Patterico's Pontifications

2/12/2009

L.A. Times: A Cut in Projected Wish List Spending = A Budget Cut

Filed under: Dog Trainer,Economics — Patterico @ 10:52 pm

The L.A. Times‘s George Skelton:

The taxes should have been raised a year ago. Make that years. The bite would have been a lot smaller. Maybe just a nibble.

Ditto some of the spending cuts, although there were $11 billion in program whacks last year.

Chris Reed:

No, there were not. This is gross dishonesty. This is journalistic malpractice. . . . Repeat after me: A cut in projected wish list spending is not a cut in real-word, hard dollars. A cut in projected wish list spending is not a cut in real-word, hard dollars. . . . Skelton would fail first grade math, but he’s tasked by the state’s largest newspaper with explaining the state budget to us.

Spending went up $67 million last year. It was not “whacked” $11 billion. Check this out with the LAO if you don’t believe me.

Even by Skelton’s and the LAT’s standards, this is innumeracy on an excruciating scale.

But they do it every year. Without fail.

53 Responses to “L.A. Times: A Cut in Projected Wish List Spending = A Budget Cut”

  1. Growing up, George Skelton’s allowance was cut year after year. His school marks suffered massive cuts from grade to grade. When he was teenager, supermodel after supermodel cut him from her life. Poor George.

    Perfect Sense (0922fa)

  2. Maybe Hacks can explain how something like this would happen.

    JD (c6800b)

  3. This guy was only off by about $78,000,000,000. He still has over $160,000,000,000 to go to catch up with the one you posted earlier.

    JD (c6800b)

  4. The LAO site is fantastic. Thank you for the link.

    One of the more interesting graphs (to my mind) was the one which demonstrated that, in the September budget which has fallen out of balance since it was passed, inflation-adjusted per capita spending was … expected to be the same as in 1998.

    aphrael (9e8ccd)

  5. I guess we should be happy for our “tax cut”, too. After all, they wanted to raise taxes much more than they did.

    Kevin Murphy (0b2493)

  6. This is standard fare for the “news”papers. Any reduction in the future rate of growth of a program, especially if a Republican does it, constitutes a cut/slash/hack, or the first step in doing away with a program. As an example, a R could propose a 5% rate of growth, and the D could propose a 10% rate of growth. The reporter will almost inevitably describe the R plan as a 5% cut, or will say the R wants to slash $50,000,000 from the program, as opposed to noting that the R proposal would allow for $50,000,000 in growth. But this is “news”, professional journalism, right Hack?

    JD (c6800b)

  7. Sorry, but no dice.

    Skelton wrote “program whacks” for a reason.

    If he meant to say that the budget was being cut, he would have simply wrote: “Ditto some of the spending cuts, which were $11 billion last year.”

    He specifically used “program whacks” to clarify that they weren’t cuts, but reductions in “programs.”

    Note, as well, the word “although,” clearly indicating contrast with “spending cuts.”

    Hax Vobiscum (edacf7)

  8. “Skelton wrote “program whacks” for a reason.

    If he meant to say that the budget was being cut, he would have simply wrote: “Ditto some of the spending cuts, which were $11 billion last year.””

    Hax – Not buying your explanation. He’s clearly bteaking out his thesaurus as he does in the first paragraph where he talks about taxes going up and uses three different words to connote increases – raised, bite, nibble. His use of cut and whack are clearly of the same nature. Your explanation is a stretch.

    daleyrocks (5d22c0)

  9. California General Fund Expenditures (millions):

    2005-06 $ 91,591
    2006-07 $ 101,413
    2007-08 $ 102,986
    2008-09 $ 92,413
    2009-10 $ 95,524

    California General Fund, Special Funds & Bond Funds Expenditures (millions):

    2005-06 $ 119,612
    2006-07 $ 129,968
    2007-08 $ 138,064
    2008-09 $ 135,568
    2009-10 $ 134,764

    California General Fund, Special Funds, Bond Funds & Federal Expenditures (millions):

    2005-06 $ 173,181
    2006-07 $ 182,903
    2007-08 $ 194,276
    2008-09 $ 199,435
    2009-10 $ 196,462

    I don’t know how to link, but try this:
    http://www.dof.ca.gov/budgeting/budget_faqs/information/documents/CHART-B.pdf

    I don’t know the budget year, but I am guessing it starts around June 1st.

