Audit D.C. Notes: Take a bow, NYT; LAT on foreign bonds; a WSJ tweak, etc.

What with the jumble of spending freeze/deficit projection/debt commission/federal budget/State of the Union coverage out there, it wouldn’t surprise us if readers’ heads are spinning.

Our prescription: take this New York Times story and call us in the morning.

The Times by far does the best job of making sense of a heavy economic-policy news day that included a big White House announcement, an important congressional vote on debt panels (no, not death panels), and the release of a major report from the Congressional Budget Office:

The annual report, together with Mr. Obama’s budget, to be released on Monday, gives lawmakers the fiscal and economic data they need to begin a new year of budget-writing.

As they do, both Congress and the White House confront conflicting pressures from voters and markets to take steps that will reduce deficits in the long run but add to them in the short run, by extending the existing stimulus spending and tax cuts, to prop up the economy so it does not fall back into a recession.

Others, not so much.

The Times also deserves props for the charts that run alongside this piece, including one showing CBO deficit numbers going back to 2002—and making clear that the trouble didn’t start yesterday, a bit of historicism that is in order, no matter where one comes down on the contentious issue of how to solve it.

Much of the rest of the coverage mashes together—and sometimes blurs—events that, while related, are distinct.

For those of you following at home, let’s break it down a bit:

The White House said President Obama’s budget proposal – to be formally unveiled on Monday – will include a three-year freeze on many domestic programs.

As that news was being absorbed, the Congressional Budget Office unveiled its annual projections for the federal budget deficit, showing a slight improvement over earlier forecasts.

Several hours later, the Senate rejected a proposal to create a debt commission to tackle tricky decisions about spending and taxes. Not bad for a day’s work.

But wait, there’s more. Now, Obama will call for a different, but similar, commission, to deal with the same issues in his State of the Union address tonight.

Got that? Good.

—Tom Petruno at the Los Angeles Times is thinking globally, taking a look at the sovereign credit risk facing American bondholders.

First, a bit of background: A year ago, as the economy seemed near collapse, one of Wall Street’s biggest concerns was that a slew of companies would be unable to make their debt payments — fueling another wave of the credit crisis that began with the mortgage-bond debacle.

But 2009 turned into a year of recovery for the economy, and a corporate credit nightmare never came to pass. Bonds of major companies wound up being excellent bets.

As the new year begins, the bond market again has a case of jangled nerves. This time, however, investors’ focus on creditworthiness is on countries rather than companies.

“The risk factor du jour is sovereign credit risk,” said Tony Crescenzi, a strategist at bond fund giant Pimco in Newport Beach.

More than just du jour, we’d say.

—Voters in Oregon are acting locally, approving tax increases on businesses and higher-income residents. It’s a story that’s often been relegated to brief status, but deserves further watching as states struggle with their own budget woes. As Bloomberg explains:

Oregon, which has no sales tax, is among states that have raised taxes to make up for a slide in revenue during the worst economic slump since the Great Depression. Twenty-nine states passed tax and fee increases totaling $24 billion this budget year, according to the National Governors Association, up from $1.5 billion a year earlier.

—Not to be lost in all the debate over deficits and the budget, National Journal asks its panel of economic experts to weigh in on an important question: “At what level does the size of America’s public debt become a significant drag on economic growth?”

The answers range across the political-economic spectrum and are pretty high on the wonk-o-meter.

James K. Galbraith puts the issue in historical perspective.

At the peak at the end of FY 1946, gross US national debt was 121.7 percent of GDP. Today the number is just under 70 percent. In 1946 the debt held by the American public – including by the Federal Reserve System – was 108.6 per cent of GDP. The comparable figure for 2009 is just under 60 percent of GDP.

Grover Norquist shows just how closely it’s all tied to politics.

Any unnecessary debt is a drag on the economy because it means the government transferred resources from the private sector to the Public sector with promises by the government to permanently take by force said sums in the future.

—We appreciate The Wall Street Journal’s tweaking a problematic headline on its story about the latest CBO deficit projections to reflect the news that the new numbers are a slight improvement over earlier projections. An earlier version, as we pointed out yesterday, gave the impression that things were getting even worse.

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Holly Yeager is CJR's Peterson Fellow, covering fiscal and economic policy. She is based in Washington and reachable at