Obama's $100 million budget cut amounts to a cup of coffee

Jake Turcotte/Staff
President Obama's vow to reduce $100 million from his budget was not greeted all to well. Even New York Times columnist Paul Krugman disputed Obama's claim that this will have any impact. "You could argue that the president shouldn’t feed the bogus claim that we can close fiscal gaps by eliminating a bit of waste," Krugman said.

The reaction over President Obama's call yesterday to thwack $100 million out of his budget?


One analogy could be in the movie Austin Powers (see video below). Remember when Dr. Evil announced he hijacked nuclear weapons and would destroy the world unless he received -- $1 million?

Rollicking laughter from Earth's leaders ensued because Evil didn't understand that $1 million in today's economy means nothing. So he quickly upped the ransom demand to $100 billion.


Although it is doubtful President Obama will immediately follow suit and announce much larger budget cuts on the way, he may want to. The sum of $100 million does sound paltry when you compare it against the nation's $3.5 trillion budget.

Reporters at yesterday's White House briefing seemed to be perplexed at the grand announcement.

"The $100 million target figure that the President talked about today with the Cabinet, can you explain why it's so small?" asked the AP's Jennifer Loven.

While White House press secretary Robert Gibbs began to tap dance. ABC's Jake Tapper chimed in recalling that the Obama administration ridiculed a figure 80 times larger than that -- $8 billion -- as being chump change when defending earmarks.

"You were talking about an appropriations bill a few weeks ago -- that at $8 billion -- being minuscule; a billion in earmarks. We were talking about that and you said that that a hundred million is a lot, but $8 billion is small?" he asked.

Gibbs then performed Act II in his tap dancing routine.


When you are dealing with millions, billions, and trillions, it is easy for your eyes to glaze over and tune out. But Harvard economist Greg Mankiw attempted to put the $100 million figure in perspective.

"One hundred million dollars represents .003 percent of $3.5 trillion. To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year -- approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year."

More coffee

George Mason University economist Don Boudreaux went the coffee route as well.

"To put this budget 'cut' in perspective, suppose that the typical American family, earning $50,000 annually, plans this year to run a budget deficit proportionate to the deficit that Uncle Sam will run," he reasoned. "Such a family would plan to spend $75,000. Now suppose that this family, seeking to signal its faux-commitment to financial prudence, promises spending cuts equal, in proportion to its budget, to the cuts announced today by Mr. Obama. This family would declare -- surely with much fanfare -- that it will reduce its planned expenditures for the year by $2.08! Perhaps it might promise to survive the year with one less gallon of gasoline or with one less cup of coffee."


Even New York Times columnist and Obama best friend Paul Krugman lampooned the announcement in his New York Times blog:

“'Pretty soon, even here in Washington, it adds up to real money',” says the president. Except, you know, really it doesn’t. 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. OK, politics is theater. But you could argue that the president shouldn’t feed the bogus claim that we can close fiscal gaps by eliminating a bit of waste."


The Associated Press breaks it down this way -- without resorting to coffee.

"The bottom line: Not much.
The president gave his Cabinet 90 days to find $100 million in savings to achieve over time.
For all the trumpeting, the effort raised questions about why Obama set the bar so low, considering that $100 million amounts to:
--Less than one-quarter of the budget increase that Congress awarded to itself.
--4 percent of the military aid the United States sends to Israel.
--Less than half the cost of one F-22 fighter plane.
--7 percent of the federal subsidy for the money-losing Amtrak passenger rail system.
--1/10,000th of the government's operating budgets for Cabinet agencies, excluding the Iraq and Afghan wars and the stimulus bill."

More impressive

Want a more impressive example of 100 million? Susan Boyle's video on YouTube. The Scottish singer who wowed the world with her singing on "Britain's Got Talent" has just topped 100 million page views (combined YouTube videos).

If you haven't seen it yet, click here.


You always inspire us.  Just as much as Susan Boyle.  So follow us on Twitter!

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