Liar or Spendthrift, How About Both?
This morning I’m writing this blog from the Emerson Lodge at Mt. Tremper in the Catskill mountans.
We have a most interesting election phenomenon going on this season. If you criticize Obama for undermining capitalism, he replies that Bain was a miserable failure, Bain, a highly successful investment firm that saved hundreds of companies and thousands of jobs; if you criticize him for letting Iran pull the wool over his eyes, he leaks Israeli war plans; if you criticize him for a terrible economy and high unemployment, he says, “blame Bush”; and if you criticize him for his disastrous spending and the first lowering of our credit rating in history, he says,”who me?, not me”.
The History BoysMay 25, 2012 Wall St Journal
Obama's fiscal blowout that never happened, according to Obama.
Riffing on the re-election trail, President Obama often tells crowds that "We've got to move forward to the future we imagined in 2008." An imaginary future from the past—got it. Then there's the imaginary history of the past that Mr. Obama has been recounting lately, when his first-term spending and debt boom never happened.
Mitt Romney "warned about a 'prairie fire of debt.' That's what he said," Mr. Obama said on the Des Moines fairgrounds on Thursday, as if he couldn't believe it either. "He left out some facts. His speech was more like a cow pie of distortion," Mr. Obama continued, with the finely shaded eloquence for which he is known. "What my opponent didn't tell you was that federal spending since I took office has risen at the slowest pace of any President in almost 60 years."
Making this a new White House theme, press secretary Jay Carney chimed in to "make the point, as an editor might say" to White House reporters that they should not "buy into the B.S. that you hear about spending and fiscal constraint with regard to this Administration. I think doing so is a sign of sloth and laziness."
Mr. Carney, the media critic, deeply sourced his view to someone named Rex Nutting, who wrote an 856-word column for MarketWatch that argued "There has been no huge increase in spending under the current President, despite what you hear."
Mr. Nutting claims that spending is rising at 1.4% annually, versus 8.1% for George W. Bush's second term. How did he manage to suss out the insights that have eluded every other human being who has spent time with the historical budget tables? His accounting methods are, er, unusual.
Mr. Nutting claims that Mr. Obama is only responsible for $140 billion worth of spending in his hyperactivist first year in office because . . . the fiscal year technically begins on October 1, 2009. Therefore he says Mr. Obama had no control over the budget, though in February 2009 he did famously manage to pass an $800 billion stimulus that was supposed to be a one-time deal. Mr. Nutting then measures Mr. Obama's spending growth rate against an inflated 2009 baseline that includes the spending Mr. Obama caused but which he attributes to Mr. Bush.
This is like an alcoholic claiming that his rate of drinking has slowed because he had only 22 beers today and 25 beers yesterday. To extend the analogy, let's stipulate that Mr. Bush was no fiscal teetotaler, though that's even more an indictment of Mr. Obama.
Mr. Nutting also has some fun toggling among Congressional Budget Office estimates, CBO baselines, White House budget proposals and actual spending to make the Obama record look better. To anyone who really knows the numbers, Mr. Obama's spending has increased by closer to 5% a year. Comparing apples to apples, CBO says total federal spending was $2.98 trillion in 2008 and has risen every year to reach $3.72 trillion in Mr. Obama's fiscal 2013 budget.
The larger conceptual error of the Nutting-Obama-Carney troika is neglecting to compare the budget to the size of the economy. The best perspective on how outlays, tax receipts and deficits change over time is as a share of GDP. Those data reveal historical trends because they account for different inflation rates and include changes over society as a whole like population growth.
Prior to Mr. Obama, the U.S. had not spent more than 23.5% of GDP—that was in 1983, amid the Reagan defense buildup—since the end of World War II. Yet Mr. Obama has managed to exceed that four years in a row: 25.2% in 2009, 24.1% in 2010 and 2011, and an estimated 24.3% in 2012, up from a range between 18%-21% from 1994-2008.
Democrats try to explain this away by saying that the economy is lousy, so spending's share of GDP looks larger than it would be with faster growth. But that is hardly an endorsement of Mr. Obama's economic policies, and in any case the recession officially ended nearly three years ago, in mid-2009.
The economy has since been growing but spending has been growing too even from the stimulus-inflated baselines. Every time House Republicans have tried to cut more spending since 2010, Mr. Obama has fought them tooth and claw.
As for that prairie fire of debt, Mr. Obama can fairly blame $1 trillion or so of the $5 trillion debt increase of the last four years on Mr. Bush. But what about the other $4 trillion? Debt held by the public now stands at 74.2% of the economy, up from 40.5% at the end of 2008—and rising rapidly.
In Des Moines, Mr. Obama's reading of U.S. fiscal history—"what generally happens"—was that "Republicans run up the tab" and then blame Democrats for the bill. Meanwhile, Mr. Nutting floated and Mr. Carney cited the "fact" that even Herbert Hoover spent more than Mr. Obama. Oh great. That means the President may stop blaming George W. Bush for the problems he inherited and instead start blaming Bush, Bush, Reagan, Ford, Nixon, Eisenhower and Hoover.