February 27, 2009
MEGAN MCARDLE: Obama’s big-bath accounting.
Analysts have long recognized the tendency of companies who are forced to report bad news to make the news worse than they have to, piling every single thing that might go wrong into one hell of a charge-off. The logic of this is simple: if your stock is going to take a hit, make it one gigantic hit, so that you can later “surprise” everyone when aliens from the Planet Zork do not actually land, vaporize 2/3rds of your customers, and keep the rest too busy dodging laser rays to focus on purchasing your product.
Looking through Obama’s budget, I am reminded of those massive one-time-write-off festivals. Only the Obama administration has gone one better: he has actually gotten everyone to congratulate him for his breathtaking honesty.
Take the Iraq war. We were not, under any administration, going to spend as much in 2015 as we did in 2005. But by treating that spending as an ongoing cost, Obama now gets to take as much credit for reducing it as he would for closing permanent air bases in Germany, or trimming Social Security.
Not everyone is congratulating him, though . . .