October 27, 2010
Paul Krugman's Jihad
In his zeal to convince voters that Obama's $800-plus-billion stimulus was ineffective because it was too small, Paul Krugman of the New York Times has been engaged in a holy war against reality.
In his October 10 column entitled, "Hey, Small Spender," Krugman declares that there "never was a big expansion of government spending" under Obama, because cities and states underwent "drastic spending cuts, more than offsetting the modest increase at the federal level." His clear message is that total government spending has fallen, a premise also advanced by Ezra Klein in the pages of the Washington Post.
In his October 24 column ("Falling Into the Chasm"), Krugman deftly modifies his rhetoric, now contending that the increase in federal spending "was barely enough to offset cutbacks at the state and local level." Hence, he paints another picture -- namely, that overall government spending has been flat.
A glaring void in Krugman's articles (and Klein's) is the absence of any numbers on total government spending, which are exactly what he needs to prove his point. This omission is particularly brazen given that Krugman avows that there is "a widespread perception that government spending has surged" because of "a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers."
So let's test these assertions against the only comprehensive and reliable source of data on this topic, which is the federal Bureau of Economic Analysis. Citing the latest figures, total combined federal, state, and local government spending rose from $5,020 billion in 2008 to $5,345 billion in 2009 -- to a seasonally adjusted average of $5,532 billion in the first half of 2010, which is the most recent available data point.
This constitutes a 10% increase over a 1.5-year period with 3% inflation. In other words, the data flat-out contradict Krugman's and Klein's stories.
Also, contrary to Krugman's claim that cities and states experienced "drastic spending cuts," the reality is that state and local governments slightly increased their spending from $2,186 billion in 2008 to $2,189 billion in 2009 to a seasonally adjusted average of $2,224 for the first half of 2010. This equates to a 2% rise during a period with 3% inflation.
Could it be that Krugman has access to another source of data that is more reliable? According to the Bureau of Economic Analysis, the data published by this agency are the "only comprehensive estimates of state and local government activity available on a timely basis."
Furthermore, since Krugman's central premise in these articles is that government spending is a salve that heals unhealthy economies, why does he limit this question to spending "under Obama"? The recession officially began in December 2007, when total combined government spending was $4,637 billion. Thus, from the outset of the recession through the second quarter of 2010, spending has risen 19% in a period with 4% inflation.
On top of this, in the four years leading up to the recession, total combined government expenditures grew by 21% with 13% inflation.
The bottom line is that rising government spending has been a defining attribute of the current economic debacle. And when all is said and done, we are left with a 9.6% unemployment rate and a crushing national debt that will ultimately sink our nation if we continue with the current profligacy.
James D. Agresti is the president of Just Facts, a nonprofit institute dedicated to researching and publishing verifiable facts about public policy issues.