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MARCH 9, 2009 2:02PM

Rigorous statistical analysis

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David Brooks needs to be more rigorous with his analysis:

"The White House has produced a chart showing nondefense discretionary spending as a share of G.D.P. That’s spending for education, welfare and all the stuff that Democrats love. Since 1985, this spending has hovered around 3.7 percent of G.D.P. This year, it’s about 4.6 percent. The White House claims that it is going to reduce this spending to 3.1 percent by 2019, lower than at any time in any recent Republican administration. I was invited to hang this chart on my wall and judge them by how well they meet these targets."

This is less a criticism of President Obama's budget, and much more a criticism of his projections. The statement "3.1 percent by 2019" assumes a certain figure for GDP in 2019. The economic forecasts of Goldman Sachs, JP Morgan, the Treasury and the Fed have all been re-evaluated over and over in the last year; the recent movement of the DJI suggests that they may be re-evaluated again. Lack of confidence in Mr Obama's fiscal stimulus in Wall Street and worries about the absence of a systematic plan to deal with the financial system doesn't help things much.

Mr Obama's projections (http://www.econbrowser.com/archives/2009/03/is_the_administ.html) are optimistic; that is fitting for a campaign run on a slogan of "hope", but it will not do for budgetary matters. What Free Exchange thinks of Mr Obama's budget is irrelevant to this post; what is relevant is that the budget may deepen the deficit more than expected.

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