To hear Republicans tell it, President Obama has gone on a massive spending spree, sending government spending skyrocketing and the debt into the stratosphere. And now, a word from reality. Federal spending has gone up slightly under Obama — much slower than under Bush in his first four years — but overall government spending has actually gone down — something that hasn’t happened in four decades.
FOR the first time in 40 years, the government sector of the American economy has shrunk during the first three years of a presidential administration.
Spending by the federal government, adjusted for inflation, has risen at a slow rate under President Obama. But that increase has been more than offset by a fall in spending by state and local governments, which have been squeezed by weak tax receipts.
In the first quarter of this year, the real gross domestic product for the government — including state and local governments as well as federal — was 2 percent lower than it was three years earlier, when Barack Obama took office in early 2009.
The last time the government actually got smaller over the first three years of a presidential term was when Richard M. Nixon was president. That decrease was largely because of declining spending on the Vietnam War.
And the private economy has grown at a faster rate under Obama than under Bush. In fact, if you look at the following chart from the New York Times you will see a clear difference between the last two Democratic presidents and the last two Republican presidents — under the Democrats, government grew slower and the private economy grew faster, and by a significant margin.
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drdave
May 9, 2012 at 1:11 pm (UTC -4) Link to this comment
Evidence. I love it.
Michael Heath
May 9, 2012 at 1:26 pm (UTC -4) Link to this comment
Re recent cuts in state spending and employment:
State and local fiscal consolidation (aka austerity) is the result of decades of conservative-led legislation passed at the state and local level. I wouldn’t be surprised if it was the primary impediment to the stimulus effort, coupled to the stimulus being too small and too heavily weighted towards less stimulative factors like temporary cuts in payroll taxes (though the stimulus still worked relative to the size of it). Laws passed years in many states ago guarantee contraction at the very point the economy requires government to support aggregate demand by spending and investing.
We used to all share a common assumption, that we want increased economic growth and a stronger labor force. It’s becoming increasingly clear that conservatives do not share these assumptions just like we’ve long known they care not a whit about the federal debt. A good illustration of this is Sen. Craig Vitter holding up an Obama federal reserve nomination. Why? Because he’s purposefully seeking to prevent the Fed from executing one of its two missions – which is to employ policies which reduce unemployment. The other mission is to control inflation; these are competing missions – you advance one at the threat of harming the other. For four years we’ve known the threat is not inflation but instead employment and yet Rick Perry and Craig Vitter and Vitter’s Senate leaders oppose the Fed increasing employment. Given the Fed is a bank and its affinity is naturally more biased towards savers/lenders, we’ve long needed fiscal policy to offset this bias at the Fed, even during Democratic reigns.
Paul Krugman recently published an article in the NYTs which was an informative though occasionally dishonest critique of Ben Bernanke. I did love how Krugman parsed Bernanke the professor who advocated for certain policies in these conditions vs. Bernanke the Chairman whose leadership doesn’t promote the level of aggressiveness he did when the argument was an Ivory Tower abstract one. Krugman does well on the mechanics of what the Fed can do and hasn’t. However he fails his readers and his character by framing the Fed Chairman as all powerful to justify his sticking his knife in Bernanke. That knife needs to be stuck, but in the Fed itself along with its contractionary allies, not solely in Chairman Bernanke. The fact is Bernanke’s led some radical initiatives to help expand the economy, while Krugman and Bernanke the ex-prof are also right the Fed should have and can do more.
zippythepinhead
May 9, 2012 at 1:31 pm (UTC -4) Link to this comment
It’s not clear from the article or the charts if this includes non-discretionary spending (soc sec, medicare, etc). Also what is the actual total of state spending compared to federal?
Randomfactor
May 9, 2012 at 1:41 pm (UTC -4) Link to this comment
I wouldn’t be surprised if it was the primary impediment to the stimulus effort,
Prezactly.
d cwilson
May 9, 2012 at 1:56 pm (UTC -4) Link to this comment
Pfft! You think facts will matter to the average Fox viewer? Obama is an atheistmuslimtaxnspendingsocialistfascist. That’s considered an article of faith on that channel. This will be completely ignored in the wingnutisphere and they will continue pounding the same drum over and over again.
Eric R
May 9, 2012 at 3:55 pm (UTC -4) Link to this comment
I can sense what the republican response will be, its stated right there in the article….
State spending (which Obama largely has nothing to do with) has gone down. when adding that large negative to his slight positive you get an overall slight negative. after the 2010 elections republicans had outright control of double the states than democrats. 22 to 11, with mixed governments making the balance. State Legislatures split 27-15 in favor of Republicans.
Republicans will trot out the fact that the majority of states are republican controlled and thus claim it was THEIR fiscal policies that reduced state spending, which was the only thing that brought overall government spending towards the downward trend.
The real question to me is should Obama get credit for reduced state spending? If the answer is no, then he has been responsible for a slight increase in federal spending, and the coincidental fact that states have reduced theirs doesnt alter that fact.
Like almost everything else, it all depends on what numbers you are talking about.
sc_d38a5ca3c2de851660c7bb2d91ca8189
May 9, 2012 at 5:08 pm (UTC -4) Link to this comment
Whether Obama is responsible for an increase in government spending or not is the less important question. The more important question is whether the dismal state of the economy is due in part to the drop in government spending.
Azkyroth, Former Growing Toaster Oven
May 9, 2012 at 6:43 pm (UTC -4) Link to this comment
Of course, the drop in investment spending at the state and local level is NOT something to celebrate…
stace
May 10, 2012 at 7:35 am (UTC -4) Link to this comment
Craig Vitter? Surely you mean David Vitter. Craig Vitter must be some Freudian conflation of Diaper Dave and Wide Stance Larry.