WSJ editorial page distorts CBO report

Here's yet another reminder of why you can't trust the Wall Street Journal editorial page.

Earlier this month, the Journal wrote the following in an editorial blaming deficits on spending increases:

The real runaway train is what CBO calls a "substantial increase in spending" that is "on an unsustainable path." That's for sure.

In fact, however, the first quoted phrase comes on page ix of the report (PDF) and the second quoted phrase comes from page xii.

Here's the first quote, which pertains to the year-to-year change from 2007 to 2008 and also blames "a halt in the growth of tax revenues":

CBO expects the deficit to rise from 1.2 percent of GDP in 2007 to 2.9 percent this year (see Summary Table 1). The significant expansion in the deficit is the result of a substantial increase in spending and a halt in the growth of tax revenues.

And here's the second quote three pages later, which pertains to long-term trends in entitlement and health care spending:

Over the long term, the budget remains on an unsustainable path. Unless changes are made to current policies, growing demand for resources caused by rising health care costs and the nation's expanding elderly population will put increasing pressure on the budget...

The CBO then goes on to discuss expected growth in these costs over the next century and advocate adjustments in spending and taxes to reduce projected deficits.

The two quotes are substantially different in context and meaning. Yet the Journal jams them together without regard for accuracy. You just can't trust them.

[By the way, the Journal's argument in the editorial is misleading -- the Center on Budget and Policy Priorities showed that 82% of the deterioration in the federal budget since 2001 that can be attributed to legislation comes from tax cuts (42%) and defense and homeland security spending (40%).]

Comments

[David]

IMHO Brendan's point is technically correct. Discussing one portion of federal spending, the CBO used the phrase "substantial increase in spending." They said another portion was "on an unsustainable path." The WSJ invited a wrong interpretation that the CBO meant these two phrases to both apply to the entire budget.

Nevertheless, I think that editorial makes its point. They show that both spending and tax dollars collected have dramatically increased since 2001.

The Center on Budget and Policy Priorities article addresses increases due to legislation passed since 2001 -- an odd thing to look at. Here's what I mean:

Suppose military spending had tripled between 2001 and 2008 due to legislation passed in 2000. That would show as zero increase in the CBPP report because the legislation occurred before 2001. It would show as a tripling in the WSJ report. I think the WSJ approach is the more relevant figure. The government would have to pony up the extra money no matter when the law was passed.

Of course that hypothetical example is unrealistic as applies to military speanding. But, something like it does apply to Medicare and Social Security. Spending on these programs is growing rapidly with no change in the law. IMHO the fact that the spending growth is due to a law passed prior to 2001 is no reason to ignore the increase.

By the way, I suspect that CBPP ignored the boost to the economy that came from the Bush tax cuts. It's reasonable to believe that the economic improvement wasn't enough to offset the lower tax rates. However, I cannot agree with a model that assumes that the tax cuts produced no economic improvement at all.

[Howard Craft]

Why doesn't the WSJ have writers pick out spending programs they think should be cut (or are unnecessary) and write an editorial about each of them, individually?

"The fiscal blowouts have included a record farm bill, notwithstanding record farm income; an aid bill for distressed homeowners, extended unemployment benefits, and more generous veterans benefits."

Suppose they addressed each of these (and others) individually and made a case that they were unnecessary or excessive. Wouldn't that be more productive than just saying Congress is doing a poor job and asking us to take their word for it?

They point to the Fredie and Fannie bailouts. Does the WSJ really think that shouldn't have happened? The WSJ?

They say, "rather than sort through priorities, Congress is spending more on just about everything."

If they also argue that deficits don't matter why do they care?

[MartyB]

Brendan,

"You just can't trust them" seems highly exaggerated and unworthy of an anti-spin person such as yourself - particularly since David's quite reasonable comments seem to indicate there are various ways to interpret the CBO figures.

Howard,

I suspect that if you went back through the WSJ archives you would likely find editorials on any of the subjects they mention being "unnecessary or excessive".

For example, I have read numerous warnings in WSJ editorials that FNMA and FHMAC needed reforming or we might be facing exactly what we recently did.

Just because they didn't provide lengthy arguments in this particular editorial doesn't mean they haven't addressed these issues in substantive ways.

[Howard Craft]

The WSJ editorial says -

"Another myth is that the war on terror has busted the budget."

Later they say -

"The CBO says that, merely in the two years that Democrats have run Congress, federal expenditures are up $429 billion -- to $3.158 trillion."

***

Looking at the second quote, the $429 billion increase in spending includes $110 billion of increases in defense spending.

Why, after saying that the amounts allocated to defense haven't "busted the budget" do they include them as part of the "runaway spending" increases?

Aren't they manipulating their argument by saying we should disregard those increases, but then adding them back in to use as criticism against Congress?

I'm not taking these two items out of context - they are central to their thesis.

I don't really trust that approach myself. Do you, MartyB ?

[MartyB]

Howard -

I don't see the "$110 billion of increases in defense spending" in the past two years you mention in the linked editorial.

I see the $429B, but they don't give the specific components other than to say it "included a record farm bill, notwithstanding record farm income; an aid bill for distressed homeowners, extended unemployment benefits, and more generous veterans benefits."

MartyB

[Howard Craft]

That's the point, they don't list it.

But it's the single largest increase in the budget (exceeding the increase in Social Security spending).

It can be found in the source report they quote, from the Congressional Budget Office. It wasn't hidden.

My point is not to be critical of that increase. I'm being critical toward the editorial - its misleading.