It’s pretty hard to dress up a disaster as something less than that, but the Associated Press’s Martin Crutsinger gave it his best shot in his report yesterday about Uncle Sam’s the May Monthly Treasury Statement, in effect understating the amount and significance of federal government’s rapidly deteriorating financial situation.

With the help of dubious handling of last year’s stimulus payments in May 2008’s Treasury Statement, Crutsinger ignored serious declines in tax receipts from economic activity that are, if anything, accelerating. I’ll cover that problem in this post.

Additionally, after only briefly mentioning it last month (noted at the time at NewsBusters and at BizzyBlog), Crutsinger grievously erred in his explanation of how a convenient “accounting change” Treasury implemented in April relating to accounting for its Troubled Assets Relief Program (TARP) has affected the reported year-to-date deficit. That is the subject of Part 2.

Here are key background and receipts-related paragraphs from Crutsinger’s report:

The federal budget deficit soared to a record for May of $189.7 billion, pushing the tide of red ink close to $1 trillion with four months left in the budget year.

Read More at Bizzy Blog