Wednesday, May 23, 2012

Yes, Obama is really a big spender.

Apparently, the latest Democratic blog fad is to claim that federal spending has been restrained under President Obama. Last week at ThinkProgress, Michael Linden had post called, "CHART: Spending, Taxes, And Deficits Are All Lower Today Than When Obama Took Office." As I discussed here, the post's headline is untrue and its content is substantially misleading.

Today at Talking points memo, Sahil Kapur has a post called, "An Obama Spending Spree? Hardly (CHART)." Here's the crux of the post with the CHART.
Obama’s policies, including the much-criticized stimulus package, have caused the slowest increase in federal spending of any president in almost 60 nears, according to data compiled by the financial news service MarketWatch. 
The chart shows that Presidents Reagan, both Bushes, and to a lesser extent Clinton, grew federal spending at a far quicker pace than Obama.
Can this be true?


Is it misleading?

Yes, and putting "CHART" in all caps in a post title doesn't make it any less so.

I generated the figure below using data on real federal spending from President Obama's Office of Management and Budget (Table 1.3) for 1981-2012. It shows real federal spending, i.e. federal spending in constant 2005 dollars, scaled on the left vertical axis and the percent change in federal spending in each year from the previous year scaled on the right vertical axis. I also included a line showing the average percent change in year over year spending for the period, which was 2.76.

Three things about recent political history pop out for me. First, the Clinton years were a sustained period of spending discipline with spending growing at below average rates throughout his presidency, including the two years before Republicans took over Congress. Second, the Bush spending spree was real. Federal spending grew at above average rates for most of George W. Bush's presidency. However, by far, the most striking thing about the graph, of course, is the huge spike in federal spending that was coincident with the financial crisis and the worst of the Great Recession in 2009. Federal spending---which included TARP and the auto bailout in addition to the stimulus, which was apparently "assigned" to Obama in Kapur's chart---jumped by a sixth, 17.4%, in that year alone.

That 17.4% year-over-year increase was more than six times the average rate of growth in federal spending since the start of the Reagan administration. It is nearly a quarter larger than the 14.2% increase in federal spending in 1967 that accompanied the implementation of Medicare. In fact, the 2009 increase in federal spending was the largest one year jump federal spending since the Truman Administration.

So, Obama came into office at essentially the high point of crisis spending on top of the Bush-era's historically high levels of ordinary spending. Yet, under President Obama, these unprecedented levels of real (adjusted for inflation) and relative (compared to GDP) of federal spending have not only been preserved, they have begun to push upward again.

The only place Obama and his supporters have any wiggle room to escape the charge of being the spendiest president in modern American history is by covering his tracks by making 2009 the explicit or implicit baseline for comparison between Obama and his predecessors. By this logic, though, Obama escapes all blame for supporting, preserving, and extending the ridiculous fiscal balance that was established in 2009.

About that socialized medicine chart...

The following charts has shown up a couple of times in my Facebook feed in the last couple of days.

It was produced by Oliver Uberti and posted at the National Geographic Magazine's blog. It wound up on my Facebook after it was posted at by Sara Critchfield with the comment, "It looks like that 'socialism' thing seems to be working out pretty well for the rest of the world." The little icon on the Upworthy page indicates that "27k" people have "liked" Critchfield's post on Facebook.

Critfield seems to want us to take away from the graph that countries with health care "socialism" have health outcomes that are generally comparable or a bit better than the United States. The author of the National Geographic blog post that originally accompanied the chart made a much more precise claim:
The United States spends more on medical care per person than any country, yet life expectancy is shorter than in most other developed nations and many developing ones... The U.S. has a fee-for-service system—paying medical providers piecemeal for appointments, surgery, and the like. That can lead to unneeded treatment that doesn’t reliably improve a patient’s health.
Here are my thoughts on the chart in the order in which they occurred to me:

1. Ubertis's post is correct in one key respect: There is basically no relationship between health care spending and life expectancy at birth in this small set of developed and developing countries. Even within the group of universal health care countries, there is an awful lot of noise in the relationship between spending and life expectancy.

2. If non-universal health care is so awful, why is life expectancy in Mexico so good?

3. Life expectancy seems like its has more to do with development than health care. Developing countries have life expectancies clustering loosely around 75, developing countries cluster around 80. I am sure we could track down some data on under-developed countries with some kind of universal care showing that their life expectancies are well below the 75-ish year mark we see in the small number of developing countries shown here.

4. Beyond making sure that most people have access to some pretty basic stuff (e.g. childhood vaccines, antibiotics, medically supervised child birth, etc.), spending more money on health care won't help people live much longer since most people don't use much health care until they are old.

