Caveat lector

Our current howler (part IV): The press corps’ new surplus

Synopsis: The press corps knows the surplus ain’t real. But often, they can’t bear to say it.

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

Surplus Values
Editorial, The New Republic, 7/19,26/99

We've often thought, in the past few weeks, of that mythical emperor with the spanking new clothes, whose admiring subjects couldn't bring themselves to see that he was parading down the street dead-dog naked. The press corps seems to know, to a man, that the projected future surpluses aren't real. But so strong is the pull of those CBO diktats, they often can't make themselves say it.

Take the July 12 New York Times editorial announcing that the surplus was bogus. In paragraph three, the Times lets us see it—they know that the surplus ain't real:

THE NEW YORK TIMES (paragraph 3): 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.

And if that's so, the Times understands—as other scribes do—that the projected federal surplus is "illusory" (Washington Post; see THE DAILY HOWLER, 8/17/99). The surplus exists because we're pretending we'll enact large spending cuts, when everyone on earth knows we won't.

But in the very same editorial, up in paragraph one, the Times couldn't quite bear to say it. This is what was a harried reader would have seen in paragraph one:

THE NEW YORK TIMES (1): Only a few weeks ago, the idea of Congress and the President wrangling over a trillion-dollar budget surplus would have provoked disbelief. But it turns out that the new era of surpluses is just as contentious as the old era of deficits. As Congress returns to work today, House Republicans are preparing a tax cut so large it would use up virtually all of the surplus for 10 years, leaving no money to make Medicare solvent or to avoid deeper domestic cuts.

Say what? If the Times believes its own paragraph three, then it believes there are no actual surpluses. But in paragraph one, where eyes first meet the page, it speaks of a "new era of surpluses," and complains that the Republican tax cut proposal would "use up virtually all of the surplus." In paragraph four, things get better. Directly after discarding the assumption on which the surplus projections rest, the Times again goes its merry way, chatting about what to do with the surplus which it just said doesn't exist:

THE NEW YORK TIMES (4): A more realistic approach would set aside a substantial part of the surplus to sustain current domestic spending and perhaps expand it in certain areas. President Clinton wants to set aside another chunk for Medicare...[I]t is not unrealistic to set money aside for the job out of the surplus.

The Times goes right back to discussing the surplus, as if its own paragraph three never occurred.

No, Virginia, there is no future surplus—unless we cut domestic spending in ways that no one thinks we'll do. That was the point made by the Washington Post in its aggressive July 5 editorial. By any rational assessment, it's a crucial point, with both the president and the Congress pretending different. If it's true that our budget projections are built on thin air, then the public needs to be told that fact—and the fact can't just be mentioned once, and then thrown away and abandoned.

But the New York Times is not alone in its fickle affair with this fact. Take a look at the New Republic's coverage of the alleged surplus. In a July 19/26 editorial, TNR said this on the surplus:

THE NEW REPUBLIC: There are, of course, good reasons to be skeptical about the numbers...[T]he surplus figures are a bit misleading. They include liabilities—that is, IOUs—in the Social Security trust fund and assume a willingness in Congress to abide by spending restraints enacted by the 1997 budget agreement. Factor in the liabilities and allow for Congress to break the rules, and the surplus starts to diminish.

TNR seems to understand the problems with the projections. But two issues later, the journal's lead story was billboarded on the cover as, "American Pie—What to do with a $2.9 trillion surplus?" The issue features three different articles: "Spend It," "Save It," and "Give It Back" (penned by Barry Bluestone, Alan Blinder, and Amity Shlaes, respectively). The journal had gone right back to those surplus projections which it said we had "good reasons" to doubt.

Different publications have expressed different views about the surplus projections. But even those most scathing in assessing the surplus have sometimes later chosen to act as if the projections were perfectly credible. Take the Post. It took the lead, in its July 5 editorial, in describing the "illusory" nature of the surplus. But on July 31, the paper reported that the Senate had passed a $792 billion tax cut "to provide broad-based tax relief to many Americans." Contrasting the Senate bill's provisions with an earlier House bill, Eric Pianin and Dan Morgan wrote this:

PIANIN AND MORGAN: Both the Senate and House versions use future surpluses to provide $792 billion of tax benefits over 10 years, but the two plans differ significantly in their details.

The paper is back to writing about the surpluses as if they were resulted from legitimate analysis. Not a word is offered to alert a reader to the shaky provenance of these substantial new tax cuts.

By the time this article appeared in the Post, any number of writers, for major publications, had echoed the Post's July 5 editorial. Again and again, writers had shown that the projected surplus derives from false assumptions. Do you see why our thoughts have turned, in recent weeks, to those cheerful subjects of the buck-naked king? Who shouted out praise for the emperor's clothes, despite what was right there before them?

In describing the problems with the budget projections, the press corps this summer has done the job it failed to do in the Medicare discourse. The scam it reported is profound and serious. It can't be mentioned once, then discarded.

The ever-new Republic: If you don't like the New Republic, just wait a while. Two weeks after the "What to do with the $2.9 trillion surplus" issue, TNR flipped again. In the August 23 TNR, Jonathan Chait penned a detailed column, "Pie in the Sky," explaining (again!) the budget blarney. "The on-budget surplus is almost entirely an illusion, the product of cooked books and wishful thinking," he said.

TNR's editors thought so too. Here's what they said in an editorial:

THE NEW REPUBLIC: As Jonathan Chait notes elsewhere in these pages, that $2.9 trillion surplus everyone's talking about is premised on the somewhat dubious assumption that Congress will abide by the discretionary spending caps instituted as part of the 1997 Balanced Budget Act. And, if Congress doesn't abide by those caps, then the surplus disappears—and so does the Congressional Republicans' justification for their regressive $792 billion tax cut.

That surplus that "everyone's talking about?" These same editors put it on TNR's cover two weeks before, asking three writers what to do with it!

More on Medicare—DO NOT MISS! We offer detailed work on the 1995-96 Medicare discourse, and a visit to our companion site, the incomparable Socrates Reads! See "More HOWLER History," 8/20/99.