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May 25 2012

Spending Rate Lower Under Obama and Democrats

Rex Nutting of MarketWatch, which is owned by the Wall Street Journal and Rupert Murdoch, shows that growth in federal spending under President Obama has been considerably lower than under Bush. In fact, the growth in federal spending under Obama and Clinton has been far lower than it was under every Republican president since Reagan.

He writes:

Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true.
But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.

Even hapless Herbert Hoover managed to increase spending more than Obama has.

Here are the facts, according to the official government statistics:

 In the 2009 fiscal year — the last of George W. Bush’s presidency — federal spending rose by 17.9% from $2.98 trillion to $3.52 trillion. Check the official numbers at the Office of Management and Budget.

 In fiscal 2010 — the first budget under Obama — spending fell 1.8% to $3.46 trillion.

 In fiscal 2011, spending rose 4.3% to $3.60 trillion.

 In fiscal 2012, spending is set to rise 0.7% to $3.63 trillion, according to the Congressional Budget Office’s estimate of the budget that was agreed to last August.

 Finally in fiscal 2013 — the final budget of Obama’s term — spending is scheduled to fall 1.3% to $3.58 trillion. Read the CBO’s latest budget outlook.

Over Obama’s four budget years, federal spending is on track to rise from $3.52 trillion to $3.58 trillion, an annualized increase of just 0.4%.

It should be absolutely clear by now that the Democrats are far more fiscally responsible than the Republicans. It’s not even close. And as Andrew Sullivan points out, Romney has promised to cut taxes even more and increase defense spending, which will send the debt soaring even more. The Republicans talk endlessly about fiscal responsibility, but it should be obvious that it is nothing more than a meaningless catchphrase.

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  1. 1
    d cwilson

    The Republicans talk endlessly about fiscal responsibility, but it should be obvious that it is nothing more than a meaningless catchphrase.

    See also: “Family Values”.

  2. 2
    Homo Straminus

    If I had to guess, I’d say conservatives would tout this as proof of Republican congress’ ability to reign in a fiscally irresponsible executive branch?

    I’d like to see proposed vs passed fiscal legislation for the same periods, to presumably put that lie to rest.

  3. 3
    tommykey

    B-b-b-but how can you trust figures provided by a guy with a name like Rex Nutting?

  4. 4
    roggg

    The sad thing is that the rank and file republican supporter believes that the opposite of reality is what’s true. If you say something often and loud enough I guess it starts to catch on. The system is tilted to reward the dishonest disproportionately.

  5. 5
    zippythepinhead

    Yes, congress has blocked most of Obama’s initiatives. With little private sector spending, the gov’t is not stepping up. No jobs bill. No highway bill. There’s talk that the sequestration that will go into effect next year will lead to a further economic slowdown. Thanks for nothing!

  6. 6
    Homo Straminus

    I think this Congress’ inability to fund infrastructure will be seen as a key element in the nation’s decline.

    But, as so often seems to be the case, the conservative cry is, “Think of the children now! Not when they actually need institutional support!”

  7. 7
    Michael Heath

    Homo Straminus writes:

    If I had to guess, I’d say conservatives would tout this as proof of Republican congress’ ability to reign in a fiscally irresponsible executive branch?

    There is no doubt that from 1995 to now federal-level Republicans are not fiscally responsible while the Democrats at the federal are, not merely relative to each other but from a normative standard as well. However we shouldn’t ignore Congress’ role where we must concede that Republican members of Congress hate Democrats spending when Democrats are in the majority, so that’s played a very large role in explaining why spending growth during the tenure of the Obama administration is very low.

    It’s also a misnomer to claim “responsible” means the absence of deficit spending. Instead I would argue ‘responsible’ means making prudent decisions that:
    a) maximizes economic growth and
    b) median discretionary income (less economic inequality), while
    c) also minimizing unemployment and underemployment,
    d) appropriately timing when to run deficits and surpluses, and
    e) insuring our regulatory environment and market sectors which are dominated by the federal government are appropriately entered and exited.

    From this perspective even Obama fails to act responsibly on item ‘e’ when he offered Speaker Boehner last summer to cut the deficit with a 83/17 ratio of spending cuts and tax hikes. Precisely because his plan would harm a, b, c, and d. Economic growth is far more important the size of the deficit. And you can’t appropriately size the deficit or manage debt with high unemployment and high underemployment.

    Even Democrats discuss the debt and the deficit as if they’re fifth grade simpletons who don’t even understand the interplay between the factors I list above. We need a technocratic approach similar to how we recovered from the early-1980 recessions. [Not that the approach was optimal either, but it was far superior to what we're doing now due to Republican obstructionism.]

  8. 8
    uncephalized

    Ed, the headline is misleading. You explained it fine in the article, but the “spending rate” is money/time, which is by any measure larger under Obama than any previous president, just as it was under Bush (since the growth rate has been positive for decades). It’s the “relative spending growth rate” money/money/time, that is smaller than Bush’s (absolute growth rate money/time/time may be lower too; I didn’t do the math). You obviously understand the difference so there’s no excuse for the error in the title.

    It’s the difference between things getting worse slower and getting worse faster rather than the difference between worse and better, and it’s important to make the distinction, especially when the vast majority of journalists don’t bother, or even understand the distinction.

  9. 9
    Homo Straminus

    All good points, as usual. And I, too, continue to be frustrated with the endemic lack of intellectual rigor when it comes to legislation.

    I will merely add that while Michael discusses reality, I was thinking of rhetoric, two concepts obviously separate from one another.

  10. 10
    D. C. Sessions

    uncephalized@8:

    A very reasonable (and small-c conservative) metric for spending is per-capita constant dollars per annum (money/people-time) and the growth rate would be either (money/people-time-time) or (1/time). No matter which metric you use, the growth rate under Obama has been quite low compared to Bush.

