Tuesday, July 29, 2008

Don't jump off any bridges yet.

Yesterday the White House announced that the current budget deficit will be$482 billion, which is an seemingly large number. The Los Angeles Times has a nice graphic you can look at. I'm as critical as anyone on Bush's failure to control spending, however, because of inflation, we should remember that budget deficits should be compared as a percentage, not as a dollar amount.

As Robert Pear and David Herszenhorn state in their New York Times article, the forecasted $482 budget deficit is 3.3 percent of the total GDP. This percentage is much lower than the percentages in the 80s and early 90s. Unfortunately those were also under republican administrations, which I'm saying sheepishly.

My point in this is, while the mass media will make a big deal about the large deficit, keep in mind that while the number is a record, the percentage is not. And it's the percentage that counts.


Scooter said...

I read about this in How to Lie With Statistics. But they used wheat pennies in the examples.

Mac Noland said...

From what I can tell, all mass media makes mistakes like this. I'm glad a few folks (like the guys at the Times) make sure to note the meaning.