So what’s the truth? I’ve written about this before, but here’s another take.
The fact is that federal spending rose from 19.6% of GDP in fiscal 2007 to 23.8% of GDP in fiscal 2010. So isn’t that a huge spending spree? Well, no.
First of all, the size of a ratio depends on the denominator as well as the numerator. GDP has fallen sharply relative to the economy’s potential; here’s the ratio of real GDP to the CBO’s estimate of potential GDP:
Five under-appreciated points about the federal budget and debt ceiling:
1. Whenever I need to get my bearings in the debate over the debt, the deficit, or the debt ceiling, I go to the web site of the White House Office of Management and Budget and download historical table 1.3. The story it tells, in very round numbers, is as simple as 2, 3, 4. The federal government spent about $2 trillion in 2000, at the end of the Clinton administration. It spent about $3 trillion in 2008, at the end of the Bush administration. And it is going to spend about $4 trillion in 2011, three years into the Obama administration.
You can fool around with inflation and with the percentage of GDP and with the revenue side of the equation, but the bottom line is that the federal government is spending about double what it was at the end of the Clinton administration. For all the clamor on the left to bring back the Clinton-era top tax rates, there are few, if any, politicians in Washington talking about bringing back the Clinton-era spending levels.
A Few More Charts That Should Accompany All Debt Ceiling Discussions
This chart from the White House, which purports to prove, with the scientific magic of math, that basically everything bad that has happened to the budget is the fault of one George W. Bush, has been making the rounds. My colleague approvingly calls it “Another chart that should accompany all debt ceiling discussions”.
I’m a little less enamored, considering that this graph attributes decisions made by Obama and an all-Democratic Congress–like doubling down in Afghanistan–to Bush, while taking responsibility for basically nothing except the stimulus. When Obama extends the Bush tax cuts for the rich under pressure from Congressional Republicans, that disappears from his side of the ledger, because after all, he didn’t want to do it. When Bush enacts Medicare Part D under pressure from Congressional Democrats, the full cost is charged against his presidency. The list of such silliness goes on. Our president seems set to coin another presidential motto: “The duck starts here.”