Monday, November 15, 2010

How Would You Fix the Budget?

Standard
BudgetWashingtonpostAmerica’s fiscal mess is no stranger to anyone who has watched the news in the past seven years. But solutions to the quandary, even in the wake of the recent election, have been few and far between. Now, oddly enough, thanks to the New York Times, Joe Public has the chance to weigh-in on the debate.

The New York Times released its ‘deficit project' this past week. The website features an interactive puzzle allowing users to choose which cuts to make among Federal expenditures.

[Link]

The puzzle is derived from a methodology formulated by two top economists who are experts on the Federal Budget. By most accounts, the puzzle is on the up and up despite its provenance. Naturally, what makes the puzzle such a beast to solve is the sheer size of the projected budget shortfalls. According to the economists projections, the budget shortfall for 2015 is estimated at $418 billion. The budget shortfall for 2030 is a daunting $1.355 trillion.

One caveat to the puzzle is that it assumes the continuation of current policies:
Our baseline was current policy. That is, we assumed that existing policies would continue, even those, like the Bush tax cuts, that are scheduled to expire. But we then allowed readers to choose the reversal of any such policies as part of their deficit solution.
Given the quasi-divided government set to take office in January, this assumption strikes me as a reasonable one. Of course, this also suggests that the budget deficit will remain in place too, since the parties rarely agree on anything – including how to cut the budget deficit.

In all, the puzzle is a useful exercise that provides an interesting snapshot of the fiscal woes facing our Nation. And who knows? Given the volatility in American politics right now perhaps the budget puzzle will produce the next member of Congress in 2012. That member surely cannot be any worse for our fiscal straits than ex-Speaker Nancy Pelosi.

0 comments: