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Sunday, September 25, 2016

The Insane Idea Hidden In The Debate Over Obama’s Spending

Instead of debating whether Obama is responsible for a spending surge, we should ask why anyone expects the ratio of spending to GDP to remain constant in a recession.

There’s a recent debate about whether or not a federal government spending boom has happened on President Obama’s watch. This was kicked off two days ago by Rex Nutting’s post at MarketWatch, “Obama spending binge never happened.” Nutting notes that “federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.” He argues that the 2009 fiscal year, outside the stimulus spending, belongs to President Bush, as it was four months into that budget when Obama entered the presidency. He draws on OMB’s numbers, which you can access here.

As you can imagine, the right wing has gone into action. Here’s “Actually, the Obama spending binge really did happen” by AEI’s James Pethokoukis, which argues that you must look at the government spending as a percentage of GDP to see the increase. Now there’s a technical debate about how to approach the numbers in the 2009 fiscal year, and there’s a fair debate on how to understand the increase in automatic stabilizers, such as unemployment insurance. Do they “belong” to Obama, given that they were already starting up due to a recession that started in December 2007? And then there’s the economic debate: shouldn’t the proper response have been to run a much larger federal government spending program?

But underneath it is an insane debate about an insane idea — that the government should keep a consistent ratio of government spending to GDP in a recession. The attack on Obama is focused on this number without acknowledging the crazy part of what this number actually does in a recession.

  • Along the same lines is the irrational fear of entitlement spending. Unfortunately, the public has feed into the entitlement hysteria. Confusion runs rampant and fear that the federal government is going bankrpt because of entitlement spending, especially Medicare and Medicaid. Long range forcasts indeed suggest big problems, but in the late half of the 21st century, not now. Look to the Congressional Budget Office for guidance and a non-partisan analysis of the numbers.

    The CBO forecasts assume health care cost will continue to rise steeply during the next 70 years, albeit it a diminishing rate. Assuming nothing is chaged from today’s status quo federal spending on health care will reach approximately 25% of GNP in 2085. We’ve got a little time to address the problem and get it right.

    If you look at the budget released back in February you find on Table S-6 and page 12 that the President’s propossed budget, Medicare and Medicaid would rise slightly from 5.1% of GDP in 2011 to 5.5% of GDP by 2020. Not a cataclysm really.

    Why the panic over something not projected to happen until 2085. Really? Why do we assume that healcare costs will contnue to rise when our’s are already vastly over-priced compared with the rest of the industrial world? We can get it right…if we put partisan politics aside and concentrate on the job at hand.

    Refer to the Wall Street Journal article by J.D. Keinke of the American Enterprise Institute of Feb 17, 2011, exploding the ‘myth’ of runaway health spending. The piece proves that spending over the past few years has been normalizing toward the rate of inflation, and not that of growing and growing as has mostly been the case since the 70’s.

    De we really need to cut off the lifeline of the poor, the elderly and those less fortunate among us? We need to continue to pressure against healthcare lobbies and push back against empty rhetoric.

  • quasm

    Mr. Koczal;

    A better question to ask is what all the spending by Pres. Obama’s administration has gotten us. How has all the job creation resulted in fewer people being employed now than when he took office?

    Dik Thurston
    Colorado Springs

    • Landsende

      Ask that question of the big corporations that are sitting on boatloads of cash they made by sending their jobs overseas but not creating any in this country. Every week you hear about more layoffs by these companies in the United States but not in their operations in China. The teapublicans say the big corporations need lower taxes and less regulation but they have had that for years and still did not create jobs in the United States. President Obama proposed a stimulus package for improving our badly needed infrastructure that would have created thousands of jobs in America and helped the economy but it was shut down by the teapublicans because the worse the economy is they can use to defeat President Obama.

    • When Republicans ask me about Obama’s debt, I ask them to breakdown the 4-5 trillion under him. Let me help: Iraqi & Afganistan wars, Bush tax cuts & Medicare part B, which Bush implemented. Let’s be honest, unless Obama was going to eliminate/end these very expensive programs the debt was going to be there anyway no matter who was President. Most of Obama’s spending was to repair the economic damage he inherited.

      • oldtack

        In perusal of all the postings on National Memo the main contentions ,allegations and concerns center around the National Debt and Entitlement Programs.

        First: The National Debt is for lack of a better word – BAD. Who is to blame? The Republicans say Obama and the Democrats counter with Bush. For the present debacle I place much of the blame on Bush because he reduced taxes and then immediately took us to war in two Countries simultaneously with no money to pay for the expense. Normally, in War situations,a Government raises taxes and severely curtails other normal operations in order to help fund the War. But our government did not do this. Instead it entered into two wars on borrowed money and continued those wars for years – on borrowed money – while conducting the rest of Government as if in a peace -time situation – all on borrowed money. Under Obama, the war has ended in Iraq but still continues in Afghanistan – on borrowed money -and the Government continues to operate as if in Peace -time.

