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PrintFebruary 15, 2011
Budget Apples and Oranges
Yesterday morning, Bloomberg, the Washington Post, Fox News Radio, and other media outlets began their reports on the President's 2012 budget with the following sentence or a close variation of it:
President Barack Obama will send Congress a $3.7 trillion budget that would reduce deficits by $1.1 trillion over a decade...
Since the budget was released yesterday, news accounts of it have typically included something along the lines of the budget "cutting $1.1 trillion from the US deficit over the next decade."
This warrants a closer look. First, $3.73 trillion is $3,730,000,000,000. If the President's budget is passed, that amount will be spent over one year.
The $1.1 trillion "reduction" that reporters feel compelled to mention in the same breath would be realized, even if it turns out to be true, over a decade. Ten years. And that reduction is in toto, not annually.
The President's budget projects spending to total $45.95 trillion over the next decade, though we don't hear that in most reports. The $1.1 trillion "reduction" figure as a percentage of total spending equals 2.39% ($1.1 trillion / $45.95 trillion).
2.39%. <sound of crickets chirping>
As a percentage of total projected deficits over the next decade, $7.2 trillion, the calculated percentage is higher: 15% ($1.1 trillion/$7.2 trillion).
Those unimpressive "cuts" being touted by reporters are only projected ones, looking ten years into the future. It's difficult to see out two years, much less ten, with any degree of certainty.
So, how accurate have this Administration's prior forecasts been? Not very. Below are projected deficits from the FY 2010 and FY 2012 budgets (in billions):
2011 | 2012 | 2013 | 2014 | 2015 | ||||
FY 2010 budget | $912 | $581 | $533 | $570 | $583 | |||
FY 2012 budget | $1,645 | $1,101 | $768 | $645 | $607 | |||
$ Diff | $733 | $520 | $235 | $75 | $24 | |||
% Diff | 80.4% | 89.5% | 44.1% | 13.2% | 4.1% | |||
Are the journalists who have been reporting the relatively diminutive and distant cuts in the very same sentence as record spending and a massive deficit carrying water for this Administration? Or are they confused? (The FY 2012 deficit is projected to be $1.1 trillion, yet another $1.1 trillion figure to keep up with.) Or are they being duped?
A Washington Times editorial on the Obama budget titled "Obama's budget blarney" is recommended reading. It describes the budget as "the latest installment in a series of proposals featuring flawed estimates based on unrealistic economic assumptions," one that "should be considered dead on arrival." That trillion dollar "savings" described above? It's a "public-relations ploy."
