Rex Nutting, of the financial website MarketWatch, recently published a column titled, “Obama Spending Binge Never Happened.” In it, Nutting analyzed the spending practices of presidential administrations going back to Dwight Eisenhower in the 1950s. His findings indicate that Obama, whom everyone believes is a reckless appropriator of federal funds, has actually presided over the smallest increase in federal spending since President Eisenhower ended the Korean War in the early 1950s. Using George W. Bush’s last federal budget of $3.52 trillion as a baseline and projecting Obama’s fourth and final budget of his first term to be $3.58 trillion, Nutting figures that the annualized growth of federal spending under Obama will increase by 1.4 percent in his first term. Compare that to Reagan ‘82-85 – 8.7 percent, Bush II ’02-05 – 7.3 percent, and Bush II ’06-09 – 8.1 percent and Obama looks like a frugal fellow.
And don’t think that Obama isn’t going to use the analysis to clear his name and further his reelection chances. In fact, at a campaign stop last week, the president boasted, “Since I've been president, federal spending has risen at the lowest pace in nearly 60 years. Think about that." Now that is an interesting comment. Obama has never wanted to be known as a spendthrift, but he sure doesn’t want to be known as the Herbert Hoover of this financial crisis either. The same Herbert Hoover who is much maligned by Paul Krugman and other Keynesians for not spending enough to prevent the Great Depression from happening. Funny thing is that under Hoover real government spending rose by 12.3 percent per year and we still had the Great Depression. According to Keynesian logic, with Obama’s paltry spending increase we should already be in another Great Depression.
Article comments
— go to most recent comments1 - Mel Blank
I like how the author doesn't bother with any sources for his statements. He just makes them and apparently we readers are supposed to trust he's correct. His history class must be a breeze to pass.
2 - Dr Dreadful
"He can’t claim his spending has kept us out of depression while at the same time claim that his spending has been meager by comparison to other administrations."
He can if he can show that his spending was both more prudent than Hoover's and directed more wisely.
You seem to live in this strange magical economic universe where the only options are either blindly throwing money at a problem (bad) or blindly taking it away (good). Like if you confiscate the government-subsidized word processors from your infinite collection of monkeys they will somehow figure out how to fashion quill pens from the pigeons that frequent their cage and still come up with the works of Shakespeare.
Likewise, Obamanomics isn't the equivalent of hurling a few cans of paint up a wall and expecting to produce the Mona Lisa.
3 - Kenn Jacobine
Doc,
How is that Solyndra investment working out for you? How about all those "shovel ready" projects? Then we have cash for clunkers which did nothing but produce a shortage of used cars for the lower classes. Obama has hurled paint. In fact, any government spending is just hurling paint because government can't just decide what the market requires - consumers do that and then producers provide it to make a profit. It is not a magical economic universe but the basic laws of Economics 101.
4 - Baronius
Kenn - You fell into Nutting's trap. President Obama is responsible for much of the FY2009 spending increase, due to the stimulus measures during his first months. It's not simply a matter of Bush's budgets being large; Obama made FY2009 larger on his own.
5 - Igor
Solyndra? That leftover from the Bush administration?
Solyndra was only a $500million loss, which is small compared to loss subsidies paid to oil companies every year, for a business that makes huge profits without paying federal corp taxes.
Among other things, the stimulus, ARRA, paid $50million for a shovel-ready program to dredge out Alameda slough in the Oakland harbor so that the largest cargo ship in the world could enter. ARRA did a similar project for Long Beach and Charleston and some others.
Remember, harbors are built and maintained by the federal government for the benefit of American business. There's never been a harbor project that was privately financed.
All the major transportation systems in the USA were built by the Federal government and are maintained and improved by the feds.
If we had depended on private enterprise to build transportation systems we'd be driving tin lizzies around on rutted roads and our goods would be delivered from China aboard tall sail Clipper ships.
6 - Kenn Jacobine
Private enterprise does build the roads, bridges, etc... Do you think the federal government owns construction companies? Of course you don't. Without those companies the federal government can't build anything. It is the free enterprise system that has provided those companies and made us rich enough to afford to build the infrastructure we have. Listening to you one would think the feds have done it all.
7 - Kenn Jacobine
I actually do not have a problem with local and state governments building roads. Under the Tenth Amendment that is their jurisdiction. Instead of sending our tax dollars to DC the states should keep more of it to provide for state needs including roads.
8 - Dr Dreadful
Kenn (@ #3): You're cherry-picking - and pretty small cherries at that.