        But – Bush and OBama are not the beginning of this problem. This problem goes back to 1950 and the Korean “Conflict”- on borrowed money -and the “Cold War”- on borrowed money.

        Our Government bagan to operate like a large majority of the citizens “If we want it let’s do it and if we don’t have the cash -just charge it.”

        We have to curtail our deficit spending and make efforts to bring this under control by letting the 12 year tax reduction expire in January while at the same time addressing and curbing expenditures on our myriad of entitlement programs. Do not “throw” all entitlements under the wheels but keep the ones that are deemed vital and address many of the others that are questionable.

        Second: We need to impose term limits. Restrict Senators to two terms and Congressmen to two terms. and work hard to reverse super pac donations to campaigns. Senators and Congressmen are “hired” by we the people to carry out the duties of Governemnt as our representatives. They should be required to report to their Constituents on all of their activity – what they proposed, what they voted for and against and why. And they should be required to stay in Washington with only one trip home every six weeks. In this space age technology they do not need to rush home ,at our expense every week (you should be at Reagan Int. on Thursday evening) nor do they need extensive recesses. They are there to do a job and there is plenty of work that needs their diligence and attention. We do not need Career Politicians doddering around in the Halls for forty to fifty years. Let them work hard – serve their allotted time and then move out and make way for the new generation that has a better understanding of modern day needs.

        We should also eliminate all Life time appointments – including the Supreme Court. But that is another issue.

        Above all – All factions – Liberal, Conservative, Moderate, Independent and whatever persuasion need to shout and voice their personal agendas and then – after all the hullaboo and posturing – sit down together and jointly address the problems before them and inter act until a solution is agreed on and quit this Partisan one upmanship that has our whole system in gridlock.

        Do you think we could make it if we fired the whole 635 yahoos and installed new people that know how to talk to each other. Not feasible – but- it couldn’t be any worse that what we now have.

        • You have a lot of great ideas, but how can any of the people they work for {us} get that message to the government ? Petitions on line ? ? ?

        • D_17

          I disagree about term limits. Maybe the idea had merit once, but we must take into account how the Citizens United decision changed the dynamic of politics.

          Corporations and SuperPacs can now use unlimited money indefinitely, to continue to elect those who are sympathetic to their objectives. When their champion has to step down, they can find and support a new one, and even put their own CEOs and board members, their own lawyers and accountants, into office for that short a time, to be followed by returning to their seat on the Board of their corporation. To be succeeded by their offspring and proteges.

          That means that if they can maintain support for a project, be it corporate welfare and subsidies, tax cuts, bailouts, or legislation limiting their liability for hazards like asbestos, tobacco or the superfund sites, or cleanups like the Deep Horizon mess, eventually all those opposing it will be gone.

          It means the ablest, most competent people will serve only a short time, to be replaced by the mediocre.

          • oldtack

            This is exactly why We the People have to unite and begin fighting back against what I term The Coordinated Corporation Takeover of our Country. Citizens United is a front for these people and a vast majority of those presently serving in Congress are willing participants because they are “in the hip pocket” of Corporate America. They are willing participants so they can protect their individual Washington bureaucracies. They must be replaced at the ballot box.

            Dwight Eisenhower warned against this as he warned us about the danger of becoming a Military Industrial complex. He was correct and we now find our country in the very place that he warned us to avoid.

            We The People need to begin now to make our voices heard. Granted – we do not have the Billions of dollars that the Koch brothers and other Industrialists have but we do have our voices and we need to make ourselves heard. Doing nothing only enforces the present situation and ensures a Military Industrial takeover of this Country that we love – this Country that many of our loved ones fought and died for.

    • johninPCFL

      All the spending like the $260B in tax cuts in the stimulus? So if the stimulus did nothing at all, can we finally stop harping on tax cuts resulting in job creation?

      And since the stimulus was targetted at re-electing Congress, so therefore 2009 spending amounted to $80B or so, can we stop harping on the huge spending blitz? The bulk of the $1.8T increase in the national debt for 2009 was from GWBs last budget and war spending, not the stimulus (GWBs budgets don’t include military costs at all.)

      In 2010 $200B was spent on stimulus projects, and the national debt rose by $1.4T, roughly the same as 2008.

      • oldtack

        To Bunny,
        We have to begin at our individual grass roots to get the Message to all. We should emulate the origin of the Tea Party . They held rallies and got the word before the people of the need for change. I do not care for the tactics of the Tea Party but I do appreciate the manner in which they organized. We need to work in our own areas – hold meetings- have rallies and draw media attention to our cause and we all should work hard to oust any Senator or Congressman that has been in office longer than two terms and be sure to let the media and the public know the reason. It will take time but it will get support. We the People need to reclaim our power and OUR Government.

  • How do they account for the various wars that Bush got us into?

