Beat the Press

Dean Baker's commentary on economic reporting

4/21/2006

Inertia, Budget Reporting and Starving Children

I had earlier promised to give my explanation for the fact that articles on the budget fail to put budget numbers in a context that would make the millions, billions and trillions meaningful to readers. While laziness is part of the story, the bigger factor is simply inertia, why change? Reporters may agree that it would be very simple and more informative to express budget numbers as percentages of total spending or dollars (or cents) per person, but this is not how their papers did it last year. Including this information is a change, and doing things differently can put you on the spot. In short, since no one put budget numbers in context last year, no one will do it this year.

There are forces that overcome inertia. For example, if inaccurate or incomplete reporting was giving readers a bad impression of Microsoft or the pharmaceutical industry, their lawyers and lobbyists would be haranguing reporters and editors on a daily basis, demanding a change in practice. While the media does occasionally stand up to powerful interests (the New York Times has regularly produced outstanding stories exposing abuses by the pharmaceutical industry, for example), it will give in when it is wrong. In other words, they will not persist in bad reporting that hurts the interests of Microsoft or the pharmaceutical industry.

The same is not true of bad budget reporting. As I argued earlier, this budget reporting has serious consequences. People hugely overestimate the shares of the budget that go to programs like Temporary Assistance to Needy Families (TANF) or foreign aid. Surveys find that people believe that 20-30 percent of the budget goes to these programs. In reality, the shares are 0.6 percent and 0.1 percent, respectively.

As a result of this misconception, voters are far less likely to support additional spending in these areas, and often support candidates who propose cutting such programs. Given their understanding of the budget, resistance to further spending is reasonable. After all, if we’re already spending 30 percent of the budget on TANF or foreign aid, and we still have so much poverty in the United States and so much hunger in the developing world, why would anyone think that spending even more would improve the situation. (I am aware that people choose their “facts” to support predispositions, but I think this can only explain a small portion of the widespread ignorance about the budget.) In short, the widespread misconceptions about these programs are a major obstacle to increasing funding.

Of course there are organizations (policy and advocacy groups) that do try to promote increased spending on programs like TANF and foreign aid. While they may not pack the same punch as the pharmaceutical industry, they probably could effectively push for more informative budget reporting if they pressed the case with reporters and editors. Why don’t they take up this cause? They didn’t do it last year. Inertia is the most important force in politics.

10 Comments:

  • At 8:35 AM, Anonymous Erik L said…

    Two points, only the first really related to the article.

    I understand your point about looking at the percentages of the budget. I think you imply that you would like to see funding for the programs you mentioned, increased. My problem with the reasoning is that over time it would lead to ever increasingly increasing government budgets. The majority of the federal budget isn't really touchable. For the mass of programs that are, I don't think it is really fair to break that mass down into tiny chuncks and argue that each individually is an insignificant percentage of the budget so quit complaining about it you heartless right wing so and so!

    If we agree that the government should have limitations on spending then we really need to argue about the total spending that is discretionary and then argue about how to divide it up among the many interests.

    My second point has to do with the issue of how things are reported. Riddle me this, Batman- why do economists not report the error in their numbers? When I took high school chemistry, my wonderful teacher Ms. Meuller, taught us that in science (even dismal science) one must always report the error in measurements and carry those errors through any calculations according to well established rules.

    Why is change in GDP, for example never reported with this error? IS it because the error would be larger than the difference between a healthy, growing economy and a recessionary economy?

     
  • At 9:09 AM, Blogger spencerengland said…

    The governemnt actually reports the error term for most measurements. The one for real gdp is not large enough to make the difference you speculate about.

     
  • At 9:24 AM, Anonymous Anonymous said…

    An entirely mundane commnet: for some reason in your RSS feed, your first few paragraphs of some posts up as a single (really long) hyperlink, directed to the blogger homepage. In this case, the whole of this post was such a hyperlink. I guess it's possible it's just my reader, but you might want to check it out.

     
  • At 9:40 AM, Anonymous Erik L said…

    Really? I find that surpirsing considering how many things must be added together to produce the aggregate number. It seems that a small error in each measurement should add up to a large potential error. Can you point me to (or tell me) the number for the most recent GDP numbers?

     
  • At 12:44 PM, Anonymous Joe Populist said…

    You've got a great blog, and your articles put are like oxygen to someone who is drowning in the elitism of the main stream media.

    The point you make in this article in particular is one of my pet peeves against the pimps for the leisure classes at at Ivory Tower think tanks like CATO Institute, AEI, ATR.

    I don't know how many times I've confronted a lot of friends and acquaintances who self identify as "conservative" who insist that the federal deficit is being caused by "welfare".

    The fact the press---which is accused of having a liberal bias---never correct this misconception, or even talk about is infuriating.

    I can't really see why it is so "conservative" to deny a single women with a couple of kids a decent place to live, while we're giving literally BILLIONS in Corporate welfare, and Defense contracting waste and abuse.

    Your insights are sorely needed..and I'm thankful you're blogging. I'll be checking your site regularly for your comments from now on.

     
  • At 1:29 AM, Blogger Hans Gruber said…

    "I can't really see why it is so "conservative" to deny a single women with a couple of kids a decent place to live..."

    Most conservatives are not worried about the cost of welfare; most are worried about the perverse incentives it creates. The state taking responsibility for mothers and their children probably has at least something to do with the skyrocketing of illegitimacy the last 40 years. In particular, the black community, in my opinion, has suffered most under this well-intentioned but tragically misguided program. The creation of TANF has greatly improved the system to my estimation, but I'm no expert. Also, the Earned Income Tax Credit has helped to improve the quality of living among the poor, while avoiding the worst of the disincentives associated with typical welfare programs.

    I agree with Erik above who argues that we should pay attention to the tiny portions of the budget because the tiny portions sure add up! But Baker's point that the public overestimates the magnitude of welfare programs is still valid.

     
  • At 10:08 AM, Anonymous Anonymous said…

    Numbers in a vacuum. This problem is not limited to budget reporting, it also happens with corporate reporting - profits in particular are reported without any reference to margins or gross revenues. Of course if we talk about profit as relative, we've got to talk about the things that subtract from revenue, and get some perspective on the entire structure. I have little doubt that the oil industry is enjoying profits that could be characerized as profiteering, at a time when the taxpayers are financing the oil infrustructure with our money our troop's blood and the environment. Yet simply citing "record revenues" provides us inadequate basis to have that discussion.

     
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