An Inconvenient Bit of Arithmetic

So, President Obama wants to assure us that he’s being fiscally responsible, by urging his cabinet (representing all federal departments) to reduce their combined budgets by $100 million over the course of a year.

What a relief! And here I was thinking that he was piling up outrageous, unsustainable, levels of debt.

It’s good to look for ways to spend less money, but this gesture would be hilarious if it wasn’t a serious attempt by the President of the United States to change people’s attitudes about what he’s doing.

Greg Mankiw gives us some perspective:

Just to be clear: $100 million represents .003 percent of $3.5 trillion.

To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year–approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.

I’m not sure which possibility bothers me more: That Obama is stupid enough to think that this is a significant gesture, or that he thinks everybody else is stupid enough to think so.

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