The President’s “matching deficit reduction” claim is off by a trillion dollars

In his weekly radio address the President said:

Now, one plan put forward by some Republicans in the House of Representatives aims to reduce our deficit by $4 trillion over the next ten years.

… That’s why I’ve proposed a balanced approach that matches that $4 trillion in deficit reduction.

In the radio address the President did not give a timeframe for his $4 trillion in deficit reduction. He did in his budget speech last Wednesday, however:

So today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years.

$4 trillion in deficit reduction over 12 years does not “match” $4 trillion in deficit reduction over 10 years. It’s not even close.

The twelve year timeframe is a red flag.  Federal budgets are measured over 1, 5, and 10 year timeframes.  Any other length “budget window” is nonstandard and suggests someone is playing games.

The President and his team have not yet provided sufficient detail for us to know precisely how his $4 trillion of deficit reduction is distributed over this 12 year window, but we can make some back-of-the-envelope guesses to get a feel for the magnitudes involved.

Based on my experience and until we get more detail from the Administration, I think it’s reasonable to assume the deficit reduction in the President’s plan increases linearly over time.  Medicare and Medicaid savings generally fit this pattern, as do gradual plans to slow the growth of defense spending.  After a jump in year 2, higher tax revenues should grow roughly with the economy.

If we assume the deficit reduction is a straight line increasing from year 1 to year 12, then $4 trillion in deficit reduction over 12 years would look like this:

Read the full story at Keith Hennessey.

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