Tuesday, April 21, 2009

Obama to Cut 0.0029% From Federal Budget



Obama's $100 million budget cut represents a 0.0029% cut. Or as Greg Manikiw describes it:
To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.


After announcing the $100 million cut, Obama goes on to explain:
"In the next few weeks we expect to cut 100 current programs in the federal budget so that we can free up those dollars in order to put them to use for critical areas like heath care, education, energy, our foreign policy apparatus, which is so important."


If you cut programs in order to put the money into other programs, that's not a cut.

So beware when Obama comes back in a few weeks and says, "We cut 100 programs from the budget."

It may be true, but if I sell my car I may avoid car payments. But if I then turn around and purchase a house with my new-found riches, I cannot claim to have saved any money.

But mark my words; Obama will try to do just that.

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