This is why, as explained previously:
... the administration pushed as much “bad news” (TARP "asset" writedowns) as it could into last year’s financial reporting, since last year was going to be a disaster no matter what. But since they overdid it with the writedowns last year (”Gosh, how did that happen?”), they can make this year look better than it really has been.
So here's the cash-based reality:
- Pushing the $115 billion non-cash adjustment back into FY 2009 where it belongs reduces the reported deficit from $1.416 trillion to $1.301 trillion, and reduces spending for that year from $3.520 trillion to $3.405 trillion.
- After doing that, the projected deficit for this fiscal year is really $1.587 trillion ($1.472 trillion above plus $115 billion), and projected spending (in the large PDF White House report at Page 18) goes from $3.603 trillion to $3.718 trillion.
Here's how the White House's projected FY 2010 situation really compares to FY 2009 after removing the effect of the non-cash adjustment:
- The FY 2010 deficit will be almost 22% higher than FY 2009 ($1.587 trillion divided by $1.301 trillion is 1.2198).
- In a nearly zero-inflation environment, FY 2010 spending will exceed FY 2009 by over 9% ($3.718 trillion divided by $3.405 trillion is 1.092).
All of this is before any other non-cash adjustments that might be dreamed up to push reported deficits into or out of 2010. Yours truly will be watching, the apparatchik press mostly won't.
To be cross-posted at BizzyBlog.com.