Friday, October 19, 2012

Deficit Math

Every once in a while, someone tries to trot out a list of things the government spends money on.  They pick out things to cut - either entirely or merely reducing the amount spent.  They then pretend they have solved the problem by cutting fat, not muscle.  The thing is, they tend to lie - not about the numbers but how they present the numbers.  I thought I'd go through one such list to show you the lies and tricks they use.

I am looking at one attributed to VP Nominee Paul Ryan, but actually proposed by Representative Jim Jordan of  Ohio.  It is fairly typical, containing multiple deceptions.

1)  One off items.  The list in question contains some one off items.  I.E.  things that we can do only once, not every year, so while it might help with the national debt a little bit, it won't actually affect the deficit, which is the real problem.  It's like selling your old clothing.   It helps pay off the credit cards, but doesn't stop you from over-spending.   This list for example includes the idea of selling off 'excess' Federal Property.  Assuming that property in question really is 'excess' - i.e. commercial and not in use, a rather than park space, then we can only do it once.  This accounted for 15 billion dollars - the single highest number (aside from the grand total at the end).

That right there is a red flag, showing that the creator of the list is trying to deceive us. The single biggest cut you want to make should not be a one-off, not if your plan is actually intended to actually solve the problem, as opposed to just scoring some political points.

Which brings me to his next attempt to deceive the American People.  The last line is (underline added):

* Total Savings:  $2.5 Trillion over Ten Years.

2)  Multiple years analysis.

The budget is a yearly thing.  Among other things, it gets changed every year.  Why did Mr. Jordan total it up over ten years?  Because his numbers are so small that they don't do.  So he multiplied them by ten to make it seem like they were significant.  THEY AREN'T.

To further confuse the matter, some of the things he talked about were over ten years, but most were over one years.  The only reason to do this was to make small things look bigger.  As a result, all he did was confuse people.

The current US National Debt is over 16,182,000,000,000  That would be 16 Trillion dollars.   The US yearly Budget Deficit is about 1.1 trillion dollars.  We are adding tot he debt by about 6.25% a year. His 2.5 trillion sounds like a lot, but that's over ten years.  When you divide by 10, to get the yearly amount it comes out to only 0.25 trillion, or less than one quarter of what we need to cut. 

Not very impressive.  Not impressive at all. Lets bring those numbers down to something reasonable.  If you found that last year you overspent by $1000, and some idiot suggest you don't have to cut back, just stop wasting $250 a year, you would laugh at the guy and say "So you only want me to overspend by $750 a year?"

No.  We need to cut the budget deficit by the full $1.1 trillion.  Doing it by 1/4 doesn't make any sense. 

3)  Include tiny amounts.    Next, when you go over his list you see a whole bunch of tiny stuff.  Remember, we are trying to get rid of $1 trillion deficit.  Talking about millions is stupid.  A trillion is one thousand billion.  A billion is one thousand million.  A thousandth of a thousands is nothing.  If the deficit was $1,000, then the equivelent of millions, would be a tenth of a penny.  If it isn't at least 50 cents, don't talk about it.    Fifty cents out of $1,000 translates to $500 million in the US budget.Rep.  Jordan included things as low as $1 million annual savings (Mohair Subsidies).

Why did he did do this?  Because the small things often seem silly and the uninformed are impressed by the word 'million'.  They think it is a lot, but it isn't, not when we are talking about trillions.

Yes, Mohair is a silly thing to subsidies - that's why the liar Representative Jordan put it on the list.  But the amount of money is so small (less than 1/3 of one cents per American citizen), that it isn't worth talking about.  Cutting it doesn't do anything to the budget at all.   Why do we do fund it?  I am sure it was put in to get some congressman's vote on a major bill.  It's a single sprinkle to make something else more palatable. We spend more on each congressman's office.   As per this new story, 13 North Carolina Congressmen spent $4.3 million every 3 months, or about $16 million a year, or $1.23 million per congressman per year.

So that means Representative Jordan probably spent more more this year on his staff than we spent on Mohair.  At least the Mohair subsidy wasn't spent trying to deceive American citizens.

4)  List programs without telling us how much money.  Presumably because they are even less than one million.  Things like the HUD Ph.D Program  or the Deficit Reduction Check-Off Act.  If you can't be bothered to tell us how much it would save, then don't include it in the list. 

5)  Don't show the entire list or show your math.  By not showing the math, it means he is leaving out the important stuff.     Below is the list of just the expensive things (over $500 million) the artful Representative wanted to cut   They total to a mere 29 billion dollars a year.  Far short of the 250 billion he claimed as a total.  I know, some of you are thinking that if he has enough stuff less than 1/2 a billion, it might add up to the other things.  You are right.   But if everything else was exactly 1/2 a billion, then he would need another (250-29 = 231  / 0.5 = 462) 462 items.  But he didn't list 462 items. Why not?  Because most of the things he wrote about are important to people and we would laugh at him for trying to cut them.  

Program Billions in savings >
Amtrack 1.565
"Duplicative Education" 1.3
Community Development 4.5
1/2 Federal Travel Budget 7.5
Federal Vehicle Budget by 20% 0.6
Department Energy Weatherization grants 0.53
New Starts Transit 2
Intercity High Speed Rail 2.5
National Community Services Act 1.15
Applied Research DOE 1.27
US Agency International Development 1.39
Davis Bacon Act 1
Cut IRS Budget by 1.8
Collection unpaid taxes by federal employees 1
ObamaCare Admin costs 0.9
Total of yearly savings: 29.005
Plus the one time stuff:

Federal Office space acquisition 0.864
Sell excess Federal Property 15 (one time)

The actual truth is you can't cut the deficit without cutting bone as well as fat. Because the amount of fat in the budget is relative low. The six main budget items are Medicare, Medicaid, Social Security, Defense, Interest on the debt, and Pensions.  You want to cut the deficit?  You need to cut something on that list. Compared to other developed countries, the US overspends on Defense, but not on any of the other stuff. It's not that hard to figure out what we need to cut.

We need to reduce Defense spending.  Start by cutting any program that Congress insists on funding even if the Defense Department says they don't want.  

The article linked above listed four programs:  Global Hawk Block 30 drone program, C-27J Spartan cargo aircraft, upgrades to the M1 Abrams tank, Air National Guard funding and the proposed East Coast missile defense system.   These programs don't cost a huge amount.  But they are an honest start.

To me, I think we need to look at each of the military branches.   The navy is relatively easy to pick on, because they tend to buy single big ticket items.  I will discuss them, but similar cost reductions should be done to the Army and the Air Force.   China and Russia each have only one Aircraft Carrier.  Spain and Italy each have two.  No other country has more than one.    Except the United States.  We have eleven.  Do we really need to have more than 5 times as much as any other single country?  More than five times greater than China and Russia combined?  Cut it down to 9. That lets us put two in the northern Pacific, two in the southern Pacific, one in North Atlantic, one in the South Atlantic,  one in the Indian ocean, one in the Mediterranean, and still have one back home being serviced.

No comments:

Post a Comment