5. I would bet that Americans' diet (fatty, salty) and lifestyle (sedentary with lots of driving and, therefore, exposure to accident risks) has a lot more to do with our marginally lower life expectancy than anything related to how we deliver health care.

6. Given that Americans, as a group, live a less healthy life in many ways than Western Europeans or Japanese, it may simply cost more money to keep us, as a group, living as long as we do.

7. How long someone lives is a really crude measure of "health." Eliminating or rationing care for non-life threatening health conditions could certainly reduce total health care costs without injuring a country's life expectancy. Are other countries achieving these "savings" because they have moved away from private health care or a fee-for-service model, or do they simply provide a smaller ranger of services on a less frequent basis? Might people in other countries choose to spend more on health care to improve the range and availability of health care options if that were an option?

Tuesday, May 22, 2012

Elizabeth Warren v. Thomas Jefferson

My cousin (approvingly) sent me a link to a short YouTube video of Elizabeth Warren---Professor at Harvard Law School, candidate for the United States Senate in Massachusetts, self-described "rock thrower," and central figure in a controversy over an unsubstantiated claim of Cherokee ancestry---giving a campaign speech on someone's porch.

Here is the clip:

The audio is a bit fuzzy, but this is my transcript of the whole twenty-four second video:
Government basically has three functions. One is to provide for the common defense, our national defense. The second one is to put a cop on the beat, to write some basic rules of fairness and transparency to make sure that nobody steals your purse on Main Street and nobody steals your pension on Wall Street. That is a basic function of government.
I presume that Warren does not pull a Rick Perry here and eventually lists the third function of government. Try as I might, I couldn't find a video or transcript of the whole speech, though. Still, the brief clip was enough to raise my blood pressure.

The first thing that caught my ear was the slick conflation between the unobjectionable governmental role in protecting private property, making sure nobody steals your purse or your pension, and a call for government regulation of banks to provide "fairness and transparency."

The second, more important thing, though, is Warren's casual (implicit) dismissal of an important cornerstone of American constitutionalism. Sure, governments can help keep us safe by coordinating things like police protection and some health and safety regulations, e.g. inspecting meat. (Although, even seemingly innocent things, like food inspections, can go too far.) However, government has a more fundamental purpose in the American political tradition: to protect our rights and liberties. This principle was expressed in the Declaration of Independence, drafted by Thomas Jefferson:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.
Maybe Warren's third function of government is precisely this, though I somehow doubt it. Also, perhaps, I am making too much of a brief segment of her stump speech. Yet, Warren's formulation of the basic functions of government seems, on the whole, extremely paternalistic, even authoritarian: We need the government to keep us and our stuff safe, to take care of us. She says nothing about our rights or our freedoms, which, I sense, she cares little about.

To be fair, I think Warren is an excellent scholar, and she has taken some positions on "Washington Reform", like a lifetime lobbying ban for members of Congress and filibuster reform, that I support. Despite these things, though, Warren's authoritarian streak and her confidence that she knows the right way to do things are, in my opinion, the worst and most dangerous characteristics a political leader can have. I hope the good folks up in Massachusetts don't end up sending her to the Senate.

Thursday, May 17, 2012

Is federal spending really lower under President Obama?

Yesterday at ThinkProgress, Michael Linden, Director for Tax and Budget Policy at the Center for American Progress Action Fund, had a post entitled CHART: Spending, Taxes, And Deficits Are All Lower Today Than When Obama Took Office. The post was picked up by Derek Thompson at The Atlantic's blog and probably elsewhere. The thing is, the post's headline claim is simply false, and the post itself is misleading.

Here's Linden's entire post:
Federal spending is lower now than it was when President Obama took office. I’ll pause to let you absorb the news.

In January 2009, before President Obama had even taken the oath of office, annual spending was set to total 24.9 percent of gross domestic product. Total spending this year, fiscal year 2012, is expected to top out at 23.4 percent of GDP.

Here’s another interesting fact. Taxes today are lower than they were on inauguration day 2009. Back in January 2009, the CBO projected that total federal tax revenue that year would amount to 16.5 percent of GDP. This year? 15.8 percent.

One last nugget. The deficit this year is going to be lower than what it was on the day President Obama took office. Back then, the CBO said the 2009 deficit would be 8.3 percent of GDP. This year’s deficit is expected to come in at 7.6 percent.

