February 19, 2009
Who Are the Big Spenders?By Randall Hoven
How can any Republican complain of Obama's spending habits or complain about his stimulus, given the way Republicans spent "the last eight years"? Well, I'm going to tell you exactly how.
According to the newspapers and TV news, Republicans have no leg to stand on when it comes to spending. President Bush spent more than President Clinton did. He waged an imperial, unnecessary war that sent spending out of control. The Republicans spent more on bailouts than the Democrats did.
President Obama made these sentiments clear, as reported by the Kansas City Star .
Time for some reality checks.
Myth. Our national debt doubled in the last eight years.
Fact. Nope, no matter how you measure it. In fact, if adjusted for inflation, real economic growth and population growth, it didn't budge at all.
Here are the national debt figures in 2000 (President Clinton's last full year) and as currently estimated for 2008 (President Bush's last full year), as provided by our government.
2000 2008 % Increase
Total Debt (dollars) $5,628.7B $9,654.4B 72%
Held by Public ($) $3,409.8B $5,428.6B 59%
Total Debt (%GDP) 58.0% 67.5% 16%
Held by Public (%GDP) 35.1% 37.9% 8%
By no measure did the debt "double" (increase 100%) in the last eight years. By using total debt in nominal dollars, you get to only a 72% increase, not a doubling. But that is nominal dollars, which includes both inflation and real economic growth in a country growing in population. Plus, the "total" debt includes what the government owes itself; it is a figment of government accounting.
The most meaningful number, which is the amount of government debt held by the public (you, me and China) as a fraction of GDP, went up by only 8%. If you also take population growth into account, the amount of debt per capita remained virtually flat the last eight years. (The CIA World Factbook says our current population growth rate is 0.883%. Over eight years, that would lead to an increase of 7.3%, or just about what the debt grew by.)
Was President Obama lying? Of course not. He just sees a glass that is 99% empty as 100% full. He visited 57 states, remember ?
Myth. President Bush increased spending dramatically. Specifically, he spent more than President Clinton did, dramatically increasing our national debt.
Fact. Only if measured in nominal dollars. But by that measure, or even in inflation-adjusted dollars, Clinton spent more than Bush 41, who spent more than Reagan, who spent more than Carter, on down the line. Measured in a meaningful way, namely as a fraction of GDP, Bush spent less than the pre-Bush average, including that of President Clinton. Similarly, he kept national debt below the pre-Bush average.
Here are the figures on federal spending and federal debt held by the public, both as a percent of GDP.
Pre-Bush average (1960-2000) 20.4% 36.2%
Clinton average (1993-2000) 19.9% 45.1%
Bush average (2001-2007) 19.8% 36.0%
Last year available (2007) 20.0% 36.8%
If you see President Bush as suddenly increasing government spending, or generating unprecedented debt, you need new glasses.
Myth. Republicans spent more on bailouts than Democrats. After all, Bush's bailout, supported by John McCain, was $850B while Obama's stimulus was only $787B.
Fact. It is true that 850 is more than 787. But when you get into who really asked for what amounts, and who voted for those amounts, the Democrats are responsible for 80% of all bailout spending - and the worst 80%.
The original bailout proposed by the Bush administration was for $700B and its purpose was to save the financial system. But then Congress added another $150B of "sweeteners" unrelated to financial rescue. New cost: $850B. As for the $700B, it would come in two chunks of $350B each, with the second chunk needing a second request by the President and a second approval by Congress.
But a funny thing happened. By January 8, after three months of bailing out troubled assets, only $267B had been spent and the Bush administration saw no special need for the second chunk of money. Bush left it up to Barack Obama to ask for the second chunk of the bailout money. If Obama didn't want it, Bush was done with the bailout; if Obama did, Bush would go to Congress for the second chunk as a favor to Obama.
On January 12, by letter to Congress, Obama did ask for the second chunk . (President Bush then did the yeoman's task of formally requesting the second chunk, what with him being the actual President and all.)
Then another funny thing happened. The new Obama administration said it needed a second bailout, a totally separate one, as an economic stimulus rather than a financial system rescue. And its cost would end up being $787B. Total cost of the two bailouts: $1,637B (not including future interest payments).
So we can blame $350B on Bush and $1,287B (the $787B second bailout, the second $350B chunk of the first bailout, and the $150B of sweeteners in the first bailout) on Obama and Congress.
By that measure, Obama and Congress get 79% of the blame.
And who, exactly, voted for these two bailouts in Congress? The stimulus passed with 244 votes in the House (all Democrats) and 60 votes in the Senate (57 Democrats and 3 Republicans). Bush's bailout passed with 263 votes in the House (172 Democrats and 91 Republicans) and with 74 votes in the Senate (41 Democrats and 33 Republicans). That is, Obama's stimulus was 99% Democrat and Bush's bailout was 63% Democrat, going by total votes cast in both houses of Congress.
