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Fact Checker: ‘Historic’ budget cuts?

By GLENN KESSLER,April 16, 2011

“This agreement between Democrats and Republicans, on behalf of all Americans, is on a budget that invests in our future while making the largest annual spending cut in our history.’’

— President Obama, April 8, 2011

“This week, Congress is moving toward approval of an agreement on the largest spending cut in history to help begin to create a better environment for private-sector job growth.”

— House Speaker John Boehner (R-Ohio), USA Today op-ed, April 11, 2011

“Biggest cuts in U.S. history”

—Washington Post front-page headline, April 9, 2011

After a tense few weeks over haggling over the fiscal 2011 budget, the White House and congressional lawmakers cinched a deal that they said will result in $38.5 billion in cuts. As the quotes above indicate, they then quickly called it a historic achievement. Even the news media got into the act, echoing the assertions.

The Fact Checker, however, is wary of raw numbers. Thanks to inflation, dollars (and budgets) get bigger every year. For instance, retail gasoline cost about 25 cents a gallon in 1918 and is estimated to average about $3.70 this year. That sounds like a huge jump, until you realize that the inflation-adjusted price of gasoline in 1918 is $3.61. That’s the proper comparison.

So, how “historic” is this achievement?

The Facts

By any measure, $38.5 billion is a big number, especially when the cuts are squeezed into the rest of the year. But the budget is pretty big, too — about $3.8 trillion. So let’s see how these figures stack up against the days when the budget numbers were smaller.

For instance, during World War II, the federal budget soared from $9.4 billion in 1940 to nearly $93 billion in 1945. Talk about an expansion of government! But then in 1946, the budget was cut to $55 billion. That’s a cut of $37 billion, technically less than the $38.5 billion in cuts reached last week. But it’s also a cut of 40 percent, which means it is 40 times larger than the deal that has been described as historic.

The budget kept falling for a number of years after World War II. It dropped to $34 billion in 1947, a cut of 38 percent. Then the next year it fell to just under $30 billion, a cut of 14 percent. (There were also cuts of 66 percent, 20 percent and 35 percent, respectively, in the three years after the end of World War I.)

Raw dollars, of course, don’t tell the whole story, either. Between 1954 and 1955, government spending fell from $70.9 billion to $68.4 billion. That may not sound like much, but it’s a decline of 3.5 percent, or three times more than this deal. But when the dollars are translated to constant dollars (fiscal 2005, the standard used in the White House budget), the cuts swell to $55 billion, which would be a cut of 9 percent. By either standard, that’s much larger than the current agreement.

The historical tables on the White House’s budget Web site provide all of this information. David Boaz and Chris Edwards of the Cato Institute, who encouraged the Fact Checker to look into this issue, have also examined the numbers. Edwards counts 18 years in the past 110 years as having bigger cuts on a percentage basis.

The Pinocchio Test

We’re going to give the politicians a pass here. Technically, these appear to be the largest raw-dollar spending cuts in history, and we have not found evidence that either Obama or Boehner has pretended otherwise — at least in public. At worst, these are one-Pinocchio violations, typical bragging that all of the Sturm und Drang over the budget was worth the effort.

But it is up to the media to provide context to these assertions. On that score, the media, including (alas) The Washington Post, misled its readers.

Two Pinocchios (to the media)