Sorry, But Balancing The Budget Isn't NEARLY As Easy As The NYT Wants You To Believe


There’s a cool feature at the New York Times that’s getting a lot of buzz today: It’s a puzzle that lets you try balancing the budget by eliminating things like earmarks, reducing the Federal government workforce, means testing Medicare, and reducing aid to the states.

As an exercises in learning how much different slice of Federal spending cost it’s helpful. Newsflash! Eliminating foreign aide won’t do squat.

But as an exercise in actual budget cutting it’s not nearly so useful because it’s so static.

See, you can slash and slash and slash all kinds of things. Eliminate earmarks? That sounds good. Freeze public sector pay? Great! Bring home the troops? Definitely! But it’s totally static.

You can’t cut public sector jobs (or public sector pay) and assume tax revenues to remain static. Job cuts lead to a weaker economy (at least in the short term) and that means lower tax revenue, and greater outlays for aide. Same with reducing state aide. It’s not easy to model, but if it were, then Ireland and Greece wouldn’t be in the situation they’re in today, where they’re slashing spending, and not finding anyway to actually close their budget gaps.

That’s not to say closing the budget deficit can’t be done, but a system that just assumes spending cuts are cost-less presents a way over-simplified view of the task ahead.

Click here for 14 facts about the deficit that will blow your mind >

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