Cutting the Budget With Words

On Monday, President Bush announced his plan for cutting expenditures as he revealed the budget for 2006. Bush's goal is to reduce the deficit by half for the year 2009. While this goal may be feasible and realistic, it appears that the budget does not include projected costs for military projects in Iraq and Afghanistan. How can George cut budget spending if he does not figure in all of the expenditures? With this type of budgeting one is left to wonder if the President of the United States is just giving us political jargon instead of economic truth. Perhaps, as Dr. Tufte stated, this political nonsense is supplied only because America demands it.


Dr. Tufte said...

How is this related to ManEc?

Announced budgets bear little relation to ultimate deficit numbers. The biggest factor in deficits is the business cycle, which is highly unpredictable.

I think it is reasonable to expect the deficit to be halved by 2009. The problem is that I think it is reasonable that it would be eliminated, or would grow in size too. There's just a lot of variation in that measure.

I don't think including or excluding the costs of Iraq or Afghanistan is much of an issue. Those costs won't be driven by business cycles, and the expected fluctuation in them is small relative to other factors.

salty said...

I agree with Dr. Tufte, that the war factors are insignificant when President Bush talks about cutting the budget in half.

Marie said...

It seems like our country is having a hard time creating sources of income. What I mean is that our economy isn't doing well and we are spenging a lot of money that we can't produce. If the business cycle is highly unpredictable then how can it be reasonable expected to reduce the deficit by halve in 2009.