Budget Speak

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.