In his report on Uncle Sam's Monthly Treasury Statement released Wednesday afternoon, the Associated Press's Martin Crutsinger incorrectly informed readers that the stimulus checks sent out by the government represented the major reason why May's monthly deficit ballooned from a year ago. The AP reporter also continued with the wire service's seemingly never-ending recession obsession.
Here's the headline, and how Crutsinger began his report:
Stimulus payments result in record May deficit
A flood of economic aid payments pushed the federal budget deficit to $165.9 billion, the highest imbalance ever for May.
The Treasury Department reported Wednesday that the May deficit was more than double what it was in May 2007. Some $48 billion in payments went out as part of the $168 billion economic relief effort to revive the economy and keep the country from a deep recession.
For the first eight months of the budget year, the deficit totaled $319.4 billion. That is slightly below the record for this period, $346 billion, set in the 2004 budget year.
By the way, when did the stimulus payments turn into "economic aid"?
This is how the numbers really came in for the month of May, along with year-to-date totals through May 2008 and 2007:
You can see from the table the real reasons why May 2008's deficit came in higher than May 2007. They are:
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July 16 Note: Due to the discovery of a Treasury Department weekly release on stimulus payments issued (example here), I have determined that May's and year-to-date stimulus payments were each understated by $429 million, which are relatively minor amounts in context. I had previously been adding totals from Daily Treasury Statements, and cannot explain why there is a difference. This changes the May 2008 receipts increase over May 2007 to 4.9% instead of 4.6%, and the text below has been changed to reflect that. It does not change the 2008 vs. 2007 year-to date receipts increase of 3.3%. The first and third percentages in the "reasons" table above have changed to 48.8% and -8.1%, respectively. The percentage related to the spending component, which remains the largest contributor to the year-over-year increase in the deficit, did not change. Besides the percentage change noted earlier, none of what follows at the original post, which resumes after this insertion, needs to be changed as a result of these adjustments.
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The AP headline gives readers the impression that the stimulus/"economic aid" payments were the sole reason for the increased deficit. That's simply not true. Higher spending was clearly the bigger culprit.
Crutsinger wasn't done committing factual errors:
Through the first eight months of the budget year that began Oct. 1, receipts have totaled $1.67 trillion, 0.3 percent more than for the same period a year ago.
Outlays, however, are up 9.7 percent to $1.99 trillion. Factors include the economic aid and the costs of wars in Iraq and Afghanistan.
If one considers the stimulus payments to be "tax refunds," as the government does, Crutsinger got it right on receipts.
I would argue that the stimulus payments should really be treated as a form of spending, as there is no correlation between what individuals and families paid in income taxes and the stimulus payments/"economic aid" they have received or will receive. If I recall correctly, even those who paid no income taxes have received or will receive payments, while many relatively well-off taxpayers who paid in a great deal will receive nothing.
But Crutsinger's paragraph about outlays is flat-out wrong. The chart above clearly shows that there are no stimulus payments/"economic aid" in the $1.99 trillion in year-to-date outlays. That number is pure, unadulterated, spending.
Crutsinger never even specifically noted the $290.2 billion in May spending, nor did he mention that it is an alltime record for a single month, eclipsing the previous record of $283.5 billion set in July 2007. He did explain that "Because June 1 fell on a Sunday, about $20 billion in government outlays were shifted into May, making the deficit for that month larger." But that hardly excuses away the record level of spending. Even if you take out the $20 billion, May's spending is still a ridiculous 16.5% higher than May 2007. Given some of the spending increases in other areas, Crutsinger's swipe at the Iraq and Afghanistan wars comes off as gratuitous, especially when you realize that the Monthly Treasury Statement's top-level year-over-year comparisons don't break out the wars' costs from other military spending.
As you can see from the first chart above, May's regular tax receipts were 4.9% higher than a year ago. While those receipts continue to come in decently -- indicating, as noted last month, that the economy may not be as weak as advertised by the AP and the rest of Old Media -- the Pelosi-Reid Congress, with too much acquiescence from the White House, is irresponsibly letting spending run away. That, and not the stimulus payments, is the real story, and Martin Crutsinger did not report it.
Cross-posted at BizzyBlog.com.
