Obama speech could clarify difference between deficit and debt or perpetuate public confusion

Wednesday afternoon, President Barack Obama will give a speech to the nation about how he plans to reduce the federal budget deficit. And he’ll talk about lowering the national debt.

They’re connected, of course, but they’re not the same. Obama knows that. The reporters who cover these issues every day know that. But do the people they’re speaking to and writing for?

In the past month or two, news about the federal budget deficit, the long-term national debt, and the “debt ceiling” haven’t been easy on people who don’t closely follow political and economic news. The stories involve otherworldly-large numbers, nuanced terms, qualifiers, rhetoric, and misstatements. And every day – for a time last week, practically every hour – there are more stories about the latest developments and reactions.

To understand it all, you must know some background. At the least, you need to know that the federal deficit is the annual shortfall that results when the government spends more than it collects, and the debt is the accumulation of those deficits year after year.

But do readers know that? Do your readers know that? How do you know?

You’re not likely to find those those terms defined in in most news stories on the federal budget or the debt. (In my spot-check of Google News on Tuesday, I did notice several stories that describe the deficit as an “annual shortfall,” which is a step in the right direction.)

Widespread misunderstanding

The people who work for the Concord Coalition, a nonpartisan interest group that advocates for an end to deficit spending, spend a lot of time talking to the public and the media about the deficit.

Although some people know what they’re talking about, it’s common for many to reveal that they don’t know this key – many would say simple – difference, according to Harry Zeeve, the organization’s national field director. “And that’s before you get to confusion about how money is raised and spent.”

“It happens all the time, and frankly it even happens with those in media who don’t work on those issues on a day-in, day-out basis,” Zeeve told me. “It’s certainly not uncommon to say to a talk show host or a local reporter or anyone else I deal with, that there’s a difference between paying down the debt and balancing the budget.”

Zeeve said he doesn’t know of any polling on public understanding of these concepts. I didn’t find any either, although I found plenty of polls that relied on people knowing these things in order to respond.

The closest I came was a Pew Research Center for the People and the Press “knowledge quiz” from November 2010 that asked people whether the deficit was greater than it was in the 1990s. Most people correctly answered that it is.

Picking your own language

The Associated Press Stylebook is no help; it doesn’t explain the difference between the budget deficit and the national debt. (There is an entry that explains the use of the term “trade deficit,” which is another matter entirely.)

In Monday’s Politico Huddle, Jonathan Allen wrote that he would avoid the term “deficit reduction” because it draws attention away from the fact that the overall debt is growing even when the deficit is reduced.

Allen’s preferred term: “deficit containment.” He explained his thinking in an email:

“I think the public generally understands that the words deficit and debt mean the government isn’t managing the nation’s money well. But it’s not always clear that a deficit is the annual difference between what the government spends and what it takes in, as opposed to the debt accumulated from annual deficits. It’s that difference that gives rise to what I think is a misleading way of talking about budget controls.

“I can remember President George W. Bush talking about cutting the deficit in half over five years, which sounded to me like he meant the country would be saving some money and cutting into its debt. Instead, he meant that he would make the annual deficit half as big in five years. In each of those five years, though, the cumulative debt would grow — just at a slower rate. He’s not alone. Presidents and lawmakers of both parties use the same language.”

Misstatements and mishearings

Sometimes, Zeeve said, politicians inaccurately describe the effect of their actions – by saying that they’re reducing the debt when they’re just reducing the deficit, or by misrepresenting how much they’re cutting.

“The cynic in me says that at times it’s deliberate, to avoid making hard choices or to keep folks kind of confused,” he said. “The optimist in me … says it can be a slip of the tongue.”

Sometimes the mistake is in the hearing, not the speaking. If Obama’s speech is consistent with previous statements about “deficit containment,” at some point he’ll note how much he plans to “cut” from the deficit over a period of years. The point is to show how much progress he’ll make in moving towards a balanced budget.

For instance, a White House Office of Management and Budget document on Obama’s proposed budget states that the 2010 health care legislation “will reduce our deficit by more than $200 billion over the next 10 years.”

You can see how someone could hear that and think that it means that the balance on the federal credit card will be $200 billion lower in 10 years. It doesn’t; it means that the deficit will be $200 billion less than it would’ve been. It’s a phantom number, just like that line on receipts praising you for how much you “saved” by buying stuff that was on sale.

It’s similar to recent news from the U.S. Department of Agriculture stating that “eggs are significantly lower in cholesterol than previously thought” — although two eggs would put you over the daily recommended cholesterol limit. Here’s an advertising campaign you won’t see: “Eggs: 14 percent not as bad as we thought!”

A case for explainers

Of course, there are plenty of ways for the motivated person to educate himself on the difference between the federal debt and the annual deficit. TreasuryDirect, which buys and sells U.S. government securities, has a basic explainer.

As I wrote regarding last year’s oil spill in the Gulf of Mexico, this is a story ripe for straightforward explainers, such as a Q&A — especially when you factor in the debate on the debt ceiling.

A particularly frank explainer from CBS News on the difference between the debt and deficit puts it this way:

“Here’s one way to think of it: Reducing the budget deficit is sort of like plugging a leak on a boat — but only partially. Sure, there’s less water coming in. But the boat is still sinking.”

Without explainers, the task of defining these terms falls to reporters who must work it into the narrative of their stories. Dick Stevenson of The New York Times described how reporters in Washington handle it:

“There’s always the risk of confusion when it comes to budget-related jargon, and I’d put the debt-deficit distinction high on the risk list for reporters who do not regularly cover these issues. We don’t have any formal guidance that we give to reporters and editors, and we don’t hit readers over the head with definitions.

“But we do make an effort to ensure that we don’t use the terms interchangeably. From time to time we will try to insert gracefully in a story a reference to the annual budget deficit as the gap between what the government takes in and what it spends, or to the debt as the accumulated borrowing necessary to cover those deficits.

“No doubt our readers could benefit from a bit more of that help in guiding them through the density of the subject.”

Perhaps Obama’s speech will provide that opportunity.

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