The other day, over at WOIFM, Mike went off on one of those charming "the media are a bunch of lying liberal sacks" tirades that we all never get tired of hearing from our more conservative friends. The trigger, this time, was the Reutgers budget deficit graph that's been making the blog rounds. To paraphrase, Mike's opinion was that expressing the Y axis of the graph in inflation-uncorrected dollars, instead of GDP, was economically unsound, and probably an attempt to distort the truth.
It appears that Mike was right. (Heh. Weren't expecting that, were you?)
He was right about the units of the Y axis, that is -- at least, based on the fact that that's the way The Economist drew the graph. I posted the following as a comment over at Mike's site, but I figured that, since Mike's objection is a valid one, I'd give the topic a bit more play here. (Plus it's a big chunk of writing and I'm lazy.)
FWIW, in the issue of The Economist datelined 8 Feb 2003, on page 27, in the lower-right hand corner, there's a version of that graph with the Y axis expressed as "percent of GDP (FY ending 30 Sept)". The cited source is "Office of Management and Budget". I'm too lazy to dig up a link, so you'll have to either schlep to a newsstand, or look at the Reuters version and visualize along with my description.
The shape of the line during the critical period is largely unchanged. From '81 (when the graph begins) until '92, there was between ~2.5% and 6% of GDP worth of budget shortage. (There's no real prevalent trend to the line movement.) Starting in '92 (at a deficit of ~4.5% of the GDP) , the line begins an upward climb with a relatively very constant slope, peaking in 2000 with a budgetary surplus of just over 2% of the GDP. Since 2000, there has been a sharp downward trend in the line (aprox. 2 to 3 times more "steep" than the '92-2000 increase), with the last hard figures (the ones outside the "estimate" part of the graph) placing us at just shy of 3% of GDP worth of deficit.
So, the facts are these: during the years of the Reagan and Bush I administrations, we had relatively large but relatively stable budget deficits (measured as a percentage of GDP). During the Clinton administration, a relatively large budgetary surplus accumulated (again, as a percentage of GDP), at a very steady rate.During the Bush II administration, that budgetary surplus vanished, at a rate faster than it accumulated, and we are now sitting at a deficit equal to about 2% of GDP -- i.e., about the best it ever got during the Reagan and Bush I years.
I am _not_ going to get into a discussion of which administration's policies are responsible for which changes; I've got more important things to do, like, well, pretty much anything. I just wanted to point out that there is a version of the graph available that's calibrated in the scale Mike was looking for, and it doesn't appear to make the current administration look much better than the Reuters version.
As for digging up a link, I burned some of this crazy Monday morning energy and found out that (apparently) the Economist web content is a week behind the dead tree version -- so it'll be later this week or early next before the graphic might be on the web. It's an exceedingly nice graphic, by the way -- somebody at the Economist has some serious Tufte-fu going on.