A number of studies have been done on the effectiveness of the stimulus, with a variety of conclusions, but depending on who's doing the analyzing the following have been successful in aiding economic recovery:
- aid to low-income families
- infrastructure spending
- increased Medicaid funding
- tax relief
- aid to states
- investment in science and tech
Last time I looked, the text of ARRA did not read: "Just throw a bunch of money out there and hope for the best". It's a very lengthy statute filled with very specific stuff.
9 - roger nowosielski
@6
The Third Reich built the best autobahn system in anticipation of the war effort -- still rarely if ever in need of repair. The German state didn't leave it up to the private enterprise system to cut the corners and use cheap materials. It was in charge of the construction from start to finish.
10 - Glenn Contrarian
Kenn -
You might not have a problem with the government building roads, but you're missing Igor's point - he's quite rightly pointing out that if it were left up to private enterprise alone, all those roads and bridges and seaports, etc., would never get built. There are things that simply cannot happen without the government as a driving force.
And that's why "being a businessman" should never be some kind of a requirement to be a politician, for while it is really nice if the politician understands business, what's most important is if that politician knows how to govern.
Left to itself, business would never build the nationwide infrastructure needed for businesses to thrive on a national level. Left to itself, the much-ballyhooed privately-owned rocket would never have made it to the space station...for while it was privately-funded, it still could never have happened without the contribution of all the taxpayer-funded astronauts and engineers and bureaucrats all the way back to Wernher von Braun.
11 - Glenn Contrarian
And Kenn -
Obama is a big spender because, Nutting’s irrelevant analysis aside, he is still outspending his big-spending predecessor. Just because the increase in the rate of spending under Obama is small does not make him a responsible custodian of the federal purse strings. Not only has he maintained Bush’s spending spree, but he has slightly enlarged it.
Nice twisting of words there, Kenn. You're trying SO hard to make irrelevant the fact that the degree to which Obama enlarged the budget was lower than that of any president since Eisenhower. ALL Republican presidents since then enlarged the budget by a greater degree.
That, and if you'll look at the little chart on the right side of Nutting's study, you'll find that after 1980, guess who came in second when it came to frugality in government? BILL CLINTON! Reagan, Bush 41, AND Bush 43 grew government at faster paces than either Clinton or Obama!
So...Kenn - are you going to wake up and realize that contrary to conservative doctrine, the Democrats ARE more responsible about government spending than Republicans? Or are you reaching really quickly for another glass of conservative Kool-Aid?
12 - Dr Dreadful
It gets worse, Glenn. What Kenn actually said was that he doesn't have a problem with state governments building infrastructure.
So what if, for example, the state of Tennessee wanted to build a bridge over the Mississippi but the state of Arkansas didn't? This set of bridges might never have been built; and even as they were built, they have quirks, such as that there's pedestrian access from the Tennessee side but not from the Arkansas side.
13 - Glenn Contrarian
Roger -
The Third Reich built the best autobahn system in anticipation of the war effort -- still rarely if ever in need of repair. The German state didn't leave it up to the private enterprise system to cut the corners and use cheap materials. It was in charge of the construction from start to finish.
Which dovetails quite nicely with the opinion of nearly ANY Navy man who's had the opportunity to be stationed on ships drydocked at both government and civilian shipyards. To a man, every single sailor on board dreaded going to civilian-run Todd Shipyards in Seattle. Why? Because we knew that Todd would pay their workers as little as they could get away with (which had the side effect of encouraging thievery by the shipyard workers) and would cut corners on their work as much as possible (which made Todd a much less safe place to work), all in the name of making a profit.
But at Puget Sound Naval Shipyard, the workers were (and are) paid well, they're given all the tools and equipment and resources they need to get the job done right the first time. PSNS is a MUCH safer place to work, and because the workers (most of whom are unionized just like the Todd workers) are NOT driven by the profit motive, they really do care about doing the very best job they can for the sailors on board.
The funny thing is, as much as all that goes against profit-uber-alles conservative doctrine, most of the PSNS workers are quite Republican. Go figure.
14 - Igor
ALL of the great American transportation systems were financed by the government through General Obligation bonds. Private enterprise never puts up a cent.
The government HIRES private construction companies under very good contracts that pay-as-you-go to the private subcontractors. The companies never have to venture a penny.
Transportation projects are managed from end-to-end by government managers and engineers to assure safety, utility and performance.
Private construction companies don't venture money. And they only have management control over their narrow projects, as subcontracted from the government, subject to performance requirements of their contracts.
One must be very inexperienced and incurious to not know how these things work.
15 - Kenn Jacobine
Where does the money come from to buy the bonds? How do people afford to buy the bonds? Only a national socialist would ignore that part of your statement.
