The Numbers Behind the ArticleBy ROBERT GEBELOFF and BINYAMIN APPELBAUM

February 12, 2012


The Numbers Behind the ArticleBy ROBERT GEBELOFF and BINYAMIN APPELBAUM

The article and graphics package about government benefits draws heavily on figures tabulated by the Bureau of Economic Analysis, a branch of the Commerce Department that serves as a scorekeeper for the nation’s economy.



The bureau tracks economic activity at the local, state and national levels. The Times used data from 2009, the most recent year for which the bureau has published local figures, but the picture has not changed substantially over the past two years. The most recent national figures, for 2011, show Americans still get 18 percent of their income from government benefits.



The bureau calculates that last year Americans received $8.4 trillion from work (about 65 percent of income), $2.2 trillion from investments (17 percent), and $2.3 trillion in cash, medical services and other government benefits.



Benefits are distributed through more than 50 programs ranging from the giants — Social Security, Medicare and Medicaid — to the $40 coupons the government issued to people with old televisions so they could buy digital converter boxes.



Tracking benefits is not an exact science, particularly at the county level, because some federal programs report distributions only by state. Tricare, which provides medical benefits for veterans and the dependents of active-duty personnel, is one such program. The bureau of analysis estimates that 75 percent of its county-level data is drawn from actual tabulations, while the rest is based on statistical estimates.



The results are the most comprehensive available data on county-level economies, widely used by government planners and academic researchers. But The Times’s county-level data, which is based on the government’s, are estimates and subject to estimation errors, particularly in counties with small populations.



Another issue: How to treat payments that the government makes on behalf of beneficiaries, like Medicare payments to hospitals. The bureau counts such payments as income for the beneficiaries, because it reflects the value of the service they received. Some researchers caution that this method creates the misleading impression that a person has become very wealthy when in fact the person has become very sick. And while the ability to gain access to treatment is a form of wealth, it is conditional. No one would have access to the money without being sick.



The Bureau of Economic Analysis also differs from some other federal agencies in counting tax credits, like the earned income credit, as a form of income. The Congressional Budget Office, for example, treats such credits as a reduction in taxes paid. In this case the difference does not affect the total amount of income.



The question is whether money paid to the government and then returned in the form of a tax credit should be treated as income from the original source, or from the government. The budget office methodology yields a lower estimate of the share of income from benefits.



Notwithstanding these differences, the bureau data are broadly consistent with other analyses of the distribution of government benefits, and of the trend toward increased dependence.



The budget office is a second major source of the data cited in the story. The Times in particular relied on its projections of future federal spending and revenues, which were updated in January. The nonpartisan office is widely respected, but its forecasts incorporate a host of assumptions — from the pace of growth to the whims of Congress. Take these, too, with grains of salt.



The estimate of the share of benefits going to low-income households is from a budget office study published last fall. The figures cited come from an analysis of the Current Population Survey by the Census Bureau, which is known to under-report participation in some benefits programs, a problem that has worsened in recent years. The budget office concluded, however, that the effect on its calculations was small, in the neighborhood of a single percentage point.



The Census Bureau also estimates the share of Americans living in households that get benefits. These data, from its sporadic Survey of Income and Program Participation, are drawn from a smaller sample than the Current Population Survey, but are gathered more carefully and therefore regarded by experts as more accurate in tracking the flow of benefits.



All dollar figures in the story were converted to 2011 dollars using the inflation index maintained by the Federal Reserve Bank of St. Louis rather than the widely quoted Consumer Price Index, because the St. Louis index is based on gross domestic product, which experts regard as a more relevant baseline for comparing changes in the level of government spending.