    Perfect Sense (0922fa)

  10. Max, think of Skelton’s “cuts” this way:

    You go into the office at your workplace to negotiate a 10% pay raise. they agree to a raise but make it 5%. You then go home to your spouse and claim your pay was cut.

    Absurd? Yes it is, and so is Skelton’s explanation.

    This technique–calling reductions in the rate of spending growth “cuts”–was employed by Democrats for decades in the US House and Senate. It even has a name: Baseline Budgeting.

    Paul (creator of "Staunch Brayer" and hoping for DRJ's eventual return) (615f40)

  11. Only that Skelton explicitly avoids calling it a cut. He calls it a “program whack.”

    If he wanted to say cut, he would say cut.

    Hax Vobiscum (edacf7)

  12. I guess that my deficiencies in math are showing: if, as aphrael wrote, “inflation-adjusted per capita spending was … expected to be the same as in 1998,” shouldn’t tax revenues, which ought to increase as population increases and inflation drives up the numerical bases on which taxes are calculated, have kept up with the 1998 levels, adjusted for population and inflation?

    Of course, as we know, the evil geniuses, George Bush and Dick Cheney, drove up the price of gasoline to over $4.00 a gallon last summer, doubtlessly to insure Republican victories in November, but now that the People have triumphed and put the incredinly brilliant, always caring Barack Hussein Obama in office, gasoline prices have fallen back to the $2.00 per gallon level. Shouldn’t that, along with the wonderful stimulus plan, increase California’s governmental revenues and lower state expenses?

    The math-challenged Dana (3e4784)

  13. Could you explain the practical difference between a “program whack” and a “cut”, Hacks? Because, I know, when I read “program whack”, I immediately think that the program was cut, as does any other sentient non-media being.

    He specifically used “program whacks” to clarify that they weren’t cuts, but reductions in “programs.”

    This sentence is every bit a bad as what Skelton did.

    JD (c6800b)

  14. If he wanted to say cut, he would say cut.

    Oh.

    Ditto some of the spending cuts, although there were $11 billion in program whacks last year.

    JD, I’m also quite interested in Hacks’ definition of whack that doesn’t mean cut in this context. Perhaps the programs were punched.

    Pablo (99243e)

  15. No, there were not. This is gross dishonesty. This is journalistic malpractice. .

    This is Pravda West.

    Most of the MSM is nothing more than a mouth piece for the democratic party.
    Stalin would blush at the outright bias and propaganda that comes from their mouth’s.

    Baxter Greene (8035ae)

  16. Actually, I’m not interested in Hack’s definition of anything. I gave up on Skelton years ago. How can a newspaper employ someone so biased when there are guys like Dan Walters who could really explain things.

    Mike K (2cf494)

  17. Only 14 billion in tax increases during “the worst economy since the Great Depression”.

    Getting off easy I see.

    Maybe the democrats will really get smart and raise taxes even higher,spend even more,keep ignoring immigration problems,and install more rail systems so that the people that are fleeing the New Michigan
    can get out even faster.

    It is a shame such a beautiful and once extremely
    successful state has been run in the ground by these useless idiots.

    But don’t worry,the rest of the country appears to be headed off the same cliff the democrats are pushing California over:


    The Real Stimulus Burden
    We’ll be paying for this in many ways, for many years.

    http://online.wsj.com/article/SB123440436240475615.html

    As of late yesterday, the details of the final House-Senate stimulus bill weren’t available. But this much we do know: The bill will mark the largest single-year increase in domestic federal spending since World War II; it will send the budget deficit to heights not seen in 60 years; and it will establish a new and much higher spending baseline for years to come. Combine this new spending, and the borrowing it will require, with the trillions of dollars still needed for the banking system, and we are about to test the outer limits of our national balance sheet.

    The nearby chart shows how the bill will increase the 2009 budget deficit, which is already the largest in modern history. Perhaps you recall the deficit wails from the Reagan years, but the peak deficit was only 6% of GDP in 1983. In the Clinton years we were told taxes had to rise to reduce a deficit of merely 3.9% of GDP. CBO estimates the 2009 deficit will reach 8.3% of the economy, not including the stimulus or bank bailout cash. Toss in those, and analysts at the Strategas Group estimate the deficit could hit nearly $2 trillion, or 13.5% of the U.S. economy.

