20 April 2009

WaPo & Obama: Eschew Obfuscation

Greg Mankiw observes:
The Washington Post reports:
President Obama plans to convene his Cabinet for the first time today, and he will order its members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official....Earlier this month, both chambers of Congress passed Obama's $3.5 trillion budget outline for 2010, which includes unprecedented new investments in health care, education and energy. But the huge budget, which contemplates a $1.2 trillion deficit, has drawn the ire of small-government conservatives, who say that such high deficits jeopardize the nation's economic future.
Just to be clear: $100 million represents .003 percent of $3.5 trillion.

To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $35,000 budget shortfall. How much would he or she announce that spending had be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks. The other $34,997? We can put that on the family credit card and worry about it next year.
This is political smoke-and-mirrors hand-waving theatrical bullshit. "Oooh, look at us, we're so serious about the problem that we're going to try to fix .003% of it."

I like Mankiw's family budget example but to de-obfuscate* this more explicitly, we got to a table:
(* And yes, that's a word amongst my people.)

spending:$ 3,500,000,000,000
deficit:$ 1,200,000,000,000
requested cuts:$ 100,000,000

What a Herculean task Obama has set for himself and the 15 top executives in the country.

If you're going to argue that deficits are necessary for stimulus purposes, fine, but stick to your guns. If deficits were good back in February don't turn around and try to placate all the teabaggers and deficit hawks in April with a spectacle of mock belt-tightening.

Prediciton: all $100,000,000 of spending cuts will be from items which were either not present in the 2009 budget, that is, they are forgoing increases rather than making cuts, or if they were present in 2009 and will be cut for 2010, will be restored at higher levels in 2011 because there is good press to be gained by cutting them now and no one will notice that they're reinstated and doubled 12 months from now.

Oh, and let's not leave the Washington Post off the hook here. Let's just let Randall Munroe set them straight for us:

1 comment:

  1. I love this post. Great family budget analogy.

    ReplyDelete