Economy
Related: About this forumFederal spending by the Obama administration
It seems that not too long ago I saw a chart that showed that the federal spending by Obama's Admin was the lowest in decades. This chart included Reagan, Carter, Clinton, both bushes and I think Nixon, but I'm not sure on that.
I have looked high and low for that chart to find out where it came from and have hit a stone wall. Could anyone here point me in the right direction? I've looked at factcheck.org and also the CBO website, but it showed spending to be at record levels!?
Thanks in advance for any aid.
elleng
(130,974 posts)Scuba
(53,475 posts)joshdawg
(2,650 posts)Thank you!
Mattias
(25 posts)Goverment spending in economic terms is the accumulated spending of everything in the public realm.
The base formula for GDP is G+I+C+X-IM=GDP, that is Goverment+Investmets+Consumption+Exports-Imports.
For goverment, G, this is federal, state etc. etc. Also as the real economy contracts a neutral level of public spending will increase in relation to GDP, eg. assume GDP is 100, G=30, I=20, C=60, X=10, IM=20 meaning that public spending equals 30 % of GDP. Should C shrink to 40, all else equal GDP would be 80 with public spending at 30 this gives a level of public spending in relation to GDP of 37,5 % of GDP without any actual increase.
Nominal spening also increase with time as inflation automatically lead to more nominal dollars spent. Eg. with an inflation of 2 % and public expenses increases with inflation $ 100 in spending jan 1 2012 will be $ 102 jan 1 2013. In practial terms a debt of $ 16 000 bn. today would if increasing with average inflation and growth equal to $ 5 400 bn. 1980 in real terms, stabilizing debt today and assuming same growth and inflation would mean that in real terms the debt in 10 years would be $ 9 900 bn. in real terms.
To complicate more goverment spending in most countries are anticyclical, meaning that in bad times revenues go down and spending go up, less taxes in as individuals and firms earn less, expenditure go up as more get unemployed.
For a goverment in an economy with inflation to spend less dollars it has to actually cut, staying neutral will lead to more dollar spending, for a goverment to stay at a neutral level of GDP in a shrinking economy it also means it would have to cut at the same rate as the shrinkage in the economy.
Perhaps this is more confusing then simplyfing but in summa it means that even in a neutral economy the dollar amount of spending will increase, also in a shrinking economy the share of goverment spending of GDP will increase.
It is from a economic viewpoint useless to look at nominal spending as a way to measure public spending, more usefull is to look at public spending in relation to GDP but that also has flaws as all else equal a growing economy reduce public spending and a shrinking economy increse spending.
So yes in nominal terms the public spending has incresed in dollars and also incresed as share of GDP. The first is explained by inflation and the second from recession.
From an economist pov its more interesting to look at structural and cycle federal revenue and spending. Eg. whitout Bush (Obama) tax cuts and with 2005 spending there would be a surplus of $ 8 000 bn. in the federal budget. $ 7 000 bn. cyclical and $ 1 000 bn. structural over the budget period. meaning that half of the public debt of today could be repayed the next ten years. With Clintonomics the same would be $ 18 000 bn. and $ 1 000 bn. in surplus amounting to no public debt and $ 3 000 bn. net assets held at end.
With current tax policy and spending policy the figure of importance is the structural deficit, that is the revenues and expenses that no matter economic cycle would remain, currently that number is 1 % of GDP so increased taxation and/or savings will make the budget neutral longterm.
That is also the only number of real importance, in bust times the defecit will automatically rise, in booms the surplus would automatically nullify earlier defecits. The cyclical surplus or defecit on the other hand is not of great importance as cycles to the extent we know will always come and go. To make a budget now revenue neutral would mean a massive surplus in boom times as much as making a budget revenue neutral in boom times would mean either a massive defecit or massive cuts in bust times.
mostlyconfused
(211 posts)I mean, the statement that "federal spending by Obama's Admin was the lowest in decades" is false. As provided in a comment already, there is a chart to show the rate of increase in federal spending, if all stimulus and tarp is assigned to Bush, is at the lowest in decades. Actual spending, both in real dollar terms and as a percentage of GDP is I believe at its highest level in decades.
abbyjoseph
(16 posts)Trouble is, "you can make the numbers tell you what you want if you torture them enough," said Rudolph Penner, a former director of the Congressional Budget Office.
