Who's Fudging the Budget?
Federal budgets are a policy geek's playground but a political reporter's nightmare. How can something so voluminous, so complex and amorphous, ever be summarized in a 90-second TV standup or an 800-word news story? Many reporters would rather cover cat-fighting personalities and hyper-plotting political consultants than crunch a single number. For them, accuracy is less important than following the technical argot of the pack.
Take the new tax-cut bill, which President Bush signed and has been assigned an arbitrary face value. "Bush Signs $350 Billion Tax Cut," read the front page of The Washington Post. It's become the standard line in media and political circles to add a prefix to Bush tax cuts - to use something as gauzy and impossible to predict as a ten-year fiscal forecast. It's as factually sound as a newspaper previewing "Finding Nemo" with the headline "Disney Releases Billion-Grossing Fish Cartoon."
No one wants to make fiscal policy in the trillions without some crystal ball of estimation. Legislators and their constituents need some projections to help them make decisions. These numbers should not be confused with facts. They're estimates, not reality. They're as statistically reliable as guessing next year's weather. Journalists should know this.
But the elevation of estimates into hard fact isn't just a function of professional laziness among journalists. It's a subtle, but very widespread form of media distortion. Every Bush tax-cut proposal since he was a candidate has been larded with estimate prefixes.
Here's what's journalistically shaky about these new estimates:
1. Relative Size. Most stories omitted that the $350 billion figure is spread out over a decade, which allows them to take something rather fiscally minuscule and make it look monstrous. That's nothing new. In a 2001 study of network tax cut stories on ABC, CBS, and NBC from January 20 to March 31, 2001, the Media Research Center's Rich Noyes found that NBC weekend anchor John Seigenthaler was the only correspondent over those months to (once) describe "the President's plan to cut taxes by $1.6 trillion over ten years."
How big was it as a percentage of the fiscal whole? At that time, the government estimated that federal revenues would total about $28 trillion in that ten-year period - meaning that the total tax cut was estimated at less than six percent of the total anticipated revenue.
2. Political Reality. All these estimates ignore the fact that President Bush could be replaced next year by a tax-hiking Democrat, rendering any ten-year fiscal projections moot. (Or do our top Washington reporters and bureau chiefs really mean to imply that President Bush's second term is inevitable, a statistical certainty?)
3. Static Analysis. Congressional estimates of the "cost" of tax cuts are largely based on static analysis, assumptions that tax cuts will lead to untrammeled revenue losses, without any positive economic effects that could offset them. In the monograph "Dollars & Nonsense," economists Arthur Laffer and Stephen Moore explained that a 1997 cut in the capital-gains tax rate from 28 percent to 20 percent was estimated by some to cost $75 billion over five years, but Treasury Department data later showed revenues rose from $62 billion in 1996 to $109 billion in 1999. Tax cuts don't always cause revenue gains, but the estimate of losses is often overstated - which should spur more journalistic caution. Instead, they "report" guesses as fact, like calling the new tax cut the "third largest in history." It's impossible for them to know that, unless they are reporting from a time machine in the year 2013.
4. No Costs for Democrats? While Bush plans are routinely tagged with estimates, the major media have a completely opposite standard for Democrats. For example, they flat out refused to report congressional estimates of the massive Clinton health-plan proposal in 1993-94. The Congressional Budget Office estimated the Clinton health plan would cost $784 billion from 1996 to 2002. Try finding that in a single network news story from that time.
Not only did liberal reporters fail to lob numerical prefixes for socialized health care, they largely accepted the odd Clinton spin that a massive new government health plan would cost... nothing? Time Washington Bureau Chief Dan Goodgame wrote for the September 20, 1993 issue that the Clintons were "surprisingly persuasive" that "reform can be almost entirely from savings, without broad-based new taxes and with enough left over to reduce the federal deficit." That's just fiscally absurd.
For viewers and readers at home, it's probably best to ignore the estimates of the media and political elite. Favor a tax cut or a government program because you favor it, and treat the forecasts with a whole shaker of salt.