On April 20, President Barack Obama caused a bit of a splash when he gathered members of his Cabinet and directed them to cut (collectively) $100 million in expenses within the next 90 days. Now that sounds like a lot of money. And we’re not ones to complain about cutting costs when the Congressional Budget Office estimated the deficit to be $1.2 trillion in 2009 alone — and that was before accounting for the cost of the stimulus bill.
That said, it’s important to keep Obama’s $100 million pledge in perspective. We found this video, created by Matt Shapiro, a 28-year-old software developer in Salt Lake City, to be particularly useful:
Matt, whose YouTube channel is entitled 10000 pennies, told us by e-mail that he actually uses 8,880 pennies in his video. The math checks out. Each penny represents $400 million in government spending, so that works out to a budget of $3.552 trillion — pretty close to Obama’s proposed 2010 budget. Obama’s pledge amounts to cutting one-fourth of one of those pennies.
We don’t doubt that there’s plenty of wasteful federal spending. But don’t be fooled into thinking that cutting a bit of waste will fix the budget problems. As Matt explained in his e-mail, "I know that we have a really hard time intuitively grasping scale when we’re dealing with two numbers that are orders of magnitude away from each other." He tells us that he created the video as a way of "seeing the numbers in a way that is a little fresher" than the typical bar graph. It certainly caught our attention.
By the way, Matt’s not alone in thinking that Obama’s pledge is not as substantive as one might think. The liberal economist Paul Krugman noted in his blog at the New York Times:
Krugman: Let’s say the administration finds $100 million in efficiencies every working day for the rest of the Obama administration’s first term. That’s still around $80 billion, or around 2% of one year’s federal spending.
That same $80 billion is under 7 percent of the 2009 deficit. Clearly it’s going to take far more than the governmental equivalent of looking under the couch cushions to fix our fiscal mess.