Lousy story underscores weak economic, fiscal reporting

The Associated Press chose to focus Friday on the size of the federal deficit in its report on the Congressional Budget Office’s latest forecast. That story, frankly, reeked. [Thx to lullabypit. I commented on his post earlier and decided to pull it up here.]

The AP’s deficit story missed the important role of economic growth because it chose to focus on one stark number of such magnitude that it must portend doom. Clearer editorial thinking (and abandonment of the Rolodex reporting style) could have produced a more useful story.

What the AP story missed: The deficit will decline relative to gross domestic product to 0.4 percent of GDP by 2016.

The critical graf from the CBO report’s summary:

If the laws and policies currently in place did not change, the deficit would remain at around this year’s level over the next few years relative to the size of the economy, CBO projects. After 2010, it would decline sharply, reflecting a rapid increase in tax revenues that would occur after provisions initially enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) expired. By 2016, the deficit would decline to 0.4 percent of GDP … [emphasis added]

The AP story also contains errors of fact that editors should have caught: “The CBO projects that the deficit will total $1.42 billion from 2007 through 2011 and will total $1.76 billion from 2007 through 2016.” That’s trillion, not billion.

Of more interest in the CBO report is this little nugget:

Individual income taxes account for the projected rise in revenues as a percentage of GDP over the next 10 years. Revenues from corporate income taxes are projected to peak this year at 2.6 percent of GDP (a level last reached in 1979) and then gradually diminish. [emphasis added]

I don’t know why that will happen, but it suggests to me I’m gonna pay more and corporations are gonna pay less. If that’s true, that’s of more interest to me than GOP and Democratic flacks arguing about who’s to blame for the deficit.

The CBO’s baseline projects an annual percentage growth in GDP between 5.1 percent in 2007 and 4.5 percent in 2016-2020. That’s pretty healthy.

The CBO also expects the consumer price index to decline from its current 3.6 percent to 2.2 percent in 2016-2020. That could be good news, too.

Shallow reporting on deadline produced a he-said, she-said story with errors. It did little to serve readers in terms of explaining what the CBO report really means. I’m no economist, and undoubtedly I’ve made a few errors of my own here. But I did this in roughly the same amount of time that a reporter would have had to work on this story. And we should keep in mind that predicting the performance of the economy is trying to track a severely shifting target. Look how much the CBO altered its projections of just five months ago.

This wasn’t journalism’s finest hour, and it demonstrates why journalists need more training in economics and dealing with numbers of all kinds. It demonstrates the consequences of corporate job cuts in the news business: Fewer bodies to do more more stories on tighter deadlines leads to an increase in poor performances such as this.

We need better journalism on economic and fiscal issues so our mediated discourse does not sink to partisan name-calling and labeling.

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