21 February 2009

Wear your brown pants when the next federal budget is revealed

President Obama has indicated that when the next federal budget is announced this coming week, the data will be presented without using four "accounting tricks" used by previous administrations. This will involve

- Removing the revenue from the Alternative Minimum Tax reform. Despite the yearly and almost certain Congressionally authorized "patch" to the AMT, the White House would always presume the AMT would not be corrected for that fiscal year, overstating revenue.

- Including the cost of the Iraq and Afghanistan wars.

- Count as spending the Medicare reimbursements to physicians

- Include expenditures related to disaster response and relief.

It's going to be scary as hell, at least for those who pay attention to such things (the vast, vast majority of the American public don't understand and frankly probably "could have cared less" in the past when things were going well.)

There will be vehement outrage expressed, especially by FOX, Limbaugh, Coulter, Hannity et al. When you hear those rants, remember these data are calculated differently from any you have encountered in recent memory.

What trickles down to the great unwashed public will probably include an element of fear. It will be interesting to see how the equity markets perform.

Found at Swimming Freestyle (one of the 2008 Weblog Award finalists for Best New Blog).


  1. Something else needs to be considered. This is the formula economists use to calculate the GDP of a country:

    GDP = Consumption + Investment + Government spending + (eXports - iMports)

    C isn't spending.
    I isn't spending.
    X-M produces a deficit.

    How do you make up the difference?

    Furthermore, the numbers I've run suggest that even with the additional spending in the stimulus, it's still not going to be anywhere near enough.

    If Obama is serious about cutting this recession short of a depression he's likely to be crafty with the funds he asks for here as well.

    As for the deficit, keep in mind that even with the additional spending of both of this and the former Administration, the GDP to deficit ratio is still incredibly low.

  2. just a small note: "could have cared less" was used when you actually meant "Could NOT have cared less". A very common mistake :)


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