Here's what we know about spending and deficits during the Obama administration: They started climbing sharply in late 2008, even before he took office, and have remained high since.
In fact, both spending and debt have been far above their historical norms as a percent of GDP. Revenue, meanwhile, has been treading near 60-year lows.
http://money.cnn.com/2012/06/22/news/economy/obama-spending/index.htm
Yo_Mama
(8,303 posts)progree
(10,909 posts)Note: all figures in this section are actual, not budgeted. I only point out that Bush signed the FY 2009 budget.
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"] v-last Bush budget was FY 2009 (all figures are actuals, not budgeted)
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"] 2008 2009 2010 2011 2012 Fiscal Year
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"] 2,979.7 3,518.0 3,456.0 3,598.0 3,540 Total Outlays
[div style="display:inline; font-size:1.37em; font-family:monospace; white-space:pre;"] (455.7) (1,414.0) (1,294.0) (1,296.0) (1,091) Surplus (deficit)
Source of FY 2008 through FY 2011: http://www.issuewonk.com/gov.asp?ID=Spending%20History%202008-2012
. . . who in turn says the source is the CBO (Congressional Budget Office)
Source of FY 2012 (September 2012 is preliminary so FY 2012 is preliminary):
. . . http://www.cbo.gov/publication/43656 which links to the complete document at
. . . http://www.cbo.gov/sites/default/files/cbofiles/attachments/2012_09_MBR.pdf
So FY 2012 federal spending (prelim) is only a $22 billion increase (0.62% increase) over FY 2009 (the last Bush budgeted year) [z the FY 2012 number needs updating, I didn't check 2/4/13 for any update-see below for what might be final: tg1734.aspx]
Since the nominal GDP increased by 13.44% between FY 2009 (a recession low point) and FY 2012 (see next paragraph), which is more than the 0.62% increase in federal spending, that means federal spending as a percentage of GDP actually dropped during those 3 years -- from 25.24% of GDP to 22.41% of GDP (calculations below)
In Current Dollars: GDP FY 2009 = 13,937.5 . GDP FY 2012 = 15,811.0 -- an increase of 13.44% over FY 2009.
Source of GDP figures: http://www.bea.gov/national/xls/gdplev.xls
where FY 2009 = Q4 2008 through Q3 2009. And FY 2012 = Q4 2011 through Q3 2012. [z I didn't update Q3-2012 2/4/13]
FY 2009: Spending / GDP = 3518/13938 = 25.24% . FY 2012: Spending / GDP = 3540/15811 = 22.39%
See the next section that explains that the Fiscal Year 2009 budget (Oct. 1, 2008 - Sept 30, 2009) was signed into law by G.W. Bush, and how the CBO on January 7, 2009 (13 days before Bush left office) projected a $1.2 trillion deficit for FY 2009. So all but about $200 billion of FY 2009 spending and deficits was "baked in" before Bush left office.
Some righties telling you that Obama doubled the last Bush deficit, from less than 500 B$ to more than a trillion dollars?
They are trying to make you think that the last Bush year was Fiscal Year 2008. Actually, the last Bush budget (FY 2009) contained a projected deficit of $1.2 Trillion. Fiscal Year 2009 covers 10/1/08 - 9/30/09 -- the last 3 2/3 months of the Bush Administration plus the first 8 1/3 months of the Obama administration. The budget for FY 2009 was signed into law by Bush. It contained a projected $1.2 trillion deficit according to FactCheck.org:
The fiscal year ended on Sept. 30, 2009, with the deficit at $1.4 trillion. But only some of that was Obamas doing. We conducted an exhaustive study of the spending bills Obama signed for that year, and concluded that Obama can be fairly assigned responsibility for a maximum of $203 billion in additional spending for fiscal 2009. Others put the amount lower: Economist Daniel J. Mitchell of the libertarian CATO Institute who once served on the Republican staff of the Senate Finance Committee has put the figure at $140 billion.
More: http://factcheck.org/2012/09/romney-obama-court-moms-distort-facts/
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More on the national debt and deficits: http://www.democraticunderground.com/111622439#post5