Here's Krugman:
For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.
Now DeLong:
Let me reserve judgment until the surrender-and-visit-to-the-cleaners is actually set out, but I suspect that come Tuesday I will be forecasting a double-dip. Horrible for the economy. Horrible for America. Horrible for the world. And horrible for Obama's aspirations for a second term as well.
And then we see exactly what they are getting all worked up about (hat tip to Tyler for posting a re-scaled graph):
That is a graph of discretionary Federal spending after the "cuts". Yes, it's going up (though note that the data are not inflation adjusted). Doesn't seem much like a disaster, does it?Here's more from the OG (original graphmaker):
The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.
No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.
The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.
Bam! The Tea Party just hit America with a steel garbage can! Sproing! America is bleeding profusly. Zoink! the EMTs are coming to take America out on a stretcher. Oh the humanity.
Somewhere, Killer Grease Mungowitz is smiling.
7 comments:
The epic fail consists in using nominal figures on a ten-year scale. Unless the intent is to lie with statistics.
The CBO didn't forecast in adjusted dollars, for the obvious reason that actual spending is always in nominal dollars.
...oddly, I never once heard this complaint made about the CBO estimates of the spending cuts, which would also be exaggerated using nominal dollars.
Let's adjust for inflation with the commonly accepted federal reserve's implicit inflation target of 2%. Here is what it looks like in 2012 dollars.
2012 1043
2013 1026
2014 1025
2015 1023
2016 1023
2017 1024
2018 1026
2019 1029
2020 1031
2021 1033
So we are talking about savings of 146 billion real dollars over 10 years as compared with just letting spending go up with inflation. (Or about an average of 14-15 billion per year which is otherwise known as 0.4% of the total budget) Of course we don't know what inflation is going to be so this is a somewhat silly exercise.
But while we're on the subject of making these numbers look more realistic let's look at it this way. What is the actual spending going to be?
2012 1043 billion
2013 whatever congress wants
2014 whatever congress wants
2015 whatever congress wants
2016 whatever congress wants
2017 whatever congress wants
2018 whatever congress wants
2019 whatever congress wants
2020 whatever congress wants
2021 whatever congress wants
It is very well established that a previous Congress cannot bind a future Congress. So Congress will do whatever they want to do spending and borrowing however much they want constrained only by political forces as usual. (And the real world if they are in the mood to share power)
Sorry, I forgot to adjust the second numbers for inflation.
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