Monday, April 20, 2009

When is $100 million a lot of money?

The U.S. Federal budget for next year is over $3.5 trillion.

Obama campaigned on cutting the many wasteful programs within the gov't.

It appears his estimate of 'waste', now that he is in power, is that there is possibly $100 million not being used effectively, and he is 'challenging' his cabinet to find these poorly spent funds.

My calculator tells me that $100 million out of $3.5 trillion is .00003% .

Which means he now feels that $3.5 trillion is a very lean budget and that the gov't is performing at virtually 100% efficiency.

The budget passed had over 10,000 earmarks amounting to several tens of Billions of dollars and this was deemed insignificant in the context of the overall budget also.

When AIG executives gave themselves hundreds of millions in bonuses this was also deemed insignificant within the context of over $150 billion in bailout money.

If workers were given raises amounting to several hundred million dollars this would be seen as inflationary and causing American industries to be less competitive against workers elsewhere in the world. That is, several hundred million dollars suddenly becomes a very large amount, having a disproportionate effect on the whole world economy, not just the U.S.

If hundreds of thousands of workers get $10 more per week this upsets the economic apple-cart but if 100 execs get $1 million a year this makes economic sense to retain 'talent' , even in failed corporations.

Ridding a $3.5 trillion budget of $100 million is equivalent to buying one less coffee per year for the average worker.

Is $100 million a lot of money ?

Absolutely, at least to most people outside of the Washington beltway, large corporations and Ivy League Universities.

To this group it all depends..... on who is receiving it.

Obama to gather Cabinet, seeking $100 million in cuts

  • Story Highlights
  • Two top administration officials say president wants $100 million in expenses cut
  • Agencies would have to report how they saved on expenses after 90 days
  • House and Senate returns from recess this week to work on $3.67 trillion budget
  • Obama to also offer examples of how agencies are already planning to save
By Suzanne Malveaux

WASHINGTON (CNN) -- President Obama returned to Washington on Sunday night with his eye back on his domestic agenda and a plan to save government money.

On Monday, Obama will gather his full Cabinet together for the first time as president and challenge it to cut a total of $100 million in the next 90 days, two senior administration officials said.

The officials spoke anonymously because the announcement had yet to come from the president, who returned Sunday from the Summit of the Americas in Trinidad and Tobago.

The agencies would have to report how they saved on expenses after 90 days, the officials said.

A senior administration official described the edict as part of Obama's "commitment to go line by line through the budget to cut spending" and "reform the government."

As House and Senate lawmakers return from recess this week, they are expected to start reconciling their versions of the fiscal 2010 budget resolution. The president's budget request is $3.67 trillion.

In context of the federal budget, $100 million in savings is a small amount, but the White House wants to demonstrate fiscal responsibility.

On Monday, Obama will offer examples of how various agencies have started cost-cutting measures, including:

• The Department of Homeland Security's plan to save an estimated $52 million over five years by purchasing office supplies in bulk.

• The Department of Agriculture's effort to consolidate 1,500 employees from seven locations into a single facility in 2011. It's estimated to save $62 million over a 15-year lease.

• The Veterans Affairs Department's move to cancel or delay 26 conferences, saving nearly $17.8 million. Veterans Affairs also will use video-conferencing to cut costs.

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