16 - Kenn Jacobine
Glenn, the point of my article is that it is a ridiculous analysis to conclude tbat Obama is not a big spender because compared to other presidents his rate of increase in spending is lower. He started out with a budget that was already over spent. He should have cut spending to bring on a correction so we can put it behind us and move on with a growth economy. The next downturn will be a doozy.
17 - Glenn Contrarian
Kenn -
Look again at the graph on the Nutting article, at how the next-most-frugal president was Bill Clinton. Remember how towards the end of the Clinton era we began getting budget surpluses? That's because not only was Clinton not increasing the federal budget like a drunken sailor (as the Republican presidents certainly did), but our taxes were higher.
In this instance, it's just like any household - cutting costs is one thing, but sooner or later the cost-cutting does more harm than good. Any responsible head of a household should not be looking at just ways to cut costs, but also to make more money...which is what happened under Clinton, largely enabled under "No New Taxes" Bush 41 who showed the courage to raise taxes when it was needed. Never mind that today's conservatives would have labeled him a socialist and run him out of the Republican party on a rail.
But any head of a household who cuts household costs but refuses to look at ways to increase household income...is not a good person to have in charge of the household.
So it goes with the government - any politician who cuts costs willy-nilly without due regard to the harm those cuts cause, but refuses to consider even a modest increase in the tax revenue to alleviate the pain of those cuts...is not someone who should be in government.
18 - Baronius
Again, let me say that the Nutting article cheats by counting the ARRA and other spending under President Obama as part of the Bush FY2009 budget.
19 - Kenn Jacobine
But Glenn, the difference between a household and the government is that the household has something the market needs labor and/or entrepreneurship. In order for the government to get more income it has to extract it from taxpayers through taxes or extract it from them through inflation. Government has no resources to sell like households. It only consumes the fruits of the labor of its citizens to survive.
20 - Dr. Joseph S. Maresca
“Since I've been president, federal spending has risen at the lowest pace in nearly 60 years. Think about that."
I agree. Basically, the exits from the Iraq and Afghani wars will reduce the deficit which was aggravated
greatly by fighting two wars concurrently. In addition, the real estate inventory glut should clear out by 2013
as stated by Warren Buffet. The population in the USA has increased from 300MM people to 313MM and
growing. Sooner rather than later, people will need housing and then home sales should spurt due to the
winding down of the current inventory coupled with the natural growth of the population in the USA.
In addition, we need to address infrastructure to accommodate more people.
21 - Dr Dreadful
Glenn, I suspect that if Romney wins the election and subsequently gets into an economic pickle that can't be alleviated by spending cuts and tax breaks, it will be remarkable how many Republicans are suddenly fine with raising taxes.
Some of them many not even impose the proviso that the new revenue can be spent only on the following:
1. Defense;
2. Preventing gays from getting married;
3. Media/publicity campaigns blaming the poor for everything.
22 - Igor
Glenn is absolutely right when he says:
"But any head of a household who cuts household costs but refuses to look at ways to increase household income...is not a good person to have in charge of the household."
Everybody in business knows that. The good executive cuts programs and lays off workers to appease The Board, not to reduce budget. Cuts "blood" the executive: it proves he has the courage to cut and fire. That gives him the credibility to advance his expansion program on The Board. And every executive that goes to the Board with a layoff and cut program MUST have an expansion program in his pocket. The Board doesn't want to go out of business, it wants to re-arm to create a new business or take away somebody else's business. If the Executive doesn't have an expansion plan they'll resort to the default business plan: liquidate and distribute the proceeds to the shareholders (or, get a new Exec!).
A cuts-only policy is a going-out-of-business strategy. Do you want the USA to go out of business?
23 - Kenn Jacobine
Only 69,000 new jobs in May, the stock market sinking like a rock - get ready for QE3. More proof that Obama's spending and Bernanke's inflating have not worked, but more is on the way. Between Romney and Obama I prefer Obama - he has been great for my gold investment!
24 - Dr Dreadful
I saw that headline a couple of hours ago and was wondering how long it would take Kenn or someone else to spin it as Doom.
While most of us know that both the unemployment rate and the stock market have this habit of going up and down rather than following a smooth curve, Kenn lives in a simpler universe.
His #23 rather reminds me of the denialist view of global warming.
25 - Glenn Contrarian
Kenn -
Only 69,000 new jobs in May, the stock market sinking like a rock - get ready for QE3.
OH NO!!! We had ONE month of bad unemployment reports - that means the sky is falling and the world is coming to an end! Run away! Run away!