Wednesday, May 30, 2012

The facts about the growth of spending under Obama

(Carolyn Kaster/AP)
“I simply make the point, as an editor might say, to check it out; do not buy into the BS that you hear about spending and fiscal constraint with regard to this administration. I think doing so is a sign of sloth and laziness.”
— White House spokesman Jay Carney, remarks to the press gaggle, May 23, 2012
The spokesman’s words caught our attention because here at The Fact Checker we try to root out “BS” wherever it occurs.
 Carney made his comments while berating reporters for not realizing that “the rate of spending — federal spending — increase is lower under President Obama than all of his predecessors since Dwight Eisenhower, including all of his Republican predecessors.” He cited as his source an article by Rex Nutting, of MarketWatch, titled, “Obama spending binge never happened,” which has been the subject of lots of buzz in the liberal blogosphere.
 But we are talking about the federal budget here. That means lots of numbers — numbers that are easily manipulated. Let’s take a look.

The Facts

First of all, there are a few methodological problems with Nutting’s analysis — especially the beginning and the end point.
Nutting basically takes much of 2009 out of Obama’s column, saying it was the “the last [year] of George W. Bush’s presidency.” Of course, with the recession crashing down, that’s when federal spending ramped up. The federal fiscal year starts on Oct. 1, so the 2009 fiscal year accounts for about four months of Bush’s presidency and eight of Obama’s.
 In theory, one could claim that the budget was already locked in when Obama took office, but that’s not really the case. Most of the appropriations bills had not been passed, and certainly the stimulus bill was only signed into law after Obama took office.
Bush had rescued Fannie and Freddie Mac and launched the Troubled Asset Relief Program, which depending on how you do the math, was a one-time expense of $250 billion to $400 billion in the final months of his presidency. (The federal government ultimately recouped most of the TARP money.) So if you really want to be fair, perhaps $250 billion of that money should be taken out of the equation — on the theory that it would have been spent no matter who was president.
 Nutting acknowledges that Obama is responsible for some 2009 spending but only assigns $140 billion for reasons he does not fully explain. (Update: in an email Nutting says he attributed $120 billion to stimulus spending in 2009, $5 billion for an expansion of children’s health care and $16 billion to an increase in appropriations bills over 2008 levels.)
 On the other end of his calculations, Nutting says that Obama plans to spend $3.58 trillion in 2013, citing the Congressional Budget Office budget outlook. But this figure is CBO’s baseline budget, which assumes no laws are changed, so this figure gives Obama credit for automatic spending cuts that he wants to halt.
 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.)
Of course, it takes two to tangle — a president and a Congress. Obama’s numbers get even higher if you look at what he proposed to spend, using CBO’s estimates of his budgets:
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)
 So in every case, the president wanted to spend more money than he ended up getting. Nutting suggests that federal spending flattened under Obama, but another way to look at it is that it flattened at a much higher, post-emergency level — thanks in part to the efforts of lawmakers, not Obama.
 Another problem with Nutting’s analysis is that the figures are viewed in isolation. Even 5.5 percent growth would put Obama between Bill Clinton and George W. Bush in terms of spending growth, but that does not take into account either inflation or the relative size of the U.S. economy. At 5.2 percent growth, Obama’s increase in spending would be nearly three times the rate of inflation. Meanwhile, Nutting pegs Ronald Reagan with 8.7 percent growth in his first term — we get 12.5 percent CAGR — but inflation then was running at 6.5 percent.
 One common way to measure federal spending is to compare it to the size of the overall U.S. economy. That at least puts the level into context, helping account for population growth, inflation and other factors that affect spending. Here’s what the White House’s own budget documents show about spending as a percentage of the U.S. economy (gross domestic product):
2008: 20.8 percent
2009: 25.2 percent
2010: 24.1 percent
2011: 24.1 percent
2012: 24.3 percent
2013: 23.3 percent
 In the post-war era, federal spending as a percentage of the U.S. economy has hovered around 20 percent, give or take a couple of percentage points. Under Obama, it has hit highs not seen since the end of World War II — completely the opposite of the point asserted by Carney. Part of this, of course, is a consequence of the recession, but it is also the result of a sustained higher level of spending.
 We sent our analysis to Carney but did not get a response. (For another take, Daniel Mitchell of the Cato Institute has an interesting tour through the numbers, isolating various spending categories. For instance, he says debt payments should be excluded from the analysis because that is the result of earlier spending decisions by other presidents.)
UPDATE: The Associated Press also dug into the numbers and came to the same conclusion as we did. “The problem with that rosy claim is that the Wall Street bailout is part of the calculation. The bailout ballooned the 2009 budget just before Obama took office, making Obama’s 2010 results look smaller in comparison. And as almost $150 billion of the bailout was paid back during Obama’s watch, the [Nutting] analysis counted them as government spending cuts,” the AP said. “It also assumes Obama had less of a role setting the budget for 2009 than he really did.”

The Pinocchio Test

 Carney suggested the media were guilty of “sloth and laziness,” but he might do better next time than cite an article he plucked off the Web, no matter how much it might advance his political interests. The data in the article are flawed, and the analysis lacks context — context that could easily could be found in the budget documents released by the White House.
The White House might have a case that some of the rhetoric concerning Obama’s spending patterns has been overblown, but the spokesman should do a better job of checking his facts before accusing reporters of failing to do so. The picture is not as rosy as he portrayed it when accurate numbers, taken in context, are used.

 Three Pinocchios


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