The Obama administration’s economists proved this week that they are mathematical wizards by determining that -- to end up with a higher number and claim it has been halved -- it first has to be tripled.
President Obama’s budget proposal released this past week projects the 2009 deficit (including the 2009 portion of the stimulus and $247 billion for TARP) to be $1.8 trillion. This estimated 2009 deficit also includes a $250 billion “placeholder for potential additional financial stabilization efforts” to come.
This same document noted the actual 2008 unified budget deficit was $459 billion.
If you triple the 2008 deficit – you get $1.4 trillion, which is close to the projected 2009 budget deficit without the $250 billion plug figure (call it what you want – that’s what it is – something to be named later). Math is interesting in that you can flip numbers in equations around and get different answers.
For example, Obama can also state that, based on his proposed budget, the deficit in 2012 will be 27% higher than the 2008 deficit, but it does not sound nearly as good.
At the end of 2008 the U.S. debt was $10 trillion, equating to $32,599 for every person in the United States. While Obama talks about cutting the deficit in half in his proposed budget, his budget reflects an increase in debt to $16 trillion at the end of 2012. Based on U.S. Census data, this will equate to $51,137 per person. While he is cutting the deficit in half, he is increasing the debt by 62%.
You might wonder, how is this possible? It does not make sense. The much-touted “cut the deficit in half by the end of the president's first term" by White House Budget Director Peter Orszag is done by increasing the current year projected deficit.
“Therefore, while our budget will run deficits, we must begin the process of making the tough choices necessary to restore fiscal discipline; cut the deficit in half by the end of my first term in office, and put our nation on sound fiscal footing,” notes Obama in his message at the beginning of the budget.
The words sound wonderful, but the numbers look ridiculous. What he forgot to mention is that he increased the deficit from $459 billion in 2008 to $1,752 billion in 2009. It’s easier to cut something in half after you have tripled it.
Having watched politicians speak for almost four decades (yes, I began watching when I was in grammar school), Obama’s speech, both in content and delivery, was masterful. Young, confident, handsome and charismatic, he was a hit with the public, resulting in an increase in the public’s perception of his ability to handle the economic crisis, and an increase in his job approval rating.