[dude1394]

Just so happens that the blogger I linked to has another post on the deficit.

New deficit figures for fiscal year 2007 (which ends in September) were just released, and the value comes to $205 billion:

Bush sees deficit falling to $205 billion

WASHINGTON (Reuters) - President George W. Bush will estimate that the U.S. budget deficit for fiscal year 2007 will come in at $205 billion, a drop from last year, U.S. administration officials said on Wednesday.


Is that big or small? You can't tell, and that's my point today. The absolute size of the deficit is simply not that informative. Same goes for an individual's credit card debt. Is a credit card bill of $10,000 big or small? The answer depends on whether you are Bill Gates or a hotel maid. For Bill Gates, it's a drop in the bucket. For a maid, it's huge.

So, back to the main question: is a federal deficit of $205 billion for 2007 big or small? The only way to tell is to look at the size of the deficit relative to the size of the economy. This is an elementary consideration, but mainstream media reporters very often focus only on the deficit's absolute size anyway. And that's why so many people mistakenly think our federal deficit is HUGE when it is actually pretty small. This is not a debatable issue. Reporters are just wrong to do this, and I don't know if they are being intentionally misleading or if they just don't understand the basics. Here are some stories from the past that are extremely misleading:

....more at the link.
http://engram-backtalk.blogspot.com/...igment-of.html

He's updated his graphs with 2007 numbers as well as having a graph from CNN. His point here is that even the graph that CNN shows, shows the deficit moving in the correct direction, however CNN's seems to engage in self-delusion when writing about it.

How large is the federal deficit relative to GDP (i.e., relative to the size of our economy)? That's the question that you'd like to have answered. For example, the federal deficit in 1968 was a mere $25 billion. If you are like a mainstream media reporter, you should react to this number in the following way:

"Wow! Those were the good 'ol days! Back then, the deficit was really low. But now, with George Bush in charge, we are celebrating a deficit of $205 billion, which is a whopping 8 times greater than it was in 1968. What a disaster!!"


This, of course, is ridiculous. The overall size of the economy was much smaller in 1968 than it is today. Because of that, the absolute deficit figures ($25 billion vs. $205 billion) get the story exactly backwards. Relative to GDP, the deficit today is about half of what it was in 1968 (2.9% of GDP back then, but 1.5% of GDP in 2007). Get the picture? The absolute value is not a relevant statistic. Even so, reporters focus on it all the time, and that makes you think our deficit picture is really bad. You are wrong to think like that.

In any story on this topic, the absolute size of the deficit should be reported as a secondary figure, not as the primary figure. Every once in a while, a story in the mainstream media presents the more useful statistic. Even then, it is presented as dire news. Here is an example of that:

The budget: worse than you think

Recent CBO estimates have made headlines, but they could be overly optimistic.
August 27, 2003: 5:15 PM EDT
By Mark Gongloff, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Congressional analysts say the federal budget deficit will soar to record levels in coming years, but some analysts said Wednesday they're probably being too optimistic -- deficits could be much worse than expected.


This story talks mostly about the irrelevant statistic -- the absolute size of the deficit -- but then shows this useful chart:

http://money.cnn.com/2003/08/27/news...t_deficits.gif