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.

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