by Ryan Streeter on February 13, 2012. Follow Ryan on Twitter.
Keith Hennessey has a few words for Obama Chief of Staff Jack Lew: your math is bogus.
Lew said yesterday on Meet the Press that Obama’s budget has $2.50 in spending cuts for every $1 in tax increases.
Not so, says Keith. He writes:
Contrary to Mr. Lew’s assertion, the President is proposing at least $1.20 of tax increases for every dollar of proposed spending cuts. The President’s budget locks in historically high spending levels and relies more on tax increases than spending cuts for the limited deficit reduction it proposes.
Why the disparity? Because the math whizzes in the White House included spending cuts from last year in the proposed budget. And, spending cuts and tax increases reduce the interest you pay – and Team Obama counts interest savings as spending cuts. Ironically, the spending cuts they factor into their budget proposal wouldn’t have happened were it not for House Republicans pushing those very cuts that the Obama folks fought tooth and nail. And, contrary to ordinary household economics, when you don’t spend money on interest, you’re not exactly “saving” anything.
So, when you do math the way most normal people do it, you find that Obama’s budget proposes 83 cents for every dollar in tax hikes.
Can you imagine going into your boss’s office and explaining that you had found a way to cut $250,000 from the coming year’s operating budget, only to have him find out that you had included $150,000 in spending cuts from last year in your projections? My guess is you’d find your (former) salary a part of the eventual savings your company managed to achieve.