# Outside the Beltway

## How to Lie With Numbers

Over at Think Progress we have a stellar example of lying with numbers, this time budget deficit numbers. The problem is that the budget numbers that are used in the post are nominal dollars. Correcting for inflation gives a much different picture (below are the top 20 deficits of all time excluding 2006 and correcting for inflation).

 Year Defict CPI CPI/100 Real Deficit 1943 -54,554 17.3 0.173 -315,341 1944 -47,557 17.6 0.176 -270,210 1945 -47,553 18 0.18 -264,183 2004 -412,727 188.9 1.889 -218,490 1983 -207,802 99.6 0.996 -208,637 1992 -290,321 140.3 1.403 -206,929 2003 -377,585 184 1.84 -205,209 1986 -221,227 109.6 1.096 -201,849 1991 -269,238 136.2 1.362 -197,678 1985 -212,308 107.6 1.076 -197,312 1984 -185,367 103.9 1.039 -178,409 1993 -255,051 144.5 1.445 -176,506 1990 -221,036 130.7 1.307 -169,117 2005 -318,346 195.3 1.953 -163,004 1994 -203,186 148.2 1.482 -137,103 1982 -127,977 96.5 0.965 -132,619 1987 -149,730 113.6 1.136 -131,805 1988 -155,178 118.3 1.183 -131,173 1976 -73,732 56.9 0.569 -129,582

In other words, the projected deficit for 2006 would come in around 16th (note that there is no projected CPI for 2006 and using the 2005 value of 195.3 and the \$296 billion, the adjusted deficit is about \$151 billion). If we looked only at peace time deficits Bush would have the highest real deficit. Still the current deficit would rank only 12th, not 4th.

One commenter pointed this problem of adjusting for inflation out…but no such luck in terms of reporting the more accurate numbers.

Kos of course eats it up with a spoon.

FILED UNDER: Economics and Business, ,
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

1. Michael says:

Isn’t % of GDP a more meaningful method of comparing deficits anyway? Let’s see those numbers.

2. Lisa says:

To truly normalize the budget deficit numbers all supplemental funds must be figured in. Supplementals are not counted as part of the deficit.

3. Fersboo says:

Deficit/Real GDP=Deficit as % of Real GDP
(\$Billions)
2005 – 318.346/11,134.8 = 2.8%
2004 – 412.727/10755.7 = 3.8%
2003 – 377.585/10320.6 = 3.7%
2002 – 157.8/10048.8 = 1.3%

4. Fersboo says:

Duh, I calculated all that and it was on the next chart.

Deficit as a percentage of GDP
(includes Budget, Social Security & Postal Service)[2d column is Public held debt as % of GDP]

2005 -2.6 37.4
2004 -3.6 37.2
2003 -3.5 36.2
2002 -1.5 34.1
2001 1.3 33.0
2000 2.4 35.1
1999 1.4 39.8
1998 0.8 43.1
1997 -0.3 46.1
1996 -1.4 48.5
1995 -2.2 49.2

5. spencer says:

Using % of GDP is the best way to do it but you also need to look at the state of the economy.

We are now 5 years from the economic bottom and have just had 3 years of solid growth. If you compare other deficits at this point in the cycle you see that the ” cyclically adjusted” Bush deficit is by far the largest in peace time history.

6. I took total deficit numbers.

I then took the GDP (which goes back to 1929).

I then compared the total deficit number with the GDP to get a percent of GDP. I multiplied the GDP number by 1000 to change it from billions to millions of dollars (to match the deficit numbers). I used the current year GDP numbers to match to the current year deficit numbers (no translation to an arbitrary year dollars).

This produced a table which I added the president for the year. In cases where the president changed (e.g. FDR to Truman), I assigned the budget to the president in first quarter of that year figuring he had the biggest impact). I threw out the deficit year in the table between 1976 and 1877 marked as TQ.

This produced 15 years of surplus and 62 years of deficits. Every president since Hoover (+0.47%)had a deficit average for their term in office (as a percentage of GDP).

The lowest deficit was Kennedy at -0.557% who just beat out Eisenhower at -0.559%. Johnson came in fourth with -0.62% (wasn’t there a whole guns vs butter debate on what sparked the inflation of the 70’s?).