The fact is that Obama inherited a disaster of a federal budget. Eight years prior, when President George W. Bush took the oath of office, there was a $281 billion surplus. By the time Obama was sworn in, he was facing a $1.2 trillion deficit. Inconvenient though it may be for conservatives (especially those who are running for president), the truth is that spending, taxes and the deficit are all lower today than when President Obama took office.
So, first, is spending lower today than when Obama took office?


The President's own Office of Management and Budget reports that federal spending in 2009 was $3.17 trillion and spending in 2012 is projected to be  $3.21 trillion (both figures are in constant 2005 dollars).

Linden's "spending is lower" claim hinges on looking at spending as a proportion of gross domestic product (GDP).

Again, according to OMB, federal spending in 2009 was 25.2% of GDP (a bit above the 24.9% CBO estimate Linden uses) and it will be 24.3% in 2012 (which is also higher than the CBO estimate of 23.4% Linden cites).

Making 2009 the point of comparison, though, is misleading. As you may recall, 2009 was a year of supposedly unusual federal expenditures like TARP and the first wave of President Obama's stimulus spending. All of that is on the books as spending in the base year of Linden's analysis.

Likewise, 2009 was the year that the "Great Recession" really took a bite out of the country's GDP. In 2007, the last pre-recession year, GDP was $13.20 trillion. It dipped to $13.16 trillion in 2008. In 2009, though, it plummeted to $12.70 trillion. By 2010, the economy was growing again, with GDP climbing back to $13.09 trillion. Last year, GDP surpassed its pre-recession level levels, hitting $13.32 trillion. (All of those values are constant 2005 dollars reported by the St. Louis Fed.) Even though the recession started in 2008, the bulk of the decline in the size of the US economy occurred in 2009.

So, Linden's analysis picks a base year with a spending "numerator" substantially inflated by various rescue and recovery efforts (supported or initiated by President Obama) and a "denominator" deflated by the economic downturn. Comparing 2009 to nearly any other year in terms of spending as a proportion of GDP will make the contrasting year look great. Picking 2009 and comparing it only to the present year is a cheap trick.

If we are going to focus on spending as a percentage of GDP, let's look at a real time series and see how the Obama years stack up to the rest of the data.

Federal Spending, Revenues, and Deficits (% GDP) 1981-2012

The figure shows federal spending (red line) and revenue (blue line) as percentages of GDP from 1981 through 2012. The figure also includes the size (%GDP) of the federal deficit or surplus (solid green line) and the deficit reverse coded (i.e. multiplied by negative one) so that higher values indicate larger deficits (dashed green line). Data are from the OMB (Table 1.3) and values for 2102 are estimates.

So, has Obama been the belt-tightening leader the Linden post suggests?


Spending relative to GDP is down slightly since the crisis year of 2009, but it is on the rise again, growing from 24.1% of GDP in 2010 and 2011 to 24.3% this year. More importantly, though, the figure highlight that the pretty massive crisis year spending spike has not really decayed at all.

From 2001, the year George W. Bush became president, through 2008, federal spending averaged 19.6% of GDP. If you include 2009, that figure goes up to 20.3%. Under President Obama, though, from 2010-2012, federal spending has averaged 24.1%. If we put 2009 on his books, the figure goes up to 24.4%. Depending on your political accounting, annual federal spending is up between 3.8% and 4.8% of GDP on average under President Obama than under President Bush.

The same basic pattern holds up in terms of revenues. At the peak of the crisis, 2009, revenues were substantially lower than in any year President Bush was in office. Yet, revenues are nowhere near peak pre-recession levels. In fact, revenues are projected to remain below 16% of GDP in 2012.

This combination of elevated spending and reduced revenue collections has produced the worst run of deficits (relative to GDP) since World War II. Between the start of Eisenhower's first term (1949) and 2008, the federal deficit averaged 1.8% of GDP and never exceeded 6.0% of GDP. From 2001 to 2008, the deficit averaged 2.0% of GDP and topped out at 3.5% of GDP in 2004.

In 2009, the deficit was 10.1% of GDP, more than five times the average for the years that President Bush was in office. Since then (i.e. 2010-2012), the deficit has averaged 8.7% of GDP and will hit an Obama-era low of 8.5% this year.

It is fun to make some partisan hay out of all of this, but the bottom line for me is just how objectively fiscally screwed the country is right now. We have been piling up deficits of essentially $1 trillion a year (eight percent of GDP plus) every year for the last four years with no end in sight. We are basically stuck in a political-fiscal prisoners' dilemma of doom. So long as Democrats will veto any serious reductions in spending and Republicans will veto any serious increases in revenues, then nothing but the horrendous status quo will prevail.

