Lying about the Debt
Last week the Office of Management and Budget released its updated fiscal outlook for the next ten years. Called the Mid-Session Review (MSR), the report was eagerly awaited in light of the growing alarm at the seemingly unrestrained spending of the current administration. This alarm is growing so widespread and intense that it threatens to sink much of the president’s program. Whether it comes to healthcare, cap-and-trade or various economic stimuli, their projected multi-trillion dollar costs are the number one concern on the minds of most voters.
Knowing that more bad fiscal news would effectually doom his agenda, the president and his team increasingly resort to deception. There is an an egregious instance of this in the MSR when they take advantage of confusing terminology to conceal the true size of the national debt.
Traditionally, the most scrutinized and reported on portion of budget documents is the section containing summary tables. This is because they present data, trends and projections – which are often complex and confusing – in relatively easy-to-grasp graphical form. The exhibits are normally arranged in order of importance with the big picture presented first.
The leading table in Obama’s Mid-Session Review is labelled S-1 and called Budget Totals. As would be expected, it seemingly features the three main indicators of a country’s fiscal health: GDP, deficit, and “debt held by the public.” The table’s penultimate line appears to present that all-important gauge: the country’s indebtedness expressed as a percentage of GDP. The administration forecasts rapid growth of this variable. It will jump from 40.8 in 2008 – the last year of Bush – to 55.7 percent in 2009. It will then grow to 70.0 percent in 2011 and finally it will reach 76.5 percent of GDP in 2019, the last year for which projections are made.
Looking at the chart most people will naturally get the impression that these figures express the country’s public debt as a percentage of its annual economic output. This, however, is not so. In reality America’s public debt will be much higher. This is because “debt held by the public” – which is what the administration tracks in its first exhibit – is not the same thing as “public debt.”
Continue reading at Frontpage
