This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published September 20, 2012 on Forbes.com.
On May 24, 2012, Rick Ungar told the readers at Forbes.com that President Barack Obama “is the smallest government spender since Eisenhower.” “[O]ur president has actually been tighter with a buck than any United States president since Dwight D. Eisenhower,” Ungar insisted.
But Ungar actually reveals the error in the underlying analysis, saying, “The first year of any incoming president term is saddled – for better of for worse – with the budget set by the president whom immediately precedes the new occupant in the White House. Indeed, not only was the 2009 budget the property of George W. Bush – and passed by the 2008 Congress – it was in effect four months before Barack Obama took the oath of office.”
This is factually incorrect.
The previous president proposes a budget, in February of the prior year. But the previous Congress approves, enacts and implements the budget. And what Congress approves, enacts, and implements can be radically different from what the President proposes.
President Bush did not have a good record on spending. From the start of his first term, he and the Republican Congress began a spending spree that increased government spending by one seventh as a percent of GDP, virtually exactly erasing the gains achieved by the Congress led by former House Speaker Newt Gingrich, in conjunction with President Bill Clinton.
But for fiscal year 2009, President Bush in February, 2008 proposed a budget with just a 3% spending increase over the prior year. Recall, however, that in 2008 Congress was controlled by Democrat majorities, with Nancy Pelosi as Speaker of the House, and the restless Senator Obama in his fourth year in the Senate. As Hans Bader reported on May 26 for the Washington Examiner, the budget approved, enacted and implemented by Pelosi, Obama and the rest of the Congressional Democrat majorities provided for a 17.9 percent increase in spending for fiscal 2009!
Actually, President Obama and the Democrats were even more deeply involved in the fiscal 2009 spending explosion than that. As Bader also reports, “The Democrat Congress [in 2008], confident Obama was going to win in 2008, passed only three of fiscal 2009’s 12 appropriations bills (Defense, Military Construction and Veterans Affairs, and Homeland Security). The Democrat Congress passed the rest of them [in 2009], and [President] Obama signed them.” So Obama played a very direct role in the runaway fiscal 2009 spending explosion.
Note as well that President Reagan didn’t just go along with the wild spending binge of the previous Democrat Congress for fiscal year 1981 when he came into office on January 20 of that year. Almost no one remembers now the much vilified at the time 1981 Reagan budget cuts, his first major legislative initiative. Then Democrat Rep. Phil Gramm joined with Ohio Republican Del Latta to push through the Democrat House $31 billion in Reagan proposed budget cuts to the fiscal year 1981 budget, which totaled $681 billion, resulting in a cut of nearly 5% in that budget. Obama could have done the exact same thing when he entered office in January, 2009, even more so with the Congress totally controlled by his own party at the time.
Reagan then ramped up the spending cuts from there. In nominal terms, non-defense discretionary spending actually declined by 7.1% from 1981 to 1982. But roaring inflation at the time actually masks the true magnitude of the Reagan spending cut achievement. In constant dollars, non-defense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983. Moreover, in constant dollars, this non-defense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms! By 1988, this spending was still down 14.4% from its 1981 level in constant dollars.
Even with the Reagan defense buildup, which, remember, won the Cold War without firing a shot (in Margaret Thatcher’s famous phrase), total federal spending as a percent of GDP declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989. That’s a real reduction in the size of government relative to the economy of 10%, a huge achievement.
In sharp contrast to Reagan, Obama’s first major legislative initiative was the so-called stimulus, which increased future federal spending by nearly a trillion dollars, the most expensive single piece of legislation in history up to that point. This record shattering spending bill only stimulated government spending, deficits and debt. Contrary to official Democrat Keynesian witchcraft, you don’t promote economic recovery, growth and prosperity by borrowing a trillion dollars out of the economy to spend a trillion dollars back into it.
