About the idea that Obama’s spending has been tame
You’ve heard of lies, damned lies, and statistics? Well, here’s Exhibit A: a column at MarketWatch by Rex Nutting.
Nutting’s column, titled “Obama spending binge never happened,” has caused a lot of excitement among people who would like to believe it’s true. And the bottom-line numbers — which are as far as Nutting goes in his column — do show that total spending has risen more slowly between fiscal 2009 and fiscal 2013 than you might have otherwise believed. Annual federal spending growth during President Obama’s first term, Nutting’s numbers show, has been 1.4 percent. That would be slower than in any of the seven previous terms, dating to the beginning of the Reagan years. Going out of his way to be even-handed, Nutting even graciously attributes Obama’s “stimulus” spending in FY09 to Obama rather than to George W. Bush, under whom that fiscal year began.
What a guy!
But what Nutting’s surface-level “analysis” fails to acknowledge — aside from the fact that he’s giving Obama full credit for a level of spending that won’t even begin for four more months, making it a completely unknowable quantity — is the vast amount of spending that was supposed to be temporary but instead has been baked into Uncle Sam’s cake. Accounting for the temporary-turned-permanent gives us a truer depiction of the Obama’s (sorry to say it!) spending binge.
Let’s start with the appropriations bills Obama signed for FY09 other than the stimulus. The two major ones were the $105.9 billion supplemental defense bill and the $2.9 billion “cash for clunkers” bill. So that’s $108.8 billion that ought to be put on Obama’s ledger rather than Bush’s.
Now let’s take a deeper look at the stimulus spending Nutting attributes to Obama in FY09. Nutting puts it at $140 billion. The next year’s budget, which included the FY09 spending, instead pegged it at $202 billion with an estimated $30 billion in FY13; subsequent budgets have not broken out the spending specific to the American Recovery and Reinvestment Act (probably because the ARRA has been so amazingly popular and successful). Nutting doesn’t tell us where he gets that $140 billion figure, and so, to avoid mixing numbers, I’m going to stick with the figures from the FY10 budget. That’s $172 billion in “temporary” spending that, under The Most Fiscally Responsible President Evah, should have disappeared.
That’s not all. Spending in FY09 also included $151 billion for the bank bailout, or TARP, and the FY13 budget puts the figure at $12 billion. That’s another net $139 billion in “temporary” spending that should have gone away. Add that to the $172 billion from the stimulus, and we’re talking about $311 billion.
Now, to be truly fair to Obama, let’s make comparisons without including the costs of Medicare, Social Security and net interest. These are big-ticket items that are growing quickly on automatic pilot, and they couldn’t have been changed without a long national debate. So, here’s what we have:
FY09 spending: $3,518 billion
Less Medicare, Social Security and net interest: $2,218 billion
Less “temporary” TARP and stimulus spending: $1,907 billion
Less Obama’s supplemental spending for defense, clunkers: $1,798 billion
The equivalent figure in Obama’s FY13 budget is $2,418 billion, which would represent an annualized growth rate of 7.7 percent. That’s five and a half times faster than the rate with which Nutting credited Obama. Once we adjust Bush’s record to account for the $108.8 billion in Obama’s supplemental FY09 spending outlined above, it places his spending as the second-fastest out of the last eight presidential terms rather than the slowest, as Nutting claimed. (The rankings are the same even if we adjust for inflation.)
Where did Obama want to stick this extra money? In International Affairs ($22 billion, or 59 percent, higher than FY09), Transportation ($30 billion, or 36 percent), Education ($42.2 billion, or 53 percent), Health (not counting Medicare, $51.5 billion, or 15 percent), Energy ($9.2 billion, or 193 percent), to name a few of the largest examples.
However, Nutting did not use Obama’s FY13 budget as a comparison. Perhaps that’s fair, given that the president’s budget was defeated 99-0 in the Senate recently. In any case, Nutting instead used the Congressional Budget Office’s projected baseline, and this really is the coup de grace for his argument.