    Inflation….raising taxes…..inflation….raising taxes…..inflation….raising taxes.

    “Yes We Can!!!!!”

    Baxter Greene (8035ae)

  18. If we took, say, 1989 as a base, and noted that California survived as a state, wouldn’t it be reasonable to say that every program which did not exist in 1989 was one without which the state could survive?

    Seems to me, therefore, the state could eliminate every new program passed since 1989, and people would still survive.

    The inquisitive Dana (3e4784)

  19. Skelton wrote “program whacks” for a reason.

    Yes, because he’s pushing an agenda. An honest reporter would not have used the loaded word “whacks”. An honest reporter would have listed what was “whacked”.

    There are no numbers as to what was “whacked”. No programs identified.

    Weird.

    Rob Crawford (04f50f)

  20. Oh, and I’m gonna guess that the “Capitol Journal” phrase indicates that it’s editorial, rather than reportorial, content. So at least it’s not masquerading as factual reporting.

    But it would be nice if the assertions were backed by evidence.

    Rob Crawford (04f50f)

  21. Dana: the graph in the middle of the page (figure 6) which I took that datum from doesn’t show revenue, just spending; but one of the problems we’re having this year is that our revenue structure is heavily tilted towards taxes on upper-income taxpayers who … just didn’t make as much money in the second half of last year as they have in most previous years. The primary reason the September budget has fallen out of balance in the ensuing months is lower than projected revenue. (Although i’d note that it’s arguable that the September budget wasn’t really in balance in the first place).

    Certainly lower gas prices will reduce some state expenses, just like it reduced some of my personal expenses; but it’s not clear how much that reduction is. On the flip side, I don’t understand why lower gas prices would increase revenue. Maybe, at the margins, by freeing up money so that people spend it on other things … but even then, from the state’s perspective, you’re substituting a sales tax for the gasoline tax, and the sales tax as a percentage of the purchase price is probably lower. :)

    aphrael (9e8ccd)

  22. If he meant to say that the budget was being cut, he would have simply wrote: “Ditto some of the spending cuts, which were $11 billion last year.”

    He specifically used “program whacks” to clarify that they weren’t cuts, but reductions in “programs.”

    Actually, no.

    He used “whacks” to avoid using “cuts twice in the same sentence.

    The point that he was trying to make was that had taxes been raised years ago, the amount of the increase wouldn’t be so big this year, and neither would the amount of spending cuts.

    (It’s a little like saying if a burglar had robbed your house last week, he wouldn’t have to take nearly so much this week.)

    Skelton was equating “whacks” with “cuts”, but it is fun watching you try to spin this.

    Steverino (69d941)

  23. Honest Reporting would be a delightful change in California.

    For decades the LA Times has been reporting that illegal immigrants are “immigrants”. they just whacked one word, right? And they are immigrants, Right? So it is not really a lie?

    The LA Times needs to stop their leftist agenda propaganda and start reporting the news before I will ever pick up a copy. The Che crowd can buy it to wrap their fish.

    Baxter Greene said, “It is a shame such a beautiful and once extremely
    successful state has been run in the ground by these useless idiots.”

    So very sad. So very true. We grew up in a paradise and our elected officials trashed it.

    tyree (5624c2)

  24. He calls it a “program whack.”

    I see – so now we’re using Mobster – related language in order to obfuscate the real meaning. Makes perfect sense to me.

    Dmac (49b16c)

  25. Hax – You’re just being deliberately dishonest again. The “ditto” regarding spending cuts ties his logic back to his language about tax increases. He says the state should have increased taxes earlier so the increase wouldn’t have been so big this time “ditto” the spending cuts, although it did whack some $11 billion from programs last year. There is no other way to read that Skelton believing California took a “bite” or a “nibble” at the problem from the spending side last year.

    daleyrocks (5d22c0)

  26. Comment by Perfect Sense — 2/13/2009 @ 1:12 am

    CA Fiscal Year runs 01 July – 30 June.
    We are now 7-1/2 months into the FY without a Budget.
    It is well past time to drive this Leviathan into the BK Court.

