I have the following snippet that toggles padding when hovering (see example here):
I just realized jquery is not reacting very well to hyphens "-" within animation but you get the same result by getting ride of the hyphen and capitalizing the first letter after. So for you will have something like this:
$("#inner").mouseleave(function () {
$("#outer").animate({
paddingTop : 0,
paddingRight : 0,
paddingBottom : 0,
paddingLeft : 0,
borderLeftWidth: 0,
borderTopWidth: 0,
borderRightWidth: 0,
borderBottomWidth: 0,
}, slow);