The CBO’s projected baseline gives us an equivalent FY13 figure of $1,968 billion, which in turn gives us an annualized growth rate of 2.3 percent, which is actually OK by recent historical standards. But what is the CBO’s projected baseline? It is the agency’s estimate of what revenues and spending will be if current law is kept in place. That is, it tells us what happens if the president and Congress do nothing. For this lack of action, Nutting wants to give Obama credit.
But wait, there’s more! Even if we use the CBO projections, it is worth noting the enormous difference between Obama’s first two years, when Democrats had huge majorities in Congress, and his third and fourth years, during which Republicans have controlled the House. The annualized growth rate in the first two years was 7.7 percent; since then it’s minus-2.9 percent.
So, to conclude:
We are supposed to ignore Obama’s budget proposal, which showed his spending rising faster than what’s typical for the past 30 years, and instead give him credit for a) not going beyond the baked-in spending he set in motion early in his term and b) the gridlock that came to Washington after Republicans took over the House?
Seriously?
You will not find conservatives lauding the George W. Bush years as a model of fiscal restraint, because they weren’t. But it is just as laughable for Nutting and his fellow travelers to try to make such a claim for Obama.
– By Kyle Wingfield
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324 comments Add your comment
wrick
May 25th, 2012
2:06 pm
JDW: ‘But to the important point, from 1997 to 2001 revenues averaged 19.8% of GDP.’
True, but this was largely due to the Gingrich-Clinton Capital Gains rate cut in 1997 and the Internet bubble. Look at Clinton’s first years on office and you will see revenue of 18% of GDP — much the same as GW Bush from 2005-2007. This means that despite the path under Bush ‘that led us astray’ the % revenue numbers were about the same as under Clinton prior to his tax cut.
Also, while % of GDP is a good metric to use, note that under GW Bush we at least experienced significant growth in GDP with his tax cuts — versus low growth for the last few years despite huge increases in deficit spending. So not only is Obama spending too much, the result of the spending is ineffective as we have low growth — while under Bush, while I would also say we spent too much, at least we saw much higher growth numbers.
Tiberius - Banned by Bookman and proud of it!
May 25th, 2012
2:13 pm
JDW, your issue is with Republican presidents increasing spending more than Obama. The gist of the two articles is that Nutting is trying to make the case that Obama is frugal when he is not, and Kyle is showing the numbers Nutting used were wrong.
Bottom line Obama is as profligate a spender as any other president and even more so because he doesn’t had the revenue to cover it.
JDW
May 25th, 2012
2:20 pm
@Tiberius…my issue is with Republicans beginning with Reagan selling us a bill of goods (which quite frankly I bought until 1994/1995) that has by in large led to the current situation. The only time in the last 32 years it has worked right was when Clinton was President and the underpinnings for that (tax levels and PAYGO) were established prior to 1994. Duhbya led us to ruin and after a whole lot of agony we are slowly recovering.
To me putting another Republican, espousing the same bill of goods, in charge is sheer lunacy. Would I rather Obama do some things differently, O’ he!! yes but when compared to the alternative history is my guide.
JDW
May 25th, 2012
2:23 pm
BTW, frugal was Jay’s word…Nutting simply pointed out that Romney’s characterization of Obama as “accelerating federal spending at a pace without precedent in recent history” was and is hogwash…or yet another Republican bill of goods.
wrick
May 25th, 2012
2:41 pm
I don’t follow the ‘bill of goods’ argument. The only times we have had 19%+ of GDP in tax revenue prior to Clinton 1997-2000 was Carter in the late 70’s — and the economy was in the tank at that time. Even during the 1950’s with 90%+ top marginal rates, we did not break 18%.
Under what JDW describes as the disastrous GWB years we were over 18% for several years due to growth in the economy (I would argue due to tax cuts). With the same tax rates now, and with a 25% increase in Federal Govt spending in 2008-2009, we have huge deficits and only 15% of GDP in tax revenue coming in — yet somehow it’s a Republican bill of goods we need to watch?
