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Always divide federal spending by ten!

This happened to come up in a Twitter thread I was just reading, and it's worth putting it in a quick blog post. Here it is: The cost of new federal programs is almost always measured over ten years. The latest version of the infrastructure legislation, for example, is usually called a "$1.2 trillion bill," which means that it actually spends about $120 billion per year.

So why not just say that? Unfortunately, most new programs have different spending levels each year, so it's not perfectly accurate to just divide the cost by ten. Sometimes this is a function of spending keeping up with inflation each year. Sometimes it's because of assumptions about how fast a program will take root and begin to grow. And sometimes it's a deliberate choice to "backload" spending for smoke-and-mirrors reasons.

This is why news outlets are reluctant to use one-year figures: they're not 100% accurate and pedants will complain about them. However, for you and me it's sufficient to just divide by ten. This is close enough, and it's way less misleading than using the ten-year number, which is easily misunderstood.

22 thoughts on “Always divide federal spending by ten!

  1. bharshaw

    And sometimes the pols play games, so they assume a program or tax cut will only be effective for less than 10 years, to cut the cost in CBO's estimates, knowing it's likely the Congress is incapable of taking away goodies once granted.

  2. bbleh

    Or the media could say something like "1.2 trillion over 10 years, or about 120 million a year," but I guess that's too much math cuz math is so boring.

          1. cld

            There is beef jerky that will never be digestible however much you eschew it, then the flavor is gone and what do you have?

  3. Austin

    This isn't really a big deal either way. The average person's eyes glaze over once dollar amounts exceed the cost of any home in their metro area or immediate environs. They simply cannot conceive of the difference between $100M, $10B or $1T because there is nothing in their everyday life to compare any of those amounts to.

    1. lawnorder

      I'm fairly good at mental arithmetic, so I have the habit of dividing government expenditures by the population of the unit governed to get the per capita cost, which is a meaningful number.

      If you live in a town of 10,000 people, a million dollar expenditure is $100 per capita, which is a meaningful amount. For the federal government, $100 per capita is about $33 billion. A trillion dollars is just about $3,000 per American. A trillion dollars over ten years is $300 per American per year.

  4. D_Ohrk_E1

    I thought maybe it was because the CBO is in the business of having to produce 10-year budget projections, and as such, it would make any infrastructure spending plan look good for Democrats on account that the fiscal multiplier for infrastructure spending is extremely high.

  5. golack

    billions trillions....it's all the same....

    At that level, people have no idea how much things really cost. At most, people may have built a house, and that is their major construction project. What that costs varies a lot depending on where you live, and when you actually built your house. They become aware of regulations, and probably remember railing against a few for raising costs. Few might be thankful when a storm doesn't blow off their roof or heavy rains don't flood their house.
    As for costs for government services, most people are clueless. Typically they'll confuse the cost for an employee with their take home salary. They do not know how much it costs to build a bridge or fix a road, and vote to patch things for now. By the same token, they do not know when things have gone off the rails since they don't know where the rails are.

  6. Yikes

    Someone ought to point out that under this ten year concept they pass a $7 Trillion defense spending bill every year, year in, year out. You can multiply by ten as well.

    Without even much discussion, let alone the heavy lift of this infrastructure bill.

  7. Citizen99

    And in case you wonder why Joe Average Voter always ends up convinced that Democrats Spend Too Much, look no further than that "liberal" media. Yesterday I heard Lester Holt announce on the NBC Evening News that the Senate was still working on "Biden's MASSIVE trillion-dollar spending bill!!!"
    That would be the $1.2 trillion -- over 10 YEARS -- bipartisan bill that's been negotiated between Senate Democrats and Republicans.

    1. Yikes

      No kidding. If the so-called left wing media was really left wing, they would be pounding on and on and on and on and on about how $120billion per year is nothing, which, as I just pointed out, is true when compared with annual military spending.

      So the R's get to bankrupt the country on a bloated military budget, which is never even mentioned in the so called left wing media, and when some spending to help average people finally manages to pass the so called left wing media actually spins it as MORE EXPENSIVE then it actually is.

      You can't make this up.

  8. rational thought

    This whole discussion is mostly disingenuous or misinformed.

    Poor Democrats because they get a raw deal on perception because they are ten year #s. But democrats could eliminate that as a problem if they wanted to do so by simply passing spending year by year as it was intended by the original constitution. And then authorizing next year's spending next year. Nobody could then talk about the spending being any more than one year's worth then.

    But they don't because this ten year budgeting is a scam designed to mislead the public by making it appear that new spending or lower taxes is paid for and they are not just increasing the deficit when they really are.

    And this is not a partisan issue and I am not making a partisan comment here. This scam is used by Republicans when they are in power too. It exists because both Republicans and Democrats use it . And notice that the main establishments of both parties tend not to mention the fact that the other party is using the deception. Because neither side wants the public to understand. They want the same tricks available to them when they are in power.

    The same point that Kevin is making here about a democratic spending bill could have been made about the trump tax cut. That was talked about in the media too based on how much lower revenue would be over ten years, not one. And I expect few here crying outrage now felt that was unfair to trump.

    And kevin is also assuming that you should just divide by ten. Now I have not yet seen actual numbers here broken down by year ( funny how those do not get publicized). But a common practice is to not only " backload" spending beyond the ten year scoring window ( as Kevin mentions), but also to front load spending within the ten year window. So maybe the first year spending is 250 billion and tenth year is only 20 billion. And that tenth year is mostly meaningless because by then you will have a replacement bill increasing it even more.

    Kevin's point would have validity more if ,first, the 1.2 trillion really was spread evenly over the ten years and not front loaded ( not sure but I doubt) AND this was all the spending that is being proposed for the whole ten years if democrats stayed in power ( which is not true).

  9. galanx

    Which of course is why the Bush tax cuts were passed on a nine year basis, so they wouldn't be counted in the budget.

    1. rational thought

      As I said, both sides play games here.

      But actually the sunset of the bush tax cuts is not the same thing. That sunset was because of the byrd rule for reconciliation, which is there presumably to prevent games and I suppose does help in that regard.

      This infrastructure act is being passed normally and not reconciliation, which is why it had to be done through compromise to get by filibuster. Thus I do not think the Byrd rule is applicable to things like the infrastructure bill.

      The byrd rule says that any provision that increases the deficit after the ten year period cannot be included in reconciliation. If the Bush tax cuts and what was packed with it had been long term balanced, so that the revenue raisers would have continued to offset revenue losses after ten years, they would not have needed the sunset provision.

      The game there was not the sunset itself, if it actually fully happened, but that many parts everyone knew would not sunset because Congress could not let that happen. But the sunset did give the democrats extra leverage in negotiations ten years later

      The sunset in the bush tax cuts was in a way the opposite of a game

  10. ssittig1

    So this 'massive' spending is only a couple of Bill Gates fortunes, or maybe an Elon Musk worth a year? And we get to run a whole country on that? It seems paltry.

  11. Justin

    Except when it comes to defense and national "security" spending. It really is more than $1.2 trillion per year. So when people complain about all that spending and can't figure out how to pay for it, there is a big pot of money being wasted every year which could be put to better use. Cut defense spending in half.

    Sadly, the democrats just voted to increase it. Again. Sigh.

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