Saturday, June 07, 2008

Budget Hero.

Think you can balance the Federal budget? All I have to say is Good luck.

Budget Hero is an interesting little game that allows you evaluate spending priorities over a fairly long time-line. It uses the Congressional Budget Office scoring method which unfortunately has some serious flaws. The worst of these is a failure to take into account the dynamic effects on the economy of your taxing and spending decisions.

If you cut taxes for example, you get less money. There's no possibility that growth in the private sector can offset any of the cuts. Similarly, there's no recognition that tax increases might bring in less money than expected because people might change their economic behavior.

It also uses the Current Services Baseline method of budgeting which scores increases for inflation as a starting point. For example: if your budget last year was $100.00 and inflation is 5% then your budget starts at $105.00. If at the end of the day you wind up with $103.00 that's a $2.00 cut, not a $3.00 increase. That make make sense in terms of providing services to people but it's not what most people think of when they hear that a program has had it's budget cut.

For the most part however, this is how Congress draws up a budget and it brings home the enormous costs of some of the programs Democrats are talking about these days. Have fun!

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