Deficits

I remain convinced that America has two deficits–one fiscal, and one informational. The economic deficit is important, but the deficit in basic understanding of the world we inhabit is arguably the bigger problem.

Case in point, as Steve Benen reports at Maddowblog: debates about the deficit.

As it happens, the budget deficit is getting smaller. In fiscal year 2010, which was President Obama’s first full fiscal year in office, the budget deficit was $1.3 trillion. In fiscal year 2013, the Congressional Budget Office projects the deficit will be $845 billion. That’s a 35 percent decrease in terms of dollars, and it’s even bigger—41 percent—if you are computing the deficit as a share of the GDP. The percentage drop is even bigger—roughly 50 percent—if you start from fiscal year 2009, which overlapped the final year of the Bush presidency and the first year of Obama’s.

The fact that the deficit is declining is not reason to ignore it, of course, but its size and trajectory are important factors–or should be–in any economic analysis, including proposals about appropriate measures to address it.

The problem is, when Bloomberg News commissioned a survey asking Americans whether they believed the budget deficit was growing or shrinking, just six percent answered the question correctly. Ninety-four percent had no clue. (Of the clueless, 62 percent actually thought the deficit was growing.)

So far as I know, Bloomberg didn’t ask a related question, of equal importance. It would be interesting to determine the percentage of Americans who could explain the difference between the deficit and the national debt.

For that matter, it would be interesting to know what percentage of our elected officials could correctly answer either of those questions.

 

2 thoughts on “Deficits

  1. That’s really the key: Although one can’t overdue the analogy between one’s household buget and that of governments, definintionally it’s pretty simple: A deficit is an excess of expenses/disbursements over income/receipts over a defined period (usually a year)…..whereas debt is what’s owed by the entity to some other entity at any given time. Does your civic literacy project have an arithmatic presentation? (:

  2. I understand policy analysis is probably part of what you do, so I get there isn’t much joy in doing fact-checking on your own time. However, there are a lot of factors for which you are not accounting (pardon the pun):

    A) the cash deficit was the highest we have ever seen as a country, ever, in 2009 when Obama took over. I dig that you follow Rex Nutting’s math (as you blogged about a few months back), but for the most part those numbers were mythbusted. You sign on the dottted line, you own it.

    B) We are increasingly getting to where acrrued costs are a much more accurate accounting measure of total debt. Presidents are signing spending bills years, even decades, into the future. That way they can say they did this or that and not have to deal with the consequences. The stimulus was a good example of this. Accrued debt actually topped 2 trillion dollars in 2010, a level we’ve never seen before or since!

    C) The CBO oftentimes functions as an info in/info out entity. They work within a specific dataset provided to them so it’s important to read their analysis as well as their conclusions. We learned this with the Obamacare debate, where 10 years of Medicare cuts compensated for only 6 years of Obamacare payments.

    D) Too often the problem isn’t a lack of information, or even education, it’s that we aren’t arming ourselves with the WHOLE truth. We can increasingly go to places like the Maddowblog (no offense) or the Heritage Foundation (to be fair) where they will tell us things that are factually true, but factually dishonest at the same time. This is a bigger problem with my generation, since we tend to have absolutely no attention span and prefer to read things that are consistent with what we already believe to be true. A perfect example is “entitlement” spending. Maddow would correctly point out that people pay into Social Security and Medicare, so it’s not an entitlement because they have invested in these vehicles for decades. This is true. Heritage would point out that, Social Security in particular, is indexed AGAINST how much you pay into it as far as rates of return on your investment. Thus, in their mind it pays out as an entitlement, because the poor get much more out of it than their middle-class peers. This is also true. Hope this helps…

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