    AD (1b89c0)

  27. On the flip side, I don’t understand why lower gas prices would increase revenue

    The reason is that when gas prices are lower, people buy more gas. Since the gas tax is not a percentage of the price of gas, more gas tax is collected.

    Steverino (69d941)

  28. Skelton is obviously using “whacks” and “cuts” interchangeably, for the reason steverino @ #22 gave — to avoid repeating the word “cuts”. Any other contrived interpretation doesn’t make sense.

    Brother Bradley J. Fikes, C.O.R., who implores DRJ to remain at Patterico! (e24bda)

  29. “…Any other contrived interpretation doesn’t make sense.”
    Comment by Brother Bradley J. Fikes, C.O.R., who implores DRJ to remain at Patterico! — 2/13/2009 @ 9:24 am

    …other than his being a lying crap-weasel, that is.

    AD (1b89c0)

  30. one of the problems we’re having this year is that our revenue structure is heavily tilted towards taxes on upper-income taxpayers who … just didn’t make as much money in the second half of last year as they have in most previous years.

    aphrael, this is why it is the height of folly to use a peak revenue year as baseline and never hold a “rainy day” fund for reserves as Deukmejian used to do when he was governor. California has been run into the ground by spending, not revenue shortfalls. Everyone has the latter. I simply don’t know how they will recover. The income taxpayers are leaving. Many of the really rich can shelter their income, as Teresa Heinz Kerry does.

    The Silicone Valley entrepreneurs are leaving. Have you seen the Intel announcement of their new plants ? Where are the new plants ?

    Everywhere except California. Why ?

    Energy, taxes and cost of living.

    Mike K (f89cb3)

  31. Mike K, how do you reconcile “we’re spending the same per capita in inflation-adjusted dollars as we did in 1998″ with “California has been run into ground by spending”? 1998 was not a peak revenue year.

    aphrael (e0cdc9)

  32. aphrael, how does per capita, inflation-adjusted revenue look relative to 1998?

    How do gross numbers for both revenue and spending look?

    Steverino (69d941)

  33. 1998 was not a peak revenue year.

    Wouldn’t it have at least been close? Since I was working in the arena at that time, there was a hell of a lot of cap gains taken during the dot com bubble.

    Dmac (49b16c)

  34. Your numbers are wrong. One factor is that the state is losing taxpayers and acquiring welfare recipients by immigration and in vitro fertilization (just kidding. I think).

    Have a look.

    “What’s going on in California is very exciting for us because it looks like a tipping point will soon be reached,” said Somer Hollingsworth, president of the Nevada Development Authority.

    During California’s energy crisis a decade ago, when executives feared the state might not be able to provide reliable and affordable power, Oregon reaped a bumper crop of recruits. Such instability “is really good for our state,” said Tim McCabe, director of Oregon’s economic development department. His recruitment budget is tight, but Mr. McCabe said Oregon won’t let California’s current struggles go to waste: “We’re redoubling our efforts.”.

    Here’s another view.

    spending during the five years since Schwarzenegger took office has gone up 30 percent, says Quinn, and people don’t feel they’ve gotten much for the money. “I think the public’s view is [government] could do the job much more efficiently, and maybe we’ll get a little more of that” with these cuts.

    Personally, I think California has had it and plan to leave in another year or so. I’m tied here by a house but I might rent it for a while.

    Mike K (8df289)

  35. Steverino, all I have to go on is this graph from the LAO report linked in the post.

    Mike, I’m willing to accept that the numbers could be wrong, but the LAO is generally pretty reliable, so I’d need to see some substantial contradicting their numbers before I would believe they were wrong on this.

    Your WSJ article is not on point; it discusses how businesses feel about the numbers, which is informative in a discussion of what the numbers should be but is useless in a discussion of what the numbers are.

    The Monitor article is more interesting, but I’d note that this claim: “But spending during the five years since Schwarzenegger took office has gone up 30 percent” doesn’t actually contradict the LAO’s claim, because (a) the Monitor’s numbers are almost certainly in nominal dollars, not real dollars, and are probably not adjusted for population growth; and (b) the LAO’s graph shows a steep decline in real per capita spending between 2000 and 2003, with 2003 a local minimum.

    aphrael (e0cdc9)

  36. Aphrael, that’s only spending. To answer your question as posed above, we’d have to know revenues as well.

    The point I’m making is that while inflation-adjusted per capita spending may not have risen much, the same normed revenue has probably fallen.

