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17 August 1999

Our current howler (part I): Post toasts ’em

Synopsis: In June, both parties said there would be a big surplus. The Post said, “Not so fast.”

$1 trillion added to surplus
Susan Page and Rich Miller, USA Today, 6/29/99

Budget Surplus Forecast Grows By $1 Trillion
Eric Pianin and John F. Harris, The Washington Post, 6/29/99

Believe It or Not, $1 Trillion Extra Really Is Possible
George Hager, The Washington Post, 6/29/99

Uncertain Windfall
E.J. Dionne, Jr., The Washington Post, 7/2/99

The Surplus Illusion
Editorial, The Washington Post, 7/5/99

The Trillion-Dollar Problem
Editorial, The New York Times, 7/12/99

You almost had to laugh at the headline. "$1 trillion added to surplus," USA Today said, over its page one lead story. The Washington Post headline added some nuance: "Budget Surplus Forecast Grows by $1 Trillion." The stories detailed new budget projections President Clinton had announced the previous day, in which the OMB predicted that "the surging economy will pump an extra $1 trillion into government coffers over the next 15 years," in the Post's words.

There was immediate muttering from some pundits about the surreal-sounding USA Today headline. But early writing in the nation's major papers suggested no problems with the new budget estimates. "Believe it or not, $1 trillion extra really is possible" was the headline of George Hager's analysis inside the Post. Here was Hager's nugget presentation:

HAGER (paragraph 3): A cynic might well wonder whether any of this is real.

(4) But economists say—cautiously, and with their usual caveats—that yes, it is.

So too, the New York Times' hopeful interior story was headlined "Clinton sees the possibility of zero U.S. debt by 2015." None of the major papers we cover voiced immediate concern with the new federal budget projections—concern that would soon be widely expressed throughout the national press.

But then the Washington Post, bless its heart, began talking back to blather. It started modestly, on July 2, with a paragraph buried in E.J. Dionne's discussion of how the large surplus should be handled:

DIONNE: Then there's the problem that part of the surplus is based on unrealistically low ceilings, passed in the deficit days, on future domestic discretionary spending. That's the money that goes to programs other than social insurance and defense: for education, public safety, health, roads, parks and the like.

Three days later, the Post let it fly. In a detailed editorial, "The Surplus Illusion," the Post said that the White House and the Congress were "arguing over money that doesn't exist" in debating how to handle the projected surplus. Here's how the Post started out:

THE WASHINGTON POST: To make the numbers come out even when they passed the balanced budget act in 1997, the president and Congress promised, without ever specifying how, that in the future a large category of federal spending would be cut by 20 percent in real terms. The promise was widely recognized at the time to be unrealistic, not to say phony—something that ultimately neither would nor should be done, given the widespread devastation it would cause. [Post's emphasis]

The Post explained that the part of the projected surplus over which the parties were fighting—the roughly $1 trillion, over the next ten years, that would not derive from Social Security funds—almost all resulted from the bogus assumptions written into the 1997 agreement. Because those assumptions were so improbable, the Post said, that portion of the projected surplus almost surely would never turn up:

THE WASHINGTON POST: If a realistic assumption were used instead—if it were assumed, for example, that in real terms the cost of operating the government is likely to stay about the same over the next 10 years—the trillion dollars in non-Social Security funds...would reduce by about three-fourths, to about $250 billion.

The Post went into some detail. But the gist of the piece was quite simple. If one made reasonable assumptions about future government spending, there would not likely be any serious surplus—except for the funds from payroll taxes that were all earmarked for Social Security. There was no big pot of extra money to be spent or used for tax cuts.

The Post took the lead among the papers we review in challenging the ongoing budget discussion. Other papers followed suit. On July 19, the New York Times said this about the projected non-Soc Sec surplus:

THE NEW YORK TIMES: If Americans want to use that money for tax cuts, they need to know the consequences. The surplus rests on the assumption that Congress and the White House will carry out previously targeted spending cuts. No one thinks that will happen.

USA Today checked in on July 29, with an analysis piece by Owen Ullmann, and a lead editorial. We do not think the major press has emphasized the problems with the projected surplus nearly enough (more on that later). But, by the time Congress began voting on tax cut proposals in early August, careful readers knew there were major problems with the assumptions that had produced the projected surplus.

To that extent, press coverage of this matter has been a textbook success, in which publications reported a major problem with official fiscal formulations. As such, it contrasted greatly with the press corps' dismal performance during the Medicare debate of 1995-96. Press corps coverage of that two-year discussion was the great press debacle of the decade—a nightmare example of technical incompetence, and craven deference to newly-won GOP power. In the current discussion, the Post identified major problems with the official discussion within a week's time. In the Medicare debate of 1995-96, the press corps blundered on in conceptual chaos for the course of a solid two years. Lingering problems with that hapless discussion have begun to appear in the news once again.

Everything you know about that Medicare debate is almost surely totally wrong. And a look at how the press corps broke down then reveals important aspects of current press functioning. Why did the mainstream Washington press corps get the surplus right, and Medicare wrong? It was the "triumph of politics," to reuse an old phrase—as we'll see when we stroll Memory Lane.


Tomorrow: Medicare follies! For two solid years, at the Speaker's direction, the press corps persisted in reporting two parts of what was plainly a three-number story.