I was reading a website (here it is) which explains why the president's budget deficit will be $520 billion. It purports to show that spending is the cause, not tax cuts. It does this in a sneaky way.

In high school economics class, everyone is taught that you cannot compare amounts of money from one year to another simply as amounts of money. This is a nominal amount. Inflation causes the value of money to change every year. The Consumer Price Index measures the change of baskets of goods from year to year and calculates an inflation rate. Using these numbers, we can compare amounts of money from one year to another year by converting, say, 2001 dollars into 2004 dollars to prove a point about spending increases or something like that.

Table 1: Spending is Driving the Deficit

Source: http://www.taxfoundation.org/ff_presidentperspective.html

The website contains a table which shows revenues versus outlays (expenses) for 2001's budget and 2004's proposed budget. The difference between prices (using a basic formula for calculating inflation rates) in 2001 and 2004 is 3.883%, which means that prices increased 3.883% between 2001 and 2004. The "fake" table (drawing from Al Franken) says that government revenue in 2004 (projected, no doubt) will be $1,798.1 trillion (probably; the author, obviously a statistician, has not told us anything more than "$1798.1"). But this is in 2004 dollars. If we put this in 2001 dollars, revenue is actually $1728.27 trillion, while spending is $2228.76 trillion (not $2318.80 trillion). This means that the revenue change from 2001 to 2004 was not -$193.1 billion, but -$262.93 billion! This is not a decrease of 9.7%, but an increase of 15.21%. Outlays aren't as dramatic: adjusting the numbers for inflation, we see that the size of the budget has increased 16.38% instead of 24.4%. I have no idea what the final "share of deficit swing" column means. It could be the equivalent of Hannity's "cumulative percent difference" column (cf. Al Franken, Lies and the Lying Liars Who Tell Them (New York: Dutton, 2003), pp. 96-101).

Table 2: Is Spending Driving the Deficit?

What do these numbers mean? The person who compiled this chart (I got this link from townhall.com, so you know there's a rightward slant here) either doesn't understand inflation, or has intentionally misled his readers. He (or she) also can't do math: a change from a $127.4 billion surplus to a $520.7 billion deficit is not a change of -$648.1 billion; since one number is negative, the resultant change is -$393.3 billion. And we can calculate the percent change in the deficit; it's not "not applicable." The percentage change (in terms of real dollars) is an increase of almost 300% from 2001's deficit (remember that deficit is not cumulative; that's the national debt. Deficit is how much more we spend than we take in per year.

Table 2B: Corrected version of "Is Spending Driving the Deficit?"

MB posted a comment to tell me that my math was wrong in the previous table. He also identified the purpose of "share of deficit swing": it's "percentage of deficit/surplus change caused by revenue/outlay changes." Table 2B is the correct table: it shows that decreases in revenue are 41.88% responsible for the deficit increase, not 29.8% as the author of the article claims.