    How else would you explain a deficit?

    Steverino (69d941)

  37. aphrael – People feel pain in real dollar terms because that’s what they pay their bills with. Real dollars are something academics, politicians and economists talk about.

    daleyrocks (5d22c0)

  38. aphtarl – Should have started out – nominal dollars – sorry!

    daleyrocks (5d22c0)

  39. The discussion about what the real revenue and spending figures are is far worthier than trying to paint Skelton as somehow misleading.

    “Program whacks” clearly isn’t a synonym for “budget cuts” both because it means something different and because no synonym would have been necessary. Had he wanted to say the budget was cut, he wouldn’t have had to have had two references to reductions in the sentence. He could have just said:
    “Spending cuts were $11 billion last year.”

    If he were trying to paint the budget as somehow austere, that would have made his point much more forcefully. But he wasn’t. Clearly, he was trying to point out that last year’s budget didn’t get everything in that everbody had wanted: thus the language “program whacks” and the word “although.”

    If you want an outrageous example of media chicanery about budgets, look at how Karl Rove is going around claiming the Bush administration cut “discretionary” spending. We all know that spending was off the charts under Bush, so to pretend that the president was somehow trying to control it is absurd.

    Hax Vobiscum (edacf7)

  40. Duck, dodge, parry … Erect a strawman and then torch it.

    Black is white. Up is down.

    JD (09132b)

  41. Hax,

    Even the guiltiest defendant needs a defense lawyer. Don’t show any shame just because your position is laughable.

    But seriously, portraying reductions in hoped-for increases as “cuts” is a strategy that has a long and proud history at this paper. You can’t view this one instance in isolation.

    Patterico (cc3b34)

  42. Hax is a laughingstock now. Anyone who can read the passage and its context and still claim the author wasn’t equating “whacks” with “cuts” is either thoroughly stupid or so disingenuous as to be unbelievable.

    Steverino (69d941)

  43. Hax, before trying to explain to us what Skelton means by his various forms of obfuscation, why don’t you email him and ask him straight-out what HE means; then, you can just copy his reply to the rest of us, and we’ll all be operating on the same bent wave-length as George.

    AD - RtR/OS (3c43e7)

  44. It’s ridiculous that Skelton’s column, full of liberal (er, ah, make that progressive) bias, runs not on the op-ed page but in the hard news section.

    As for “whacks” or “cuts” and all the employee terminations at the LA Times, I guess Skelton would say management has implemented a lot of whacks of his colleagues over the past several months. See, doesn’t that sound so much nicer and accurate?!

    Mark (411533)

  45. Hax – Just keep ignoring the word ditto at the beginning of that paragraph which ties it back to the first paragraph and the word “although”, which contrasts the state actually taking action on the spending side, whereas it failed to do so on the tax side.

    In terms of your certainty over Skelton’s word choices:
    a)Are you George Skelton
    b)Have you asked George Skelton what he meant by his choice of words
    c)Asked others how they would interpret the sentence

    Personally I vote for d), that you’re just making shit up.

    daleyrocks (5d22c0)

  46. Steverino, at 36: I think real per capita revenue has fallen over 10 years, although as I said I don’t have the numbers to prove it.

    Daleyrocks, at 37/38: “real dollars” is the only way to compare prices across multiple years. Using nominal dollars is pointless, because the change in the purchasing power of the dollar over time makes $1000 in 1991 and $1000 in 2008 wildly different numbers.

    aphrael (9e8ccd)

  47. Bullshit on the per capita, inflation adjusted spending being the same over the last 10 years.

    From the link in #9, the last full year of spending was 2007/2008 – $194 billion – 10 years prior, 1997/1998 it was $100 billion.

    From US Census bureau ‘quick facts’ they list 2000 population of 33.9 million and 2006 population of 36.5 million. To fit the $ years above let’s generously call it 30 million and 38 million.

    From inflation data.com, inflation over the 10 years compounds to 29%.

    So $100 billion inflated by 29% and then 27% for population you get 100 x 1.29 x 1.27 = $163 billion. Accordingly, adjusting base year spending for inflation and population (never mind that population growth only impacts some state government needs – how many DMV offices are you going to add when a town goes from 50,000 to 60,000?) you find that that there is real growth of 30%.