Lil' Barry Bailout (Revised Downward)
May 25th, 2012
2:47 pm
Romney is correct. Obozo’s is spending faster than any president since FDR.
Americans will correct their mistake in November.
JDW
May 25th, 2012
2:56 pm
@wrick…you are only looking at income check the spending side of the ledger….from the folks that preach financial responsibility. At the same time these policies have led to the decimation of the middle class. We now have a greater share of income and assets congregated at the top of the spectrum than in our history and the gap is getting wider.
Duhbya’s folly took a government that was running in balance and created deficit spending anew. On top of that, my contention is that the absolute lack of attention to the day-to-day business of running a government enabled the financial meltdown we endured in 2007 forward.
JDW
May 25th, 2012
2:57 pm
@LBB…”Romney is correct. Obozo’s is spending faster than any president since FDR.”
And yet that has been shown to be absolutely false.
wrick
May 25th, 2012
3:38 pm
JDW: I believe the figures below are correct. First column is revenue as % of GDP, second is spending.
I agree Bush spent too much, but the % is barely higher than Clinton. Then after 2008, we go off the cliff with spending.
William J. Clinton
1994 18 21
1995 18.4 20.6
1996 18.8 20.2
1997 19.2 19.5
1998 19.9 19.1
1999 19.8 18.5
2000 20.6 18.2
2001 19.5 18.2
George W. Bush
2002 17.6 19.1
2003 16.2 19.7
2004 16.1 19.6
2005 17.3 19.9
2006 18.2 20.1
2007 18.5 19.7
2008 17.6 20.8
2009 15.1 25.2
Barack Obama
2010 15.1 24.1
2011 15.4 24.1
md
May 25th, 2012
4:03 pm
“At the same time these policies have led to the decimation of the middle class. We now have a greater share of income and assets congregated at the top of the spectrum than in our history and the gap is getting wider. ”
Using that talking point kills your credibility…….it does not take into account the role of a global economy, which quite frankly coincides with the stagnation of the middle class.
We do not live in a closed economy, so sighting numbers as if we do is faulty at best.
And the middle class is responsible for decimating the middle class…….consumers dictate wages, and if one wants to look at the correlation between wages and the increased consumption of foreign goods back in the 70’s, one would understand why wages are flat.
A $50 billion dollar a month trade imbalance over several decades will have an impact on wages…..and the middle class.
JDW
May 25th, 2012
4:09 pm
@wrick…”I agree Bush spent too much, but the % is barely higher than Clinton. Then after 2008, we go off the cliff with spending.”
Problem was he raised spending by 1% to 2% of GDP and cut revenues by the same ending up with a 3% to 5% deficit in place of a balanced budget. Then when the bottom dropped out and spending had to be increased yet again he had reduced the revenue generating capacity which would have mitigated the current deficit.
Of course there is the bit about being 60% to 70% accountable for the whole going off the cliff thing.
JDW
May 25th, 2012
4:18 pm
@MD…”A $50 billion dollar a month trade imbalance over several decades will have an impact on wages…..and the middle class.”
And yet strangely the spike in the trade deficit really takes off right around 2000….hummmmmm
http://www.tradingeconomics.com/united-states/balance-of-trade
md
May 25th, 2012
4:23 pm
A good graph that shows trade imbalance and real wages…..it is no coincidence:
http://www.epi.org/publication/webfeatures_snapshots_archive_02282001/
md
May 25th, 2012
4:26 pm
And notice how wages basically stopped increasing when we as a nation became a net importer vs a net exporter…………
JDW
May 25th, 2012
4:33 pm
@md…it is a good graph and a valid point. Please note that the decline coincides roughly with the 1980 rise of Reagan and the Republicans. In fact the only respite over those years seems to be in the later 90’s and more recently in 2009….coincidence? Nah…
md
May 25th, 2012
4:49 pm
“Please note that the decline coincides roughly with the 1980 rise of Reagan and the Republicans. ”
I can’t see much difference based on partisanship…….exporting has for the most part been going down since the 40’s and wages stagnated pretty much about the time we started buying all our Datsuns and Toyotas…………..