[Updated 3:21PM to correct typos.]

Tuesday, May 8, 2012

Defending Elizabeth Warren (Sort Of)

I am no fan of Elizabeth Warren's politics. I have described her as a "partisan hack" and a "busybody... [who] is eerily comfortable using the coercive power of government to push the rest of us into making the kinds of choices she likes and punish those who disagree with her." I also think her claim of Native American identification is self-evidently ridiculous whatever her distant Cherokee or Delaware ancestry might be. It is clear that Elizabeth Warren made no effort to become involved with the activities of any American Indian tribe or organization, has never publicly discussed or described the importance of her alleged Native American heritage to her life or work (at least before the recent controversy erupted), and probably never really thought of herself as an actual member of an American Indian tribe.

For her part, Warren has now claimed that she made the claim to score an invitation to "luncheon."


Over the last few days, though, some conservative commentators have begun to claim that Warren used her American Indian "ancestry" to win a position at Harvard Law School that she did not really deserve.

Writing on The Washington Examiner's website, Paul Bedard claims:
Embattled Massachusetts Democratic Senate candidate Elizabeth Warren graduated from the lowest ranked law school of all Harvard Law School professors--and nearly all Ivy League law professors--shedding further light on the importance her claim to be Native American was to advancing her career. A

After Harvard hired the aspiring law professor, they noted that she was the first-ever minority woman due to her 1/32nd Cherokee lineage. The claim, not something she has ever touted publicly before, surfaced last week and has been dogging her campaign ever since.

That “box checking,” as critics call it, likely played a role in her Harvard hiring especially when her background is compared to those of the other near-100 Harvard Law School professors and assistant professors, according to an analysis of law schools the professors attended.
George Leef writes on National Review Online's "Phi Beta Cons" blog:
...Elizabeth Warren’s JD is from Rutgers, a law school far below the usual ranking for law profs at Ivy League institutions, or even any of her previous faculty posts.

Where one went to law school doesn’t actually have the slightest bearing on one’s competence to teach law and do the obligatory legal research (that is, cranking out law-review articles with vast numbers of footnotes; walk into a law library and you’ll see mountains of bound volumes of these almost-never-read works), but there is a pecking order of prestige in law schools. Anyone who wants to get into the law-prof business who doesn’t have a degree from an elite school has a tough time of it. There’s an implicit assumption that if you couldn’t get into one of those top law schools, you’re probably not the right material. But evidently Warren realized that she could overcome that “disability” by trumping it with minority status.
Michael Barone, also writing for The Washington Examiner, says:
When she was hired, Harvard Law School had just denied tenure to a female teacher and was being criticized for not having enough minorities and women on its faculty.

Of course Harvard and Warren say her claim to minority status had nothing to do with her being hired. And if it did, no one is going to say so. Nothing to see here, just move on. 
The thing is, though, Elizabeth Warren was one of the four most cited scholars of commercial law and bankruptcy in the country from 2005-2009. Google Scholar shows she has 17 publications (some coauthored) with over 100 citations. Moreover, little of this work is abstract legal theorizing. Warren has worked in bankruptcy law, and her scholarship has focused on assessing the consequences of bankruptcy policies for American families. (Some of her work emphasizes pretty conservative themes. For example, her paper on "The New Economics of the American Family," emphasizes how the trend away from stay-at-home mothers toward two income families has made American families more economically vulnerable.) Point being, she is a hugely accomplished scholar with a record that is completely consistent with her present position.

Politics ain't bean bag, of course, and it is kind of fun to watch Warren trying publicly to rationalize her Native American self-identification. Still, it is a stretch to say or imply that Warren was not qualified for her job.

I think you maximize the political mileage you get from your opponent's dishonesty by being scrupulously honest yourself. Warren's academic record is fantastic and not impeached at all by her claims of minority ancestry. However, Noreen Malone is exactly right in pointing out that Warren's inconsistency in her racial self-identification and her flimsy explanations for claiming to be a Native American substantially undermine her image as a fearless straight talker:
Neverthless, the problem for the Warren campaign isn't that she once identified as American Indian... It's that she has apparently officially claimed that heritage selectively. The inconsistency leaves plenty of room for the Scott Brown campaign to suggest that Warren, who has built a career and a following on being a straight-talking straight shooter, isn't always forthcoming. Call it the truthiness factor. 
Elizabeth Warren is absolutely qualified to be a Professor of Law at Harvard University. Her qualifications for the United States Senate, however, leave something to be desired. Perhaps the folks up in Massachusetts ought to keep her in her present position, in which she clearly excels.