    So how do you get from $100 billion to $190 billion – a mix of inflation, population (I’m fully counting population growth, though I can make a case for using just 1/2 or 2/3rds of that growth), and real growth. The biggest factor: real growth, followed by inflation and then population.

    To get the ‘flat spending’ you have to ignore spending that is sourced from bonds and federal funds. So spending isn’t flat because they’re using bonds and increased federal spending to fund the increases. As a California taxpayer, I have to pay those bond holders principle PLUS interest and as a federal tax payer I have to pay back the federal debt PLUS interest. So not counting the bonds and federal outlays makes no sense: they should actually count MORE since we also have to pay interest on it.

    All that said, I just winged that so if anyone has any corrections I’d appreciate it.

    I never miss Chris Reed’s blog since you recommended it, Patterico.

    EBJ (437cb7)

  48. I didn’t see your post, aphrael, when I made my post. Please whack away at the logic.

    EBJ (437cb7)

  49. The more I think about it the $194 billion current spend isn’t correct. That’s all that went out the door last year, true, but what about future interest payments? The money isn’t out the door but the commitment is there and needs to be recognized in the year that the commitment was made*. In 2007/2008 borrowing was $8 billion. At 5% that’s 400 million a year for 15-30 years discounted by inflation – let’s call it another $4 billion in future interest commitments that will need to be paid.

    To understand that flat spending California is probably not right you only need to understand one thing: since I moved to the state 10 years ago the legislature has been dominated by democrats. Flat spending? Highly unlikely.

    * In the accounting you would do for your own finances or in business finance this is true, not in goverment accounting though.

    EBJ (437cb7)

  50. “Daleyrocks, at 37/38: “real dollars” is the only way to compare prices across multiple years. Using nominal dollars is pointless, because the change in the purchasing power of the dollar over time makes $1000 in 1991 and $1000 in 2008 wildly different numbers.”

    aphrael – I fully understand that, which is why they are used in analysis by economists, academics and politicians. Ordinary consumers buying shit, not so much, that was my point. “This box of mac and cheese isn’t that much more expensive in real dollars than it was five years ago when you think about it.” An unlikely grocery store conversation.

    daleyrocks (5d22c0)

  51. I have to say MSM and every congress calls all reductions in planned increases cuts. A planned increase of 10 billion that only increases by 8 billion is always declared a 2 billion cut. The only actual cuts in spending have occurred in the defense spending — one of the very limited number of constitutionally acceptable forms of government spending. Everything else has become “entitlement” spending. “Entitlement” spending increases have been codified, so any variation on those increases need voted on. No vote means the increase happens automatically. Bully for the pass-the-buck lib mentality.

    Like the notorious “Slick Willy,” the buck never got here.

    John Hitchcock (fb941d)

  52. One other factor in California is the 150,000 tax payers per year leaving the state. They are replaced by illegals who are off the legal economy and using more government facilities (like County Hospitals) than the average resident. The state economy is hollowing out. Spending is held down by restricting infrastructure rehabilitation in favor of social spending.

    There are also crazy incentives like building a billion dollar LA County Hospital with 600 beds to replace an old but very serviceable 3500 bed capacity hospital because there is $500 million in federal money for “disaster relief.” The old hospital is allegedly damaged by an earthquake 10 years ago but it will still be there in another 20 years serving as offices and research labs.

    The gas tax, which by law is restricted to highways, has been diverted to the general fund. Now, the Department of Boating and Waterways, which is funded by user fees and restricted to boating, will be dissolved and folded into the Parks Department so the state can appropriate the money. That will end maintenance of marinas and other boating facilities. California slides toward third world status while Mexico builds beautiful marinas down near Puerto Vallarta. More and more high end yachts are moving to Mexico year around. The sales tax law started it and this will push the trend along.

    And so it goes.

    Mike K (2cf494)

  53. [...] Comment on L.A. Times: A Cut in Projected Wish List Spending = A Budget Cut by daleyrocks [...]

    MOD POST (LOOK BUSY) - HTML Tutorial | Boxing Results (8f7944)


Powered by WordPress.

Page loaded in: 0.2739 secs.