  • perplejado

    I’m always amazed at the response I see to articles. My conclusion is that people already have their minds made up and the argument presented is missed. Mr. Thurston the net effect of President Obama’s spending is that the recession was stemmed and its impact muted, although not as much as it should have been, if his opponents were not so shortsighted. Without the stablishers that the article referred to, the economy would have contracted even farther. Dollars injected into a stagnate or contracting economy are subject to a multiplier effect that increases its value as it circulates in the economy, thus creating some demand that otherwise would not be present. However, as the article pointed out, the economy was contracting in 2008 and revenues fell and government spending remained constant, thus the reason the increase in government spending as a percentage of GDP. When the economy improves, you will see a reversal of this trend, barring any unforeseen events, such as a war.

  • montanabill

    Obviously a fellow at some institute where they specialize in convoluted logic and weird economics. Their conclusion: we need a really big government with lots of government spending and we’ll never have a depression again. Maybe they are on to something, did the Soviet Union or Cuba ever have a depression?

    • Obviously you are uneducated in even the basics of macro economics.

      • William Deutschlander

        Actualy Patrica, MontanaBill does not know what the he-l he is babbling about, EVER, He is a fourth generation conservative because the family has always voted conservative, unable to think or reason for himself.

      • montanabill

        On what educational basis do you make that ‘informed’ opinion?

  • William Deutschlander

    After the Republican 2008 GREAT RECESSION, resulting from the malfasance of 2000-2008, ANY Republican, GOP Representative that says anything other than PRAISE for the GOVERNANCE of the past 3.5 years, is a damn fool and a liar!

    Thank YOU Obama & Administration for saving the WORLD & the USA from the FINANCIAL RUIN of the REGIME that SANK OUR ECONOMY from 2000 through 2008.

    Under so called CONSERVATIVE ADMINISTRATIONS the REPUBLICANS are responsible for approximately FIFTEEN TRILLION DOLLARS of our NATIONAL DEBT, which is now APPROACHING SEVENTEEN TRILLION DOLLARS! They, the GOP, sure do know how to lie and swindel the public!

  • ckibbey80

    We’re still living with the Reagan mess from the 1980’s when he “built up” the military, which cost us a bundle…we were armed to the teeth with no one to fight…and now, we have the Iraq/Affgan wars that dear “W” got us into, to the tune of God knows how much (we will never know how much was spent dollar wise). The GOP is largly a lying sack of s— and its middle name is doodoo. That is not to say that the Democrats are little angles, either.

    • Just as importantly we must acknowledge that Reagan also opened the door to “too big to fail” corporations by way of deregulations that allowed for the massive amount of leveraged buyouts and mergers, swallowing up much of the competition and causing massive layoffs as well as changing the dynamics of business. It’s the reason we broke up companies like Ma Bell.

  • JohnRNC

    Well said William! The GOP in general and the Tea Party in particular have been trying to re-invent our economic woes as a fault of the Obama Admin. ever since the early days of the 2010 campaign. They depend on a public that is addicted to instant gratification, poorly educated and even more poorly informed. Bush’s win in 2004 illustrates this disturbing trend and the fact that what ought to be the obvious TRUTH has less of an impact than sound-bites and repetition of false rhetoric.

    I fault the Obama Admin for not setting the record straight sooner and more forcefully. Hopefully now that this election has arrived, they will push harder. The truth is supposed to win in free democratic systems. Let us all hope, pray and work hard to see that it still works.

  • Those who do not learn the lessons of history are doomed to repeat it. I am 72 years old. I will never forget the stories of my parents and grandfather how they lost everything. My Grand Father was a college professor and was forced to take work as a m

  • Republicans like to tell a big whopper about how much of the deficit is Obama’s. They claim that the deficit was $10 trillion when Obama started and is $15 trillion now, blaming Obama for $5 trillion. But $4 trillion of that is Bush’s. Obama put on the books about $4 trillion of spending for the two wars in the MidEast and Medicare Advantage D. These are GW Bush’s unfunded expenditures. They are not Obama’s. All Obama did was put them on the books. Obama explained this in Febuary 2009 when he did it. You can read about it in the New York Times from then.
    Which Presidents increased the deficit the most? According to the U.S. Treasury Dept.
    Reagan 189%…GH Bush 55%…B Clinton 37%…GW Bush 115%…B Obama 16%

    • dude, those figures are bogus. all of them in your rant, bush did not include the war into his budget, but it was i9ncluded into his debt. the 4 trillion is all barrys. and if we keep up all the longterm unemployment benefits, unemployment #’s will go down as they fall off the rolls.

  • It truly amazes me the expectations placed on Obama as if he was not a mere mortal. Obama inherited the worst recession since the Great Depression, a housing bubble burst that 2.38 million in foreclosure, a Wall St. financial collapse that nearly destroyed the world’s economy, not one, but TWO of the longest wars in American history, simultaneously and it all occurred before Obama was even elected. We lost 53,000 factories and 6,000,000 manufacturing jobs under Bush tenure, and we were hemoraging 750,000 jobs PER MONTH when Obama took office. Obama doesn’t run the government alone. He has had to contend with Congress and the other party. But the Republican’ts have had an entirely different agenda. They who secretly conspired to undermine the Obama presidency from it’s first day