In the State of the Union, President Obama pledged to cut the “deficit by more than $400 billion.” Well, just how much money is that?
First of all, that’s a $400 billion cut over the next decade. In other words, he wants to cut $40 billion per year.
Let’s put that in perspective:
- $40 billion is about 3% of the current deficit.
- $40 billion is about 1% of current federal government spending.
- $40 billion is about 0.3% of our GDP.
Basically, $40 billion is a rounding error. Obviously, I’m very skeptical by calls for small spending cuts when, at the same time, the President also said he plans to increase spending… I mean investments… in other areas.