I am happy to say that I know Dean Baker, read his blog Beat The Press almost daily, and constantly learn from and am amused by his posts about how the media misreports economic news.  If you haven''t already bookmarked Dean's blog, stop reading this now and get that done.

(Okay, enough sucking up.)

But Dean and many other economists missed something important last week when they insisted last week that the nominal all-time high fiscal 2009 deficit projected by the Bush administration in its midsession review was not important and dismissed out-of-hand the reporting of that as a record.

They're right, of course.  The deficit as a percent of GDP is the meaningful number in terms of its economic impact.

But the federal budget deficit has political as well as economic importance and, from a political point of view, the number projected by the Bush administration last week absolutely was significant and definitely worth mentioning in a bold, large font in a banner headline in the right-hand column on page 1.

A little historical perspective here will be helpful.

I was a member of the House Budget Committee staff in the late 1970s when the prospect of a $50 billion deficit was absolutely scary for most members of Congress.  It wasn't the deficit as a percent of GDP that was frightening; it was a $50 billion-plus  nominal deficit that members of the committee didn't want to recommend to their colleagues and that the rank and file was leery about having to defend to their constituents.

Bob Giaimo (D-CT), the committee's chairman, used that fear to stop members of the committee from offering amendments to his proposed budget resolution that would have increased the deficit further.  He then used it on the House floor to stop other efforts to add spending and decrease revenues.

That meant that, even though it was way below a record as a percent of GDP and, therefore, was not as big as it seemed, the $50 billion number was highly important.  It was a threshhold, a symbol, and a line that few members of Congress dared cross that year.

The political importance of the nominal deficit was reinforced a decade or so later when the first version of Gramm-Rudman-Hollings was enacted in 1985.  Although it ultimately proved to be unworkable, GRH I included annual nominal deficit targets.  Hitting those nominal numbers was what Congress tried to do and what it used to measure success.

Fast forward to today.  The Bush administration obviously understood the political importance of a record-high nominal deficit because it grossly, and in my opinion fraudulently, understated it in its midsession review.  The $482 billion number for fiscal 2009 does not include what will likely be at least $100 billion in additional spending for activities in Iraq and Afghanistan, includes about $65 billion in revenues from the alternative minimum tax the White House knows is not at all likely to be collected, and overtstates by one-third or more the economic growth that is likely to occur next year.  Add those back and a deficit well in excess of $600 billion (and possibly closer to $700 billion) seems to be a real possibility.

A deficit of that size would be at least as alarming to today's average member of Congress as $50 billion was to those serving with Bob Giaimo.  The administration previously projected a $500 billion deficit, but it has never dared talk about $600 or $700 billion.  Doing that now would have set off a political firestorm and possibility created the U.S. equivalent of the peasants storming the castle with pitchforks.

I'm not giving the deficit-as-a-percent-of-GDP argument short shrift or otherwise pooh-poohing it.  As I'm sure Andrew and Pete -- my two bloggers-in-crime here at CG&G and the real economists among us-- would insist, that has to be the major consideration when fiscal policy is being made.

But at the same time, I don't want the extraordinary political significance of the nominal deficit to be ignored either.  During a debate as political as the one that occurs on federal spending and taxing, it's a number than should and can never be said to be insignificant.