The Corner

Fact-Checking Obama on Spending

Something really strange is happening in Washington these days: The same people who are always arguing that the only way to boost economic growth is to spend and spend and spend are also the ones bragging about President Obama’s record, wait for it, as the smallest spender of all presidents.

If that’s true, shouldn’t they be upset? And if they are upset, should they be praising Obama for how little he is spending? And if he really is a small spender, did the stimulus really save the day? I am confused.

Here are a few examples of the articles about how Obama is a model of fiscal responsibility: 

  • The article by Rex Nutting, of MarketWatch, titled, “Obama spending binge never happened.”

  • The New York Times’s Floyd Norris has a piece called “Government Getting Smaller in the U.S.”

  • Andrew Sullivan on how Obama’s spending record is more conservative than Reagan’s.

I would like to preface my remarks by saying that I am not here to defend the record of presidents Bush and Reagan on spending. Both of them spent too much money and grew the federal budget excessively. But that doesn’t make Obama a fiscal hawk. The budget deficit as a share of GDP didn’t go from 1.2 percent in 2007 to 7.6 percent without some aggressive spending which wasn’t backed by tax revenue or GDP growth.

This morning the Washington Post’s fact checker gave Jay Carney 3 Pinocchios (that’s not good) for using Nutting’s numbers to claim that spending growth under Obama was the smallest since Dwight Eisenhower. First, as Glenn Kessler notes, spending is going up and it’s going up fast. So no matter what the annual growth rates are under Obama, things aren’t looking good. Also these advertized growth rates aren’t looking so good if one uses at more realistic numbers from the CBO alternative baseline rather than a wishful-thinking baseline.

The correct figure to use is the CBO’s analysis of the president’s 2013 budget, which clocks in at $3.72 trillion.

 So this is what we end up with:

2008:  $2.98 trillion

2009:  $3.27 trillion

2010:  $3.46 trillion

2011: $3.60 trillion

2012: $3.65 trillion

2013:  $3.72 trillion

Under these figures, and using this calculator, with 2008 as the base year and ending with 2012, the compound annual growth rate for Obama’s spending starting in 2009 is 5.2 percent.  Starting in 2010 — Nutting’s first year — and ending with 2013, the annual growth rate is 3.3 percent. (Nutting had calculated the result as 1.4 percent.)

Then, as Kessler notes, if it were up to the president, the spending would have gone up more than it has. The actual spending level for each year ended up being lower than what the president requested:#more#

2012: $3.71 trillion (versus $3.65 trillion enacted)

2011: $3.80 trillion (versus $3.60 trillion enacted)

2010: $3.67 trillion (versus $3.46 trillion enacted)

I guess it means that Congress — and those annoying obstructionists tea partiers — are the ones responsible for Obama’s alleged fiscal responsibility. (That we can claim that anyone is fiscally responsible when the government spends $3.65 trillion blows my mind, by the way).

Dan Mitchell looked into Nutting data too. And he remarks that his numbers are nominal, which is a big no-no when you compare spending records by presidents over time. Here is how the numbers look once you adjust for inflation:

Total Spending

1.5% — Clinton

1.8 % — Bush 41

1.8% — Obama

2.5% — Reagan

2.8% — Nixon

3.9% — Carter

5.0% — Bush 43

5.9% — LBJ

His whole post is here. Finally, my colleague Matt Mitchell did a fantastic job debunking Norris’s claim that the government is shrinking. As Mitchell puts it “Government Spending Has Shrunk . . . When You Ignore 44 Percent of Government Spending.”

What Mr. Norris neglects to note is that real gross domestic product for the government is only about half of what governments actually spend. And when you look at total spending, it is actually up over the last three years, not down. . . .

Among other things, however, government GDP does not include transfer payments such as Medicaid, Medicare, Social Security, Unemployment Insurance, Earned Income Tax Credits, Supplemental Nutritional Assistance, Housing Assistance, Supplemental Security Income, Pell Grants, Temporary Assistance to Needy Families, WIC, LIHEAP…you get the point.

It turns out that real spending on everything other than government consumption and gross investment is up about 19 percent since Obama took office. And this is more than enough to offset what’s going on with consumption and gross investment. Thus, total spending is up 7.7 percent in real terms.

The whole thing is here, including a fun chart.

Now, let’s see if can we bring the budget back down to the Clinton years, please.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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