W Bush comes in with the fifth lowest budget deficit average as a percentage of GDP with -0.88%. Followed by Nixon (-1.17%), Ford (-2.17%), Clinton (2.39%) and Carter (-2.42%).

We then get into the heavy hitters of deficit spending with Truman (-3.00%), H Bush (-3.56%), Reagan (-3.81%) and the granddaddy of them all FDR (-6.84%). Though to be fair, FDR was at -3.27% from ’33 to ’41 and WWII was the big deficit years of -14.88% from ’42 to ’45. Truman started with a -21.4% deficit in 1946 and came out with the most surplus years (four out of seven).

I would love for someone else to reproduce the results and show me if I made an error.

Just based on this, Bush’s having the fifth lowest budget deficits average (as a percent of GDP) out of 13 presidents isn’t stellar, but hardly the end of the world. It does show Reagan as one of the big budget busters (I remember the days when he would trade pork for cold war national security votes to blue dog democrats). FDR was hardly a role model, but you have to acknowledge WWII more than doubling his peacetime numbers.

As another aside, you can use this data to also compare receipts and outlays as a percentage of total GDP.

The biggest average in receipts was W Bush (17.23%) followed by Clinton at 17.10% average. Next is H Bush at 16.71%, Reagan at 16.65%, Eisenhower at 16.45%, Kennedy at 16.41%, Carter at 16.22%, Nixon at 16.02%, Johnson at 15.72%, Ford at 15.62%, Truman at 15.10%, FDR at 6.71% and Hoover at 4.65%.

So four of the top five confiscators (aka highest percentage of GDP in receipts) are republicans. Three of the lowest five receipts are democrats. Maybe we need to rethink the whole GOP = starving government idea.

Looking at outlays as a percent of GDP, we find Reagan at the top with 20.46% followed by H Bush at 20.27%, Clinton at 19.49%, Carter at 18.64%, W Bush at 18.113%, Truman at 18.105%, Ford at 17.79%, Nixon at 17.20%, Eisenhower at 17.01%, Kennedy at 16.97%, Johnson 16.35%, FDR at 13.56% and Hoover at 4.18%. Again FDR’s and Truman’s numbers were pushed up by WWII which saw a peak of 41.7% for 1946, 40.9% in 1945, 35.7% in 1944 and 17.7% in 1943.

So on the big spenders, three of the top five are republicans with W Bush coming in fifth. Two of the bottom five were republicans.

The only real standout in the whole list is Hoover who ran a surplus and kept the government in a respectable 4 to 5% range. Unfortunately that was being done while the US GDP was being cut nearly in half due to the great depression.

A lot of these budgets as a percent of GDP is that post FDR there was expectations of big government. All of them post FDR are roughly +/-2% on outlays, +/-1% on receipts. That same group is thus a predictable +/-1.2% of deficit.

The deficit average for the post FDR is -1.9%. Every president from Ford on has been above this average except for W Bush. The receipts average is 16.3% with an eclectic mix of Kennedy, Eisenhower, Reagan, H Bush, Clinton and W Bush. The outlays average is 18.2% with every president from Carter on being above the average except for W Bush.

So banging W Bush as a big confiscator (highest percentage of GDP) seems fair. Hitting him as a big spender (fifth highest) seems less fair as he is just slightly below the post FDR average. Banging him as a big deficit runner (9th highest) doesn’t seem reasonable since his deficit average is half the post FDR president’s average. Contrast that with Clinton as number two confiscator (above post FDR average), number three big spender (above post FDR average) and number six deficit runner (above post FDR average) helps put this in perspective.

7. psst spencer, there’s a war on.

8. Herb says:

It’s just like toe old saying goes:

“Figures don’t lie, but liars figure”

This also applies to the OIL COMPANIES, who rip the public off every day while pocketing BILLIONS.

Seems to me Steve that you need to apply your knowledge and theory’s to Big Oil also.

9. Steve Verdon says:

Herb,

Sure, and that will make todays profits look smaller. After all, the standard CPI-U numbers bring everything back to the 1982-1984 reference period.

And what makes you think I wouldn’t adjust for inflation when it comes to oil company profits? That is what I’ve been arguing for in regards to the price of oil.