Network newscasts and the major papers blared out the same basic headline recently: Bush Administration Projects Record Deficit. The coverage focused on a new request for funding for the war on terror. And most of the coverage also blamed tax cuts for the deficit’s increase.
But in a review of the coverage, only one major outlet—the Washington Post— put the deficit number in any context—just three paragraphs from the bottom of the story. Yes, it’s true that the projected $427 billion deficit will be the highest ever. But there’s much more to understanding that number than the fact that it’s a “record.”
That amount is just 3 percent of the gross domestic product—down from last year’s 4.5 percent. So, as a share of the economy, this year’s deficit is actually less than last year’s. It’s also less than the average 3.93 percent seen in the 1980s. And it’s a third of the average racked up in the World War II decade of the 1940s.
And while the media coverage lamented the cost of the war, blaming the Bush tax cuts, little attention focused on the real deficit-swelling culprit: domestic spending.
According to budget documents, domestic spending on so-called discretionary items—that is, programs whose spending Congress must vote on each year—increased by 32.7 percent, or three times the rate of inflation, since 2001. So-called mandatory spending—welfare and other entitlement programs—went up nearly twice the rate of inflation. To be sure, defense spending went up faster—about 3.5 times the rate of inflation—but there is a war going on. And it’s still about a fourth of what is spent on entitlement programs.
And as for the tax cuts, the deficit comes even after tax receipts for the first quarter of fiscal year 2005 surged 11 percent over the same time period the year before. Tax cut foes—such as the major media— usually forget to mention that point (kudos to the Washington Post for including it, but again, very low in its story).
In short, the deficit is not a problem when it comes to the real world. And if Congress wants to reduce it, all it would have to do is cut back on its spending binge.