the irresponsibility of defense cuts.

While the NYT tries to sway public opinion by editorializing in news reports, Digby does some real reporting on entitlements today: http://digbysblog.blogspot.com...lfish.html
NYTimes has extensively rewritten article, still blames aging for debt
written by JaaaaayCeeeee, February 06, 2013 12:00
Although the NYT article notes that it has been edited to report that the Alternative Minimum was changed, not repealed, it has also been extensively rewritten (someone reads little-upfisted comments and Dean Baker?).

The news article no longer reports that future CBO deficit projections will define the scope of our spending problem. Now reports that deficits will rise starting in 2016 due to aging and health care costs, which is slightly less misleading.
spending cuts
written by Chris, February 06, 2013 12:26
After running into the constant demand for "spending cuts" by the federal government, I have come to think that they are due to widespread confusion between the fiscal situation of a sovereign government and an individual family. Most families probably think they "overspend" and that breaking this "bad" habit would be good for them. They then apply this sentiment, ignorantly, to the government and, if asked, almost always agree that spending should be cut. If they had a better understanding of macroeconomics much of this nonsense would vanish, I hope.
written by JDM, February 06, 2013 1:30
That must mean that Bill Clinton balanced the budget because he was a good accountant...

That's how Kevin Kline balanced the budget in about an hour as substitute president in "Dave". That was a how-to video, wasn't it?
written by watermelonpunch, February 06, 2013 1:40
@ Chris - Pretty much exactly what I wrote in the comments of an earlier post here.

It's easy to imagine someone making that mistake if they haven't really thought about how things work much, if at all. The average person will think - well, if I spend my money it's gone... I can't spend it twice. They don't think about how when they spend, it comes back to them in a circle. But that's probably because so little does come back to the average person!!

But more than that, people at newspapers ought to know better.

What really grieves me the most though, is that these statements are made in such a cold, matter-of-fact way, as if they're talking about a family deciding to pare back their budget by cutting soda pop and a yearly 2-week trip to Disney World.

Like okay well, we need to balance the budget so grandma has to die because she's not getting her heart pills - oh yeah, and that poor baby who needs an antibiotic - sorry, he has to die too. No heat for the single dad or the disabled war veteran! Cut down on the assistance to the paraplegic - he can pee his pants and only eat every other day.

Oh well, it's just the budget! That's the way things are!

I want to say, is that REALLY how lazy & selfish a lot of Americans are now? That many Americans will just allow their fellow citizens to suffer and die rather than coming up with a viable solution?
Really? Really?

What's the other explanation?
There's only so many meanings you can glean from this, even if what they say was 100% true... it just sounds really ugly.
Now Hear This, Now Hear This
written by Last Mover, February 06, 2013 4:01
"New deficit projections will define the scope of the nation’s spending problem."

Now hear this. This hole in the ground we're digging will define the amount of dirt taken out of it.
More graphs in lead articles, please
written by Bart, February 06, 2013 7:39

Newspapers like the NYT and the TV news need to provide more charts that show Budget Components and How They Grow.

Hey, that would be a good name for a childrens' book.
News alert!
written by David, February 06, 2013 6:14
Yellow journalism has returned! Editorializing in columns masquerading as news articles is cool again! People who couldn't report their way out of a bag now get to write articles for national news rags, provided they counter the liberal bias of the facts! Happy days are here again!

We now return you to your regularly scheduled brainwashing programming

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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.