As I said, we are to blame more than anything…….don’t buy it, and it will not come…….
Lil' Barry Bailout (Revised Downward)
May 25th, 2012
4:57 pm
Sorry, JDW, but only the Democrat sheeple and Obozo receptacles think spending more as a percent of GDP than anyone since WWII and racking up $5 trillion in debt in less than four years is responsible.
Romney is correct.
To disagree is to deny reality.
JDW
May 25th, 2012
5:01 pm
@md…”As I said, we are to blame more than anything…….don’t buy it, and it will not come”
There is truth to that. Our fixation on low costs is part of the problem. However, I do think that there are ways we can bolster exports through policy and that seems to happen more in a Democratic Administration.
The other issue is that we don’t do a great job of measuring intellectual and financial exports. Take Google, or any other tech company, they have exported their business to every country and generate revenue in every country but it doesn’t show as an export.
JDW
May 25th, 2012
5:02 pm
@LBB…”deny reality”
Bubba, don’t make me laugh. You have no relation nor concept of reality.
md
May 25th, 2012
5:05 pm
“Take Google, or any other tech company, they have exported their business to every country and generate revenue in every country but it doesn’t show as an export.”
But it doesn’t show as an import either………..ipods are made in China, but the bulk of the profits show up in our gdp…..
Lil' Barry Bailout (Revised Downward)
May 25th, 2012
5:15 pm
The reality is that Obozo has added more to the debt in less than three years than Our President Bush did in eight.
Lil' Barry Bailout (Revised Downward)
May 25th, 2012
5:17 pm
’scuse me…it took less than four years, not three, for Obozo to add more to the national debt than Our President Bush did in eight.
Joseph Theranger
May 26th, 2012
1:27 pm
President Bush was not a conservative. If a true conservative decided that a war was worth waging, he should have asked for the people of the country to share in the suffering of the soldiers on the front line by having everyone back a plan that would pay for the cost of the war. The payment could have been in the form of service cutbacks or tax increases or both.
Medicare part D was hardly a conservative action and No Child Left Behind was a terrible example of an unfunded federal mandate so I agree that neither President Bush was a Predident about whom a conservative could get excited.
I now have to accuse myself of being very unconservative given what I am about to say. To get the country going in the right direction, we are going to have to cut spending and either raise tax rates or broaden the tax base (eliminate deductions, BTW, they are properly called deductions, not loopholes). The electorate will want to make sure that every American shares in the pain that will be required to get us back on track. Under President Reagan, the pain was an 18 month (or so) recession. I’m not sure what our pain will be but, whatever it is, it had better be shared pain.
wrick
May 29th, 2012
10:02 am
@JDW: “Then when the bottom dropped out and spending had to be increased yet again he had reduced the revenue generating capacity which would have mitigated the current deficit.”
He had ‘reduced the revenue generating capacity’ in some kind of permanent way by having it at 18+% rather than 19% under Clinton?
Bush’s 18%+ is in line with Clinton’s pre-1997 capital gains tax cut number. How did the same tax policies that had us at 18%+ in 2006 lead to 15% in 2009? It is not the GWB’s tax rates that led to the housing bust.
Regarding ‘”60% to 70% accountable” — you really believe the GWB tax cuts in 2001 and 2003 led to the housing bust and bank failures in 2008? GW is responsible for spending beyond what I would prefer but he is not responsible any more than is Clinton or GHW Bush for the housing mess.
Obama is responsible for continued huge deficits and failure to get the economy moving. Clearly, we would be far better off with 18%+ of GDP in tax revenue as we had under GW than 15% with Obama.