Here’s a piece of advice for reading the economic “news”: if you see a headline that says, “such and such will fall by $X,” you are safe to completely ignore it. Nowhere is up = down, left=right, blue=red than when it comes to economics reporting. Here is the latest:
Federal spending is likely to fall $8 trillion over the next decade.
What an impossibly nonsensical pile of crap. Long-time economics readers obviously know this, so this is for my newer followers. First, this certainly can’t mean that federal spending in any one year will fall by $8 trillion because “we” spend less than $4 trillion every year. OK, that’s obvious and not what the headline implies, but what it DOES imply is that federal spending will fall, on average $800 billion per year for the next 10 years, for a total of $8 trillion.
Bring out the unicorns!
If our federal spending is $4 trillion this year in 2015, then what this tells us is that federal spending in:
It seems that the economics news reporters have shrunk government so much that it can be drowned in a bathtub! What a hoarde of evil right-wing ideologues they must be.
Here is what the article then says,
After four years of hand-to-hand combat over the federal budget, government spending is projected to be nearly $8 trillion lower over the coming decade, according to a new analysis
Yes, hand-to-hand combat. That’s accurate. Actual MMA on the senate floor. That would actually be a good way to reduce the deficit – if all of these bozos knocked themselves out, they’d have to let go of the purse strings – plus they could sell tickets to watch that fiasco and use the proceeds to cover some of the debt. But really, look at the bait and switch from the headline – so government spending is $8 trillion lower over the next decade. But that still has no meaning because:
(1) These are all based on projections
(2) What the quote means is that as compared to the gargantuan sums of money that we initially predicted government will spend, all totaled over a decade, we will increase our spending by a crap-ton, but by $8 trillion less.
Notice how steamy the article is. It doesn’t say ANYTHING about what outlays themselves are expected to be in each year, all it does is show a chart that shows how federal spending as a share of GDP is expected to change over time. 2010 estimates suggested that spending in 2024 would be 25.5% of GDP and now “they” estimate it to be 22.1% of GDP by then. But what is really going on is that instead of the government spending $4.5 trillion next year and $4.8 trillion the year after and … $8 trillion in 2024 (I made these numbers up because of course the author does not provide them), the government will be spending $3.7 trillion next year and $4 trilloin the year after and $7.2 trillion in 2024.
Not only is the article totally misleading, let’s have you reflect for a moment on how reliable and believable any of it would be in the first place even if we were all on the same page? Who wants to bet that the spending over the next decade will be lower by $8 trillion than what the 2024 original estimate of total spending is (if you go find the raw data I would appreciate it)? Anyone taking that bet?