Ross Perot is Back!
June 16th, 2008 . by economistmom
Good news for columnist Mark Shields, who wrote in 2004 (as we had just posted a record $413 billion federal budget deficit) that he missed Ross Perot (as had many of us who label ourselves budget hawks). He’s back! Not in a candidacy for the presidency, but at least in time to maybe influence the quality of debate during the campaign. Ross Perot has just launched a website (with blog and lots of charts) called Perot Charts. (I’m adding it to my blogroll today.) It’s very much in the spirit of the Concord Coalition and in particular the Fiscal Wake-Up Tour, in its mission. I think the “giant sucking sound” that Perot used to use to express his objections to free trade policy can now be applied to his dismay over the federal debt and all the borrowing from abroad our country’s doing. From the premiere blog entry (and press release):
“The economic crisis facing America today is far greater than anything since the Great Depression,” said Perot. “Our federal government continues to spend us deeper into debt. The American people must get directly involved and demand an end to deficit spending. This website will provide information for citizens to do just that.”
Like the economic charts Perot employed in his 1992 and 1996 presidential campaigns, which served as snapshots of complex economic issues presented in simple terms, PerotCharts.com features the latest official government figures about the real conditions of our economy for everyone to see and consider. The site is designed to be a reservoir of information about the economy, and provides an accurate look at where the money comes from and where it goes.
…“We simply cannot wait any longer to do something about runaway deficit spending,” Perot said. “This website addresses a number of issues, and we will add more in the coming weeks and months. But there is a common thread running through all of them. We cannot solve these problems unless we have the ability to pay for the solutions. Getting spending under control is the first step in that process.”
EconomistMom - thanks for gracing the comment box over at Angrybear. You invited our readers to visit your blog, which is something I advocated a few days ago. I learned about the Perot Charts by reading Andrew Sullivan (one of my favorite conservatives). I did suggest that Sulli’s attack on Bush’s fiscal fiasco missed but then there were so many Perot charts - some of which were quite good.
The chart you get when you click “Social Security” shows projections for all budget categories. The data are 2 years old, and the “high cost” estimate for Social Security is used. Even so, it is clear that Medicare and interest costs, rather than Social Security, are the deadly problems. Had we stayed on a virtuous fiscal path and not cooked up an unfunded Medicare drug plan, the future would look very different.
Economistmom – thanks for your efforts in making economic concepts accessible and for reminding us of Perot’s fleeting success in getting people somewhat comfortable in thinking about a subject that they’d prefer to avoid – the budget.
But any useful, productive discussion of the budget (or anything financial-related) is doomed to failure if folks keep making the same slip you make in your parenthetical remark that the federal government “had just posted [in 2004] a record $413 billion federal budget deficit.” Don’t worry, nearly everyone (except some economists and The New Republic) who knows how to count makes this mistake because it seems so natural (but that is no excuse). Reporters are the worst offenders because it allows them to hype a new “record” every day, month, or year (see a recent example in Lori Montgomery’s Washington Post piece about how the promises of the presidential candidates will bump into budget realities: “Economists expect the deficit to top $400 billion when the fiscal year ends Sept. 30, rivaling the all-time high of $413 billion set in 2004” (http://www.washingtonpost.com/wp-dyn/content/article/2008/06/20/AR2008062002889.html).
Does this mean that if the deficit in 2008 is $414 billion, it will set a new record, all-time high? Of course not. For that matter, the 2004 deficit of $413 billion was not a record, all-time high either. (The one and only record high, according to table 1.3 of OMB’s Historical Tables that go back to 1940, occurred in 1943 when the deficit was 486 constant 2000 dollars, far higher than the 2004 deficit of 374 constant 2000 dollars.) Why not? Because you can’t measure record, all-time highs for anything in nominal dollars. What are nominal dollars? They are the dollars that measure prices for a particular year only, and they are not comparable over time without converting them to comparable units.
Let’s take an example close to everyone’s pain threshold right now – gas prices. The average price of a gallon of gasoline in 1981 was about $1.35. But when we say $1.35 as a shorthand, easy way to say the price, what we are really saying is that the price of gas in 1981 was 1.35 nominal 1981dollars. One the main arguments of 2004 presidential campaign was premised on the incorrect claim that gasoline prices were, at $2/gallon, at an “all-time” high. Speaking more precisely, in 2004, gasoline cost 2 nominal 2004 dollars per gallon. So how do you know whether 2.0 nominal 2004 dollars is more or less than 1.35 nominal 1981 dollars? You don’t.
The units that are being compared are two totally different things, so one just can’t take the numerals that are attached to the units, pick the bigger numeral and say, ah ha, “2” sets the record! When, as any good economist would do, you convert the 1981 price of gas in nominal 1981 dollars into nominal 2004 dollars (thereby making a two-data point series of “constant” or “real” 2004 dollars), you realize the price of gas in 1981 was 3 nominal 2004 dollars. So the price of gas in 2004 (2 nominal 2004 dollars/gallon) did not set a record after all. The nominal prices Americans were paying in 2004 still were far short (by about one-third) of the record high that had been set 23 years before. Of course, Americans are right now paying about 4.25 nominal 2008 dollars for a gallon of gas, which does set a record because it exceeds the 1981 price of gas, which converts to about 3.2 nominal 2008 dollars.
Still, some would argue that one can refer to a nominal record without suggesting it’s a meaningful nominal record…that there is too such a thing as a record value in current, or nominal, dollars. But you can’t, and there isn’t. For any kind of record to live up to the purpose of the word “record,” the record has to have meaning. A “record” that is claimed for 2004 because the deficit that year was 413 nominal 2004 dollars is only a record of one thing – it is a record (as in, it is written down) of all the annual deficits recorded for the federal government for 2004. And since there was only one actual, annual deficit recorded by the Treasury for 2004, then sure, comparing a measurement to itself and nothing else sets a record, I suppose, but only a tautological one.
A record in the “all-time high” sense means a comparison in meaningful units that are constant (i.e., that measure the same thing…in the case of constant dollars — purchasing power) over time, so that you can make consistent comparisons over time. A “meaningless record” measured in nominal dollars doesn’t tell you anything about the measurement compared to other points in time. It only tells you about that one data point, and therefore, by definition, can’t be a record. Here’s hoping Economistmom’s blog holds others to this rudimentary, but essential, standard in the future!
Thanks, “educate ‘em”! I totally agree that such nominal dollar “records” are pretty meaningless, but I have definitely slipped into mentioning them anyway–part of the lasting effects of years of (adverse) conditioning at my partisan, Capitol Hill jobs. A couple of my pet-peeve records I heard all the time about the Bush economy? The record (absolute) number of employed people in the economy, or the record (nominal) level of revenues achieved (or increase in revenues) after the 2003 tax cuts. Among deficit watchers, we’re also encouraged to attach significance to nominal levels because the (gross) debt limit is set in nominal (current) dollars, as are the reported deficit numbers–at least before they are analyzed by the economists who know to examine levels relative to the rest of the economy (GDP).
Hope you’ll keep visiting and educating us with your comments!