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Francine Hardaway Headshot

Add Up the Numbers Again Before You Cut Spending

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Before we start taking proposals like Paul Ryan's radical plan to cut the deficit by cutting spending seriously, shouldn't we start with considering how accurate the deficit numbers really are? Pundits and Congressional aides throw around numbers like $14 trillion in debt and $38 billion in cuts, but what do these numbers mean.

Are any of the numbers on which Congress is basing these whack-job proposals even close to accurate?. Remember that Paul Ryan's budget will actually cause not only Medicare, but even our military defense budget to "disappear," in the words of one pundit, taking the federal government back to the size it was in 1900, when the robber barons ruled and America was not a world power.

I would be less skeptical about Ryan's radical solution to our debt problems if I didn't know one thing for sure: the numbers in a field I follow very carefully, computer software, are misleading and incorrect.There are complicated reasons for this -- bits v. atoms, products v. services, etc. Because software can be either a product or a service (often it is both), unless it has hardware attached to it computer software is not counted in the US's exports. That's just nuts. We have a huge software industry in the US that just isn't counted in our exports. What does that do to our trade deficit numbers?

Any software developer knows that the minute her product goes live, it's global. People can order and download it, or access it, from anywhere in the world. Why then, isn't it an export? Because the way we count exports is outmoded and wrong.

Moving right along, how do we count jobs? That, too, is outmoded. Small software businesses do not hire full time employees -- they partner, contract, and collaborate. Their efforts will never be counted in the job numbers. The "free agent" economy is not part of the job numbers (that I can tell). The small businesses formed by the Kauffman Foundation program I facilitate are not counted in the unemployment numbers OR the job numbers.

It doesn't take a data geek to understand that if the job numbers are wrong and the export numbers are wrong, every other number the government generates (and supplies to Congress) is also wrong. I don't mean intentionally wrong, I mean out of touch with what's really going on in the job market, the export market, and perhaps the health care and defense arenas as well.

People who work with information technology know that garbage in is garbage out. If $14 trillion or $38 billion are the sum total of many mistakes like the two I just described, I for one have math anxiety. I think we need a data revolution before we make any more big decisions.