Words are interesting things.
Or, as Humpty Dumpty said: ‘They mean what I want them to mean, neither
more nor less.’
I refer, of course, to the clever
double-speak that is associated with the Federal government and the President’s
just released budget. One particular
word is troubling me: deficit. The
word means – literally – the amount that an account or number falls short of
some reference value. In modern
parlance, at least in respect to the government, deficit means something a bit
more specific: deficit means the annual shortfall between total revenue (from
taxes and other sources) and total expenditures. Except when it doesn’t.
In his latest love letter to the
American economy, President Obama tells us that his budget would “would achieve nearly $1.8 trillion in additional deficit
reduction over the next 10 years, bringing total deficit reduction to $4.3
trillion.”
But
that isn’t the deficit he is talking about, it is the national debt, the total
amount of outstanding debt that the Federal government is carrying on its
books. That number – the total
debt, as of this morning, is about $16.7 Trillion, and is scheduled to climb –
per the White House’s estimates – to $26.1 Trillion during that 10 year period.
So,
where is this reduction? Well, the
fact is there isn’t one. What the
President has managed to do is change some numbers that don’t exist and act as
if it is real. Thus, the President
and his minions have taken a look at some hypothetical budgets for the next 10
years (it is worth remembering that we as a nation haven’t had a complete
budget since 2009 – so there is a great deal of fantasy involved in all this),
and then looking at the amount of money that was supposedly going to be spent
over the next ten years, he has ratcheted down the numbers a bit and called it
a ‘reduction in the deficit.’
Thus, by identifying a particular budget that would have left the US
with a total debt of some $28 Trillion, and then paring back on that
hypothetical budget, he has ‘saved’ $1.8 Trillion.
One
wonders why he didn’t take another budget, one that would have left the US with
a $36 Trillion debt by 2023 and then he could announce that he had saved us all
$10 Trillion. After all, the words
mean what he wants them to mean.
But
are we spending less? No, absolutely
not. In fact, total Federal
Spending – per the President’s proposal – would climb from $3.8 Trillion in
2014 to $ 5.6 Trillion in 2023 – a 47% increase in 10 years, or an annual
compound growth rate of 4% - considerably better then you will get at your
bank. And the annual gap between
spending and revenue – I won’t call it a deficit because I don’t want to
confuse anyone – will only shrink to $439 Billion.
We
are supposed to be worried about the ‘deficit,’ aren’t we? Isn’t a great deal of the noise coming
from Washington all about we need to reduce the ‘deficit?’ But the President somehow can’t reduce
the deficit in 10 years? And it is
worse then it seems. According to
the President we will have Federal revenues of $5.2 Trillion in 2013. If we just slowed the growth in our
spending from a 4% annual (compounded) growth rate to a 3% annual compounded
growth rate we would have a $70 billion surplus in 2013. But apparently a 3% annual growth rate
is not enough for the President – even after he has said he will cut pay
increases in the military to just 1% per year for several years, and will
re-compute the Consumer Price Index for Social Security benefits and save tens
of billions of dollars per year.
Indeed,
the President’s proposed budget, which assumes a rosy for the economy, leaves
the nation with an annual deficit in excess of $400 Billion for the indefinite
future, increases our national debt to $26.1 Trillion – a 55% increase from
today, and leaves our future saddled with literally more than $200 Trillion in
unfunded annuities.
And
the President pats himself on the back for his stewardship of the nation’s
economy. But, all that is meaningless.
After all, the President has informed us that he is reducing the deficit
by $1.8 Trillion.
