On his radio show on April 28, 2003, Rush Limbaugh went into a discussion of how small Bush's proposed tax cut was compared to the gross domestic product (GDP). This discussion can be heard on his site at the first audio link following a related article titled Bush Tax Cut Puny Compared to Reagan's. I'll transcribe what he said below (perhaps someone can check my accuracy). To set it up, he's describing an email that he received from someone in Sioux Falls, South Dakota:
And he says "Rush, it may be of interest to point out the following from my basic economics class in my old college days on the way to earning my MBA. To get the U.S. GDP for ten years, ten years from now, multiply the existing GDP by ten and then add about 50 percent for total ten-year growth at about four percent. This includes increases from the previous years and four percent, incidently, is only moderate growth. The current GDP of this country is approximately 9 trillion dollars. The next ten years' total GDP will be about 90 trillion dollars. If you add 50 percent for growth, then the total will be 135 trillion dollars, meaning the total GDP.
The accuracy of the 50-percent rule mentioned in the email can be measured in the following table. The second column shows the GDP for eleven consecutive years, starting at a GDP of $9 trillion and increasing 4 percent each year. As can be seen, the GDP after ten years is $13.322 trillion, about 48 percent more than the initial GDP of $9 trillion. Hence, the 50-percent rule a fairly accurate way to predict the GDP in ten years. However, Rush uses this rule incorrectly. He multiplies the $13.5 trillion by ten to get an estimate of the ten-year total GDP of $135 trillion. This is essentially assuming that the average GDP from years 1 to 10 will be equal to the GDP in year 11. This is obviously wrong. As can be seen in third column, the actual total GDP is $108 trillion, about 20 percent less than Rush's estimate.
GDP, ASSUMING 4% GROWTH (trillions of dollars)
Year GDP Total Year GDP Total
----- ------- ------- ---- ------- -------
1 9.000 9.000 2003 10.757 10.757
2 9.360 18.360 2004 11.187 21.944
3 9.734 28.094 2005 11.635 33.578
4 10.124 38.218 2006 12.100 45.678
5 10.529 48.747 2007 12.584 58.262
6 10.950 59.697 2008 13.087 71.350
7 11.388 71.085 2009 13.611 84.960
8 11.843 82.928 2010 14.155 99.116
9 12.317 95.245 2011 14.721 113.837
10 12.810 108.055 2012 15.310 129.147
11 13.322 2013 15.923
The $9 trillion GDP that Rush uses to calculate the 10-year total is,
in fact, low. According to the 2004 U.S. Budget, the U.S. GDP was at
this level around 1999, when it was $9.138 trillion. In the article
referenced above, Rush does mention that we are on target for a $10.7
trillion GDP this year. The fifth column in the above table shows
that, starting with the $10.757 trillion GDP projected for 2003, the
ten-year total GDP will be about $129 trillion, about 4.3 percent
less than Rush's estimate. In any case, Rush continues the
description of his calculations:
Step three. Take the proposed ten-year tax cuts and their percentages of that total, percentages of 135 trillion. 350 billion dollar tax cut equals 26 ten-thousandths of one percent. A 350 billion dollar tax cut equals 26 ten-thousandths of one percent of our GDP. A 550 billion dollar tax cut equals 41 ten-thousandths of one percen of GDP. A 726 billion dollar tax cut, the amount the President originally wanted - 54 ten-thousandths of one pecent of the ten-year GDP.
Now, if I take $350 billion and divide it by $135 trillion (or $135,000 billion), I come up with 0.0026. That's equal to 26 ten-thousandths. Yet Rush is saying that it's 26 ten-thousandths OF ONE PERCENT. Hence, he is claiming that the tax cut is 1/100th or one percent of it's actual size. That's a pretty big error, even for Rush! Rush makes the same error for the $550 billion and $726 billion tax cuts.
Now, some might claim that "26 ten-thousandths of one percent" is confusing. Perhaps Rush meant something else. But Rush clears it up at the end of the audio link, stating the following:
And even, even the number the President is asking for, his 726 billion, is peanuts compared to the total output of goods and services in this country. There's another way to express this. You'd have to take one of those bills, one of those dollar bills, cut it into ten thousand pieces and then take one of those pieces and cut it in about half. That is a good way to illustrate the size of the President's tax cut versus total GDP.
Source: Rush Limbaugh radio show, April 28, 2003, audio link at:
http://mfile.akamai.com/5020/wma/rushlimb.download.akamai.com/5020/clips/03/04/042803_10_gdp.asx
Rush's final description leaves no doubt. He is off by a factor of one hundred. In addition, it's misleading to even compare the size of the tax cut to the GDP. The fact is, the government will never be able to access all of the GDP. It can only access that part that it obtains through taxes. Hence, the tax cut would best be compared to total federal receipts, not GDP. In every year since 1960, total federal receipts have been between 17 and 21 percent of GDP.
It will be interesting to see if Rush issues a retraction of his horrendous math errors. He has essentially lied to millions of his listeners, by a factor of over a hundred. The fact that the errors are so heavily in his favor make a retraction essential to his credibility, in my opinion.