The Entrepreneurial View #463
The President, the Budget and the Media
by Raymond J. Keating
For an economist, it's particularly frustrating when opinion and analysis on tax and budget matters get passed off as news reporting.
That was the case with a front-page article in the December 15 Washington Post titled "Bush's Budget Wins May Cost Him," written by Jonathan Weisman. The piece began:
"As Congress stumbles toward Christmas, President Bush is scoring victory after victory over his Democratic adversaries. He has beaten back domestic spending increases, thwarted an expansion of children's health insurance coverage, defeated tax hikes, won funding for the war in Iraq and pushed Democrats toward shattering their pledge not to add to the federal deficit with new tax cuts or rises in mandatory spending. But the cost of those wins could be high, both for the federal debt and for the president's own priorities. Bush's steadfast stand against Democratic spending, coupled with his equally resolute opposition to tax increases, could raise the federal debt this fiscal year by nearly $240 billion."
So, the article opens with a nod to the President's policy wins against a Congress controlled by the opposition party. There is a story here to report, of course. Republicans lost control of Congress in November 2006, but a Republican president subsequently scores wins against the new Democratic Congress. However, that's not the point of the reporting here. Instead, most of the article essentially adopts the Democrats' warnings and positions against what President Bush is doing.
Now, there's nothing wrong with someone making that case in a newspaper. But it should be labeled as an opinion or commentary piece.
There was some reporting on points of fact. For example, as the piece noted, President Bush signed on to larger increases in so-called discretionary domestic spending when Republicans ran Congress, but now is looking to slow that growth with a Democratic Congress.
But most of the story presents a certain point of view on budget matters that, from this economist's perspective, ignores fiscal and economic reality.
The central bias of the piece is that tax increases are the best tool to balance budgets and restrain the growth in federal debt. That could not be more clear that in the following sentence that verges on incoherence: "Bush's steadfast stand against Democratic spending, coupled with his equally resolute opposition to tax increases, could raise the federal debt this fiscal year by nearly $240 billion."
Hmmm. Couldn't it possibly be that restraining government spending growth while opposing tax increases that impose costs on the private sector is a positive policy combination for both the economy and the budget? I certainly would say so, but this perspective is given no credence in the article.
In fact, Bush's opposition to higher taxes comes across as irrational and irresponsible. No possible economic or budgetary downsides to the various tax increases mentioned in the article are considered.
For good measure, the idea that any kind of tax relief must be "paid for" by other tax increases is presented as a kind of obvious truth that cannot possibly be denied. For example, on the issue of extending the alternative minimum tax (AMT) patch for another year, Weisman wrote: "If, as expected, Congress passes a bill without making up the lost revenue, the cost to the Treasury would swamp the savings from Bush's spending fight."
Really? Where does that assertion come from? What are the underlying assumptions? We don't know, even though this is supposed to be an unbiased news account. Why does the extension of a current tax relief measure - regarding the AMT that was imposed to redress the fact that 155 wealthy taxpayers legally avoided paying taxes in the late 1960s but now ensnares millions and threatens tens of millions more - count as "lost revenue" to the government?
Then Weisman argues that if the President gets all he wants on discretionary spending, the AMT patch and war spending, "he will end up adding about $239 billion to the federal deficit this year." Again, where does this number come from? Are there other estimates around? After all, with the AMT patch in effect and both discretionary and wartime spending rising in recent years, the federal budget deficit declined from 3.6% of GDP in 2004 to 1.2% in 2007, or from $413 billion to $163 billion, respectively.
And then to complete his case, Weisman finds a Republican to agree with the thesis put forth in the article: "‘I have difficulty seeing how $11 billion or $22 billion in discretionary spending on the domestic side of the equation is so fiscally irresponsible when juxtaposed against these major AMT provisions of $50 billion, or certainly against the $70-plus billion they want for the global war on terror, Iraq and Afghanistan,' said G. William Hoagland, a Republican budget adviser to former Senate majority leader Bill Frist (Tenn.). ‘It doesn't pass the sensible man's test.'"
How odd that this person cannot see the difference between jacking up "discretionary" spending, and allowing income earners to keep more of their own money and spending money to win a war. I think lots of sensible people can see the differences here.
But in the end, sensible people can disagree on many of these issues. But one would never get that impression from this front-page editorial in the Washington Post dressed up as a news report.
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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
This article may be reprinted with appropriate citation and credit.