But this was just a warm up for Obama’s Swedish socialism. Obama worked with Pelosi’s Democrat Congress to pass an additional, $410 billion, supplemental spending bill for fiscal year 2009, which was too much even for big spending President Bush, who had specifically rejected it in 2008. Next in 2009 came a $40 billion expansion in the SCHIP entitlement program, as if we didn’t already have way more than too much entitlement spending.
Ungar’s analysis proceeds by not counting as part of Obama’s record all this precedent shattering fiscal 2009 spending, attributing that instead to Bush. But as I have just shown, Barack Obama was directly and personally responsible for the 2009 spending explosion. Of course from those stratospheric heights, the pace of further spending increases may seem slower, just like if Jack in the Beanstalk and the Jolly Green Giant both eat the same feast, the percentage weight gain for the Giant will be so much smaller than for Jack.
Moreover, in the 2010 election, the voters elected a Republican majority House in a New Deal size, 63 seat landslide, precisely to shut down President Obama’s runaway federal spending, deficits and debt. So that slowed the growth of federal spending in President Obama’s last two years in office, though the Republican House had to take Obama to the brink of default on the national debt to win any spending restraint at all.
Of course, that didn’t stop Obama from earning his crown as the biggest government spender in world history. The biggest single spending bill in world history, Obamacare, was enacted in March, 2010, before the 2010 elections could shut Obama down. That legislation, not yet even counted in Obama’s spending record so far because it mostly does not go into effect until 2014, is now scored by CBO as increasing federal spending by $1.76 trillion in the first 10 years alone, with trillions more to come in future years. Indeed, as explained in detail in my 2011 book, America’s Ticking Bankruptcy Bomb, that is surely still a gross underestimate.
After just one year of the Obama spending binge, federal spending had already rocketed to 25.2% of GDP, the highest in American history except for World War II. That compares to 20.8% in 2008, and an average of 19.6% during Bush’s two terms. The average during President Clinton’s two terms was 19.8%, and during the 60-plus years from World War II until 2008 — 19.7%. Obama’s own budget released in February projects the average during the entire 4 years of the Obama Administration to come in at 24.4%, the highest for any Presidential term in American history, except for World War II. Even with a Republican Congress holding him back for half his term, President Obama still managed to increase the federal government by close to one-fourth during that one term, as compared to the average during the entire 60 plus years of the postwar era.
In sharp contrast, when Eisenhower came into office in 1953, he cut federal spending that year of $76.1 billion, already just 2% of Obama’s spending this year, to $70.9 billion in 1954, and again to $68.4 billion in 1955. Federal spending did not really climb above the 1953 level until 1958. During his first term, Eisenhower slashed federal spending from 20.4% of GDP when he came into office in 1953 to 16.5% of GDP in 1956. President Obama as noted above did just the opposite in increasing federal spending by roughly the same amount as a percent of GDP in his one term.
Moreover, unbounded by the Republican House in his 2013 budget proposal for the future, President Obama’s 2013 budget actually proposes to spend $47 trillion over the next 10 years, the highest in world history by far. Indeed, in that 2013 budget, President Obama proposes to send federal spending soaring by 2022 to $5.820 trillion for that one year, the highest government spending for one year for any nation in world history. Even Obama’s own OMB scores spending under the President’s 2013 budget as soaring to 30% of GDP by 2022, 50% above the long run, postwar, historical average of 20% of GDP. So Obama aims in his 2013 budget to increase the federal government by half above the postwar, bipartisan consensus.
CBO projects that on our current course, under current policies, federal spending would soar to 30 percent of GDP by 2027, 40 percent by 2040, 50 percent by 2060, and 80 percent by 2080. President Obama, by vociferously opposing any entitlement reform to reduce spending, instead vastly increasing entitlement spending with Obamacare and expanded SCHIP, would not do anything to take America off this path to third world oblivion. But the Left tells us that President Obama is tighter with a buck than any President since Eisenhower. That is why leaving liberals alone to play with numbers is like leaving small children alone to play with matches.