If we weight the price tags of the two packages by party vote, the Democrats are responsible for $1,315B and the Republicans are responsible for $322B, or a bit more than what actually went to rescue troubled financial assets.
Either way you measure it, the Democrats can claim about 80% of the credit for these two major bailouts totaling more than $1.6 trillion of federal spending, increasing by a third our national debt (held by the public), in less than five months time.
Moreover, the 20% credited to Republicans actually went to troubled financial assets. There is at least a case that this money helped avoid a system-wide breakdown of our banking system, and therefore truly saved us from financial catastrophe. The other 80% is more like very expensive confetti, with entrenched Democratic support groups being the confetti suppliers. They get the real money; we get the confetti and the debt.
Myth. Bush spent irresponsibly huge amounts of money on his unnecessary war in Iraq and defense generally, crowding out non-defense spending.
Fact. No he didn't. What he spent was nowhere near unprecedented, as a fraction of GDP. And he spent more on non-defense than Clinton did, even measured as a fraction of GDP.
Spending on national defense went from 3% of GDP to 4% in President Bush's time in office. The US spent more than that from 1941 to 1994, or 53 years. A mere 4% of GDP is historically low, not historically high . Even during its lowest point previously, Jimmy Carter's term, defense spending was 4.7% of GDP.
When we let that figure get low, 1.7% in 1940 and 3% in 2000, we got Pearl Harbor and 9/11. Coincidence?
Not to mention, that 4% of GDP went to fighting wars in two countries, against people who purposely torture and behead civilians, and hardening our homeland defenses against a full spectrum of conventional and non-conventional attacks. (If you think the Iraq war was unnecessary, read my earlier piece, "Who Lied About Iraq".)
From 2000 (Clinton's last year) to 2007 (the last Bush year of available data, and the year of the Iraq "surge") non-defense federal spending went from 15.4% to 16.0%. (Source: US Statistical Abstract.)
Worried about health care? Federal government spending on health care and Medicare went up 30% as a fraction of GDP from 2000 to 2007. Education? It went up 21%. And don't forget the money we sent to Africa to fight AIDS; even U2's Bono praised Bush.
Myth. When Republicans were in charge, they spent too much.
Opinion. Yes they did.
But why do I say that? I say that because I am a limited-government conservative. I waited 50 years for Republicans to be in charge so they could do what they always said they would do: cut taxes, cut spending, cut regulations. They cut taxes a little bit in their first year or two, and that was it. I didn't want them to do the same thing that had been done the previous 50 years; I wanted them to cut, cut, cut.
Instead, Bush gave us prescription coverage under Medicare, No Child Left Behind, ethanol subsidies, massive transportation bills, etc. I've written of this previously (e.g., here and here).
But when all was said and done, spending levels remained about where they were for the previous 50 years (as a fraction of GDP). That is only upsetting to me because I thought Republicans would cut spending.
But if you are a Democrat, you should be pleased as punch. Your worst fears turned out to be unfounded. Here you had a Republican President and Republican majorities in both the House and the Senate and you still got more spending overall, especially on health and education.
Bush didn't touch Social Security. He expanded Medicare and Clinton's AmeriCorps. Grandma was not pushed into the street or forced onto dog food. That draft you said was coming right after the 2004 election if Bush won? It didn't happen.
The only people who should be upset with the Republicans in office are the Republicans who voted for them. The rest of you got what you wanted, namely the same damn status quo that we'd had for the previous 50 years of Democratic-majority rule.
What "failed theories"? So when President Obama said, "What I won't do is return to the failed theories of the last eight years," what failed theories is he talking about? Because the theory on spending that was put into practice the last eight years was the same theory that had been in practice the previous 50!
If you want to try President Clinton's economic "theories" as practiced, be my guest. Because by the time his second term ended, the federal government was spending just 18.4% of GDP, the lowest level since 1966. In addition to cutting spending, he and the Republican Congress at the time also ended Welfare and cut capital gains tax rates. Bring it on!
If Obama wants to go back to those "theories" of government, I beg him to do so. Don't expand health and education programs, like Bush did, but cut taxes and spending, like Clinton did.
Instead, Obama turned logic on its head. He complained about doubling of the national debt under Bush (itself a lie), then increased it by over a trillion dollars in his first month in office. Heck, he increased it by $350B before he was even sworn in (by sending that letter to Congress asking for the second chunk of TARP).
Obama said Bush's theories failed, yet he is doing more of the same - on steroids. Heck, on cocaine. Whatever we're on, it's a bad trip, baby.