    You can pull these yourself from http://www.usgovernmentspending.com

  11. 11
    Jordan Genso

    Can someone explain to me the asterix* in the chart stating that the 2009 stimulus was re-assigned to President Obama? Does that mean the stimulus was added to the 2010 budget (that has total spending only being $3.46 trillion)?

    I want to accept the graph as accurate, but I need a clarification about where exactly the spending that was pushed for by President Obama (but still occurring in 2009) ended up getting counted.

  12. 12
    laurentweppe

    My big personal political theory is that right-wing voters in western democracies are not manipulated idiots but the intelligent and cynical accomplices of their elected officials.

    So it should not merely be

    absolutely clear by now that the Democrats are far more fiscally responsible than the Republicans

    It should also be
    absolutely clear by now that the Republican voters never gave a shit about deficit and complained about them because honestly saying “I want to rig the economy so that smarter, brighter, better, more hardworking members of the underclass never have the shadow of a snowball chance in hell to become more prosperous than me” might have increased the hostility of the underclass and its liberals allies beyond any manageable threshold.

  13. 13
    jeremystyron

    This is quite a remarkable admission considering that it comes from MarketWatch. Thanks for the post.

  14. 14
    Michael Heath

    Jordan Genso writes:

    Can someone explain to me the asterix* in the chart stating that the 2009 stimulus was re-assigned to President Obama? Does that mean the stimulus was added to the 2010 budget (that has total spending only being $3.46 trillion)?

    The 2009 fiscal year for the federal government is 10/1/2008 through 9/30/2009. So the analysis correctly assigns all of 2009′s spending to President Bush, with the noted exception; though I think they should always note the attendant Congress as well. Because this analysis is comparing performance by president, the person doing this analysis re-assigned the stimulus spending passed in 2009 all to Obama, including the portion spent during the 2009 budget year. Since we’re gauging presidents this is the correct thing to do; however I wonder if W. Bush passed any marginal increases in spending during the 2001 budget year since we were in the down part of the business cycle in the period of that budget year late-Jan-01 through Sep-01, if so that should have been counted as being under W.’s watch rather than Clinton’s.

  15. 15
    jbar

    Being just a bit skeptical of the statistics above I decide to investigate the numbers. I visited the OMB link in the article above and downloaded table 15.2 Total Government Expenditures: 1948-2011. What I found is that the average annual federal expenditure under the eight years attributable to GWB was $2.6 trillion while the average annual expenditure under the two years attributable to BO has been $3.5 trillion. Spending has increased 35% under Obama over the spending under Bush.

    Same data as used to produce the statistics quoted the article, different result.

    Can’t we all just be a little more skeptical?

  16. 16
    jbar

    Let me be clear that my comparing Obama to Bush II is not to in anyway deny profligate spending under Bush II, or any former president. The last few years under Bush I and most years under Clinton were fairly constrained by historical standards.

  17. 17
    R Johnston

    Michael Heath @7:

    I’d go a bit further. Right now the real interest rates on 10 year treasuries is negative and the real rate on 30 year treasuries is below 1%. Even if you completely ignore Keynesian counter-cyclical considerations, it’s grossly fiscally irresponsible for the government not to be borrowing more when the government can literally borrow at negative real cost, and if you’re optimistic enough to think there’s even going to be nominal economic growth over 30 years it’s irresponsible not to borrow more on that term as well.

    The government not borrowing more at ten years right now is simple innumeracy, and the government not borrowing more at 30 years is a bet that the economy will be completely stagnant for the next 30 years and not produce enough real growth to make financing debt at .6% burden-free.

  18. 18
    cactusren

    jbar, your comment made me curious, so I went and checked out table 15.2 as well. When I calculate the average for “Total Government Expenditures” for FY 2002-2009, I get $4.05 trillion, and for FY 2010-2011 (latest available data) I get $5.19 trillion.

    However, these numbers aren’t what’s being discussed in the article. It’s talking about the average increase in spending from year to year. To find that, you first have to take the difference of each year from it’s previous year, then average those numbers. Then divide that average by the Total Expenditure for the year preceding that presidential term. Doing that, I come up with a 7.3% average increase for Bush’s first term, and 8.5% for his second. I think the discrepancy between my numbers and the article’s here has to do with that asterisk, and counting the stimulus spending under Obama rather than Bush. And for the rate at which spending has increased under Obama, I calculate 1.2%.

    The reason your numbers differ so much is that you’re averaging 8 years worth of increases into one number (which is kept low by the relatively lower spending of the earlier years under Bush). Then you’re comparing that to two years worth of data for Obama, which is only very slightly higher than the spending in the later years of Bush’s term. The large difference is due to the fact that you’ve pulled that number down by averaging it across Bush’s 8 years in office, when spending increased every year, making the early years much lower than the later years.

    So, it’s as if you’ve taken a ramp, and leveled it off at it’s mid point. It should not then be surprising that there’s a large step at the end of it.

    That’s why the article instead chooses to compare the average difference of spending per year, without lumping 4 or 8 year periods together.

  19. 19
    cactusren

    I’d also like to point out that in that table, which starts in 1948, 2010 is the only year in which federal expenditures did not increase. And unless I misunderstand the period for fiscal years within the government, this was a period when Democrats controlled the House, Senate, and Presidency.

  1. 20
    Long Term Effects Of Partisanship on Our Future - Page 5 - Political Wrinkles

    [...] time…… I won't bother to read the rest until you back up your stuff……. Here ya go Spending Rate Lower Under Obama and Democrats | Dispatches from the Culture Wars __________________ Truth, Justice and the American [...]

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