NYC Letter: Team Barry Tackles The Deficit, Part I

Day 90 of CHOPE

If we’re to going to rebuild our economy on a solid foundation, we need to change the way we do business in Washington. ... That starts with the painstaking work of examining every program, every entitlement, every dollar of government spending...

... And this Monday, at my first, full Cabinet meeting, ... I will ask all of my department and agency heads for specific proposals for cutting their budgets. Already, members of my Cabinet have begun to trim back unnecessary expenditures.

Mr. Obama,
President of the United States
WEEKLY ADDRESS: President Obama Discusses Efforts
to Reform Spending, Government Waste
Saturday, April 18, 2009 (White House)

Is Mr. Obama serious about laying a mighty axe into his showcase legislative triumphs, his $3.5 trillion budget and $787B stimulus spend-a-thon? Will he demand $500B in offsetting cuts to keep his 2010 budget even with Mr. Bush's 2009 budget? [This dizzying possibility compels us to sit.]

Oh no. Just a minute.

OBAMA TO ORDER $100 MILLION IN BUDGET CUTS

April 20, 2009 (WaPo) - President Obama plans to convene his Cabinet for the first time today, and he will order its members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official.

Although the budget cuts would amount to a minuscule portion of federal spending, they are intended to signal the president's determination to cut spending and reform government, the official said.

Just how miniscule? $100M is .003% of Mr. Obama's $3.5 trillion budget; .0127% of Mr. Obama's $787B stimulus package; .002% of the $4.3 trillion aggregate spending. [Pause.] Mr. Obama's $100M cuts directive is so puny, so teeny tiny, it only emphasizes the enormity of his spending.

Obama's order comes as he is under increasing pressure to show momentum toward his goal of eventually reducing the federal deficit, even as he goes about increasing spending in the short run to prop up the economy and support his priorities.

Now there's a trick. Quadruple the deficit in a single year then hack away at this tremendous mountain of debt with a noodle.

Harvard economics professor Greg Mankiw provides an illustrative explanation:

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 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.

And this is not the whole story. That $3 savings in Mr. Obama's directive is to be achieved over time not "over the course of the year". Who is this stupid? Team Barry hopes they can convince you to be. But even an obedient press cannot bring itself to print what they are told without snickering.

SPIN METER: SAVING FEDERAL MONEY THE EASY WAY
Obama's Latest Budget-tightening Effort
Hardly Makes A Dime's Worth Of Difference

WASHINGTON April 20, 2009 (AP) - Cut a latte or two out of your annual budget and you've just done as much belt-tightening as President Barack Obama asked of his Cabinet on Monday. ... Obama made his push for frugality the subject of his first Cabinet meeting, ensuring it would command the capital's attention. It also set off outbursts of mental math and scribbled calculations as political friend and foe tried to figure out its impact.

The bottom line: Not much.

The president gave his Cabinet 90 days to find $100 million in savings to achieve over time.

For all the trumpeting, the effort raised questions about why Obama set the bar so low... Obama only asked his Cabinet secretaries to identify waste in their annual operating budgets, which total a little over $1 trillion. He's leaving out war costs, the economic stimulus measure, the Wall Street bailout and benefit programs like Social Security and Medicare.

Obama's marching orders to the Cabinet on Monday were less than meets the eye. Many of the savings he asked them to achieve are already under way and are included in the calculation. To be sure, this is an extra effort, on top of an agency-by-agency review of programs and proposed multibillion-dollar cuts in weapons programs. But it is decidedly marginal.

... In large measure, the examples of economizing given by the White House were of the painless, seemingly commonsensical variety. They were not the program cuts that people feel and that budget-watchers say are essential to make a meaningful difference in the exploding deficit. Some of them will take many years to play out.

... Republicans were quick to point out that borrowing costs for February's stimulus package will on average cost almost $100 million a day over the next decade.

Because Mr. Obama is taking a symbolic but piddling approach to deficit reduction, he might try cutting out this and this, cut back on this. And maybe tone down this during "sober times".

CHOPE.

Smoke: Piddlely cuts. Mirrors: Enormous noise. Presto-chango: Business as usual.