Fox Nation falsely attributes entire FY09 deficit to Obama
Posted in Main Blog (All Posts) on October 10th, 2009 4:45 am by HL
Fox Nation falsely attributes entire FY09 deficit to Obama
The Fox Nation falsely attributed the entire fiscal year 2009 deficit to President Obama, using the headline “Obama Triples Budget Deficit to $1.4 Trillion” to link to an Associated Press article reporting on the Congressional Budget Office’s (CBO) most recent budget review estimate. In fact, only a small portion of the fiscal year 2009 deficit is due to Obama’s policies; in January, before he took office or signed any legislation, CBO projected that, based on policies set under President Bush and economic conditions at the time, the deficit for fiscal year 2009 would reach $1.2 trillion.
Fox Nation headline falsely claims “Obama Triple[d] Budget Deficit to $1.4 Trillion”
Fox Nation: “Obama Triples Budget Deficit to $1.4 Trillion.” The Fox Nation linked to an AP report, released on January 7:
The ongoing turmoil in the housing and financial markets has taken a major toll on the federal budget. CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation. Enactment of an economic stimulus package, for example, would add to the 2009 deficit. In any event, as a percentage of GDP, the deficit will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983.
A drop in tax revenues and increased federal spending (much of it related to the government’s actions to address the crisis in the housing and financial markets) both contribute to the robust growth in this year’s deficit. Compared with receipts last year, collections from corporate income taxes are anticipated to decline by 27 percent and individual income taxes by 8 percent; in normal economic conditions, they would both grow by several percentage points. In addition, the estimated deficit includes outlays of more than $180 billion to reflect the cost of transactions of the TARP.
The projected deficit for 2009 also incorporates CBO’s estimate of the cost to the federal government of the recent takeover of Fannie Mae and Freddie Mac. Because those entities were created and chartered by the government, are responsible for implementing certain government policies, and are currently under the direct control of the federal government, CBO has concluded that their operations should be reflected in the federal budget. Recognizing the cost of the takeover adds about $200 billion (in discounted present-value terms) to the deficit this year, reflecting the long-term net cost of the more than $5 trillion in credit guarantees issued and loans held by those entities at the start of the fiscal year. In addition, the cost of Fannie Mae’s and Freddie Mac’s new credit activity in 2009 will total $38 billion, CBO estimates.
