How do you write an article about Uncle Sam's April financial results without telling readers how much money came in and went out -- especially if what came in was an all-time record?
Yesterday and today, many journalists have shown us how. Two of them are Martin Crutsinger of the Associated Press and Michael M. Phillips of the Wall Street Journal.
Crutsinger's AP report actually made it appear as if collections is the problem area. In fact, as you will eventually see after the jump, April's result had nothing to do with "dampening" revenue growth, and everything to do with exploding spending.
Crutsinger began as follows:
Federal government surplus for April shrinks
The federal government ran a budget surplus of $159.3 billion in April, smaller than a year ago.
The Treasury Department reported Monday that the budget surplus for April was 10.4 percent lower than in April 2007.
The government traditionally runs a surplus in April, the month that tax returns are due. However, the weak economy has been dampening growth in revenues this year.
Crutsinger avoided mentioning April's all-time record tax collections (April 2007 was the previous record), and the potential implications:
As I wrote on April 29 (at NewsBusters; at BizzyBlog), when it first became clear that a record month for federal receipts was in the making, one key element of this supply-side stunner of a result may be a positive leading economic indicator:
The unexpected increase in this not-withheld category consists mostly of final payments that accompany individual 1040s for 2007, plus first-quarter 2008 estimated payments. The increase may not only reflect that entrepreneurs and the self-employed had pretty decent years in 2007, but that many of them are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable.
For some reason, the WSJ's Phillips focused this morning on one line item that makes up less than 15% of total receipts, saved the really good receipts news for his fifth paragraph, and didn't recognize just how good it was:
U.S. Receives Less From Corporate Taxes
With turmoil rocking financial markets and housing woes slowing the economy, corporate tax revenues are falling and leaving big holes in the federal budget.
The Treasury Department reported Monday that corporate income-tax revenue over the first seven months of the fiscal year, which began Oct. 1, was $171.1 billion, 14.7% lower than during the same period a year earlier. Meantime, government outlays rose 7.3%, to $1.7 trillion, and the federal deficit ballooned to $152 billion, 88% higher than the same period last fiscal year.
..... One slight bright spot is that while growth in revenue from individual income taxes has slowed, it has held up better than expected. That includes taxes paid by individuals on April 15, which reflect economic activity in calendar 2007, and those withheld monthly by employers, which reflect current business trends. Overall individual income-tax receipts reached $748 billion over the first seven months of fiscal 2008, up 6% from the period in fiscal 2007.
The decline in corporate tax collections, using Phillips's 14.7% decrease, is about $29 billion. His "slight bright spot" from individual taxes, using his reported 6% increase, is over $42 billion. As you can see from the table above, the not-withheld portion of those collections, which is heavily influenced by tax payments from entrepreneurs, partnerships, and Sub-S corporations, was up $33 billion in April alone. For the first seven months of this year, those receipts (excluding refunds, which have not changed in an amount material to the gross collection numbers) are up by 12.3% over fiscal 2007.
(To verify, go to the Daily Treasury Statements for April 30, 2008 and April 30, 2007. Then compare the totals of the line item of the same description, plus a later, much smaller item called "Individual Income Taxes." April 2008's total is $357.6 billion [$342.0 + $15.6]; April 2007's is $318.3 billion [$306.1 + 12.3]. $357.6 billion is 12.3% greater than $318.3 billion.)
As for the deficit, here is the clearly gloomy comparative news for the month of April and year-to-date (source: April 2008 Monthly Treasury Statement):
AP's Crutsinger avoided mentioning spending, where Uncle Sam's problem so obviously lies, until the seventh of his eight paragraphs. This later placement increases the likelihood that the spending news won't appear at all in many edited reports at AP-subscribing publications.
To his credit, Phillips got spending into his second paragraph, but "somehow" never got around to enumerating April's or fiscal 2008's receipts.
Interestingly, if you follow the WSJ link from a Google News search on "treasury receipts" (not in quotes) done at about 10 a.m., you end up at Phillips's article, which does not contain the text relating to receipts and disbursements shown at the search result (link not provided, as results on the same search done now may be different):
This search result, obtained by clicking on the "all 135 articles" link pictured above, and then viewing results "with duplicates included," clearly shows that Crutsinger's narrative dominated the coverage of yesterday's Treasury report.
This would explain why you probably haven't seen or heard anyone mentioning the April collections record.
Mission accomplished, eh Martin?
Cross-posted at BizzyBlog.com.
