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Fuzzy Deficit Math

Budget wonk Keith Hennessey to the rescue!

10:34 AM, Jul 8, 2011 • By MATTHEW CONTINETTI
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Quick, go and read super-wonk Keith Hennessey's dissection of the fuzzy math surrounding a possible budget deal. The numbers being tossed off are staggering: $4 trillion in savings over 10 (or is it 12?) years, $2 trillion over 10 years, etc. But what are these "savings" being measured against? Hennessey writes:

Suppose, for instance, that a budget deal would result in $5 trillion of total deficits over the next decade (Y = $5 trillion). If we compare that to current law, then the deal will “reduce future deficits by $2 trillion.” If, however, we compare it to a starting point in which taxes don’t increase, troops aren’t reduced, and Medicare payments to doctors aren’t cut, then that same deal, those same policies, and that same $5 trillion of deficits will “reduce future deficits by $7 trillion.” By changing the baseline, we can make the same deficit reduction package look $5 trillion bigger.

Neat trick! But also one that's totally unserious about reforming America's spending habits before it's too late. "The best way to evaluate the deficit impact of a budget deal, if one occurs," Hennessey goes on, "is to look at the budget deficits that would result over the next decade, measured as a share of the economy." How will that number compare to the historical deficit-to-GDP average of 2 percent? Will the number hold the debt-to-GDP constant? And will future deficits as a percentage of GDP decline or increase in the future?

Republican lawmakers, please read Hennessey—and also protect defense—before agreeing to any deal. Because right now it seems as though the White House is doing its best to pull the wool over our eyes.

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