This article was published by The McAlvany Intelligence Advisor on Wednesday, February 14, 2018:
Mark Twain attributed his quote about statistics to British Prime Minister Benjamin Disraeli: “Figures often beguile me, particularly when I have the [freedom] of arranging them myself … there are three kinds of lies: lies, damned lies, and statistics.”
Mark Mulvaney, Trump’s OMB director, must feel the same way. There’s enough statistical smoke and mirrors in the president’s “An American Budget” to, in the words of Tevye [the dairyman in Fiddler on the Roof] “cross a Rabbi’s eyes.”
First, Mulvaney admits that this MAGA budget won’t balance, ever. The government is too big and growing too fast for the economy that funds it ever to catch up. So he and the president decided to ignore a balanced budget and go for the next best thing: show the economy growing faster than the government is growing and someday, eventually, the deficits will start to shrink when compared to the economy itself.
The numbers “prove” the conclusion: for fiscal year 2018 (which ends this coming September 30), government revenues of $3.3 trillion compared to government spending of $4.2 trillion will leave a gap – a deficit – of $873 billion, equivalent to 4.4 percent of the country’s gross domestic product. In the following years that annual deficit is projected to grow to $987 trillion in 2020, equivalent to 4.5 percent of the country’s GDP. Only by 2022 does that percentage begin to decline based on the assumption that government spending is only $4.9 trillion while tax receipts would hopefully be $4.1 trillion.
That is the crux of the new math in Trump’s budget:as long as the economy grows faster than the debt, the debt (relative to the economy) will start to shrink. And, lo and behold, under the out years’ projections it does. By 2023 the deficit is only 3 percent of GDP and by 2028 it falls to just 1.1 percent.
Of course, by 2028 the Trump presidency will be a distant memory, buried by the behaviors of six new Congresses with their own ideas of what constitutes fiscal restraint and Constitutional limitations. History will likely have also recorded at least one recession between now and then, not to mention a war or two. And much higher interest rates to offset the increased risk of default being borne by investors buying government paper.
But Mulvaney bravely marched into the hall of mirrors:
As a nation, we face difficult times – challenged by a crumbling infrastructure, growing deficits, rogue nations, and irresponsible Washington spending….
Just like every American family, the budget makes hard choices: fund what we must, cut where we can, and reduce what we borrow.
And just what constitutes “fund what we must?” The 160-page budget is mostly made up of calculations based upon Trump’s spending plans and a 3-percent economy. His spending plan includes $200 billion for his infrastructure rebuilding program; $23 billion for border security, which includes $18 billion for the wall (it looks like Mexico won’t be paying for that wall after all); $85 billion in expanded coverage for improved medical care for veterans; $17 billion to fight the “opioid” crisis; not to mention defense spending that jumps from $590 billion last year to $634 billion this year and continues to escalate to three-quarters of a trillion dollars in the out years.
Missing from the budget is any mention of restraining spending for Social Security or Medicare, the two elephants in the living room that no one, including the president, wants to talk about. Mulvaney made it clear that Congress simply isn’t in the mood to consider adopting all but a few of his proposed spending cuts and the president has told him that cuts to those welfare programs are off the table.
There it is: the bald-faced lie that is covered up with statistics: without reining in Social Security and Medicare spending, those two programs have the potential to bankrupt the United States all by themselves. The funding shortfalls have been calculated by a Boston University professor who has no skin in the game. So his “generational accounting” methodology isn’t tainted with self-interest or political bias. Professor Laurence Kotlikoff was allowed to post his calculations and reasoning at a most unusual place: The New York Times. His conclusion: the unfunded liabilities here are in excess of $200 trillion, with a T.
Compare that to the world’s GDP, not just that of the U.S.: $75 trillion.
Conclusion: Trump’s budget is just plain false, meant to entertain the ignorati and keep them from awaking from their slumber.
Washington Examiner: Mick Mulvaney defends his nonbalancing budget