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.
He is certainly handling the crisis well for those who believe that “more” and “government” are words that belong together. He is ramping up federal spending and debt to a level that is frightening. At the end of 2008, our debt equaled 70% of GDP. In Obama’s proposed budget, the 2012 debt equals 97% of GDP.
Louisiana Governor Jindal, who gave the Republican response to Obama’s speech, has been panned by pundits on both sides of the aisle. While the location appeared as staged as it was (Jindal walking down the hall to the podium) and his delivery lacked the emotion and charisma of the president – his words clearly outlined the choices we have to face.
“Democratic leaders in Washington, they place their hope in the federal government. We place our hope in you, the American people,” he said.
Jindal continued, “In the end, it comes down to an honest and fundamental disagreement about the proper role of government. We oppose the national Democratic view that says the way to strengthen our country is to increase dependence on government. We believe the way to strengthen our country is to restrain spending in Washington, to empower individuals and small businesses to grow our economy and create jobs.”
Right now, the people in our nation are placing their faith in the federal government and in its ability to fix the crisis by spending trillions of dollars, to cut the deficit in half after tripling it.
I agree with Jindal, “Americans can do anything.” We just have to decide that we want to.