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Willisms

« Trivia Tidbit Of The Day: Part 306 -- Ideological Spectrum. | WILLisms.com | Pundit Roundtable - Hometown Edition »

Trivia Tidbit Of The Day: Part 307 -- When Deficit Reductions Are Duplicitous.

Criticizing Lower Than Expected Deficits-

This is a remarkable (and telling) series of sentences from the Associated Press:

The administration in recent years has consistently put forth deficit estimates in February that have turned out to be too pessimistic when the books are tallied in October. Last year, for example, the White House initially predicted a 2005 deficit of $427 billion; the year-end result was $318 billion.

And in 2004, when Bush promised to cut the deficit in half by the end of his term, the White House projected a whopping $521 billion deficit. Even though the actual deficit for that year came in at $413 billion, Bush has used the higher figure as the benchmark for keeping his promise.

What? First of all, that last part is just not true; the insinuation that Bush is cooking the books to keep his deficit-cutting promise is absurd. Seven trivia tidbits ago, this should have been clear. Both the projected deficits and the real deficits were included in the White House OMB chart. Either way, the deficits are smaller and smaller.

Secondly, President Bush is right on track to keep his promise (and then some) of cutting the deficit in half, whether the benchmark is 521 or 413 billion dollars.

Third, any deficit number is meaningless without context. As a number by itself, it doesn't mean much. As a percentage of GDP, deficit numbers do mean something. But either way, in raw dollars or in the context of the size of America's economy, the deficit is actually shrinking at this point.

Fourth, since when is beating expectations (that everyone in the media seemed to agree upon) a bad thing? The AP story makes it sound so sinister (using the word "pessimistic," for example). It's not sinister. It's just that the rapidly growing economy contributed to record tax revenues. That's reflects well on the President's economic leadership.

Fifth, while it is politically smart to lower expectations, I like to deal in facts. The facts indicate that we'll have surpluses in a couple more years if the trends hold up. That's not guaranteed, but it is likely.

The Skeptical Optimist has a great post on this, with this great chart:

federaldeficits.gif

And this great turn of phrase:

I keep thinking maybe it will whack us in the back of the head “next month.” But I’ve been thinking that for twelve months now, with no luck. The deficit just keeps trending downward and downward. In any case, one of two things will have to change soon: either the deficit will start increasing, or the rhetoric about growing deficits will have to start decreasing.

Even with out-of-control spending increases, we'll end up with surpluses in the short-term, unless economic policies change for the worse (tax hikes, trade isolationism, etc.), slowing down the economy. I'm not convinced we can grow our way, however, out of the longer-term entitlement crisis our nation faces, without major reform.


-------------------------------------

Previous Trivia Tidbit: Congressional Ideology Spectrum.

Posted by Will Franklin · 25 March 2006 10:27 PM

Comments

Slight point of clarificatoin, the chart is from the Skeptical Optimist, who happens to be an ecomonist--not the Skeptical Economist.

Posted by: Bert at March 26, 2006 11:32 AM

Oops. That's what I get for being in a hurry.

Posted by: Will Franklin at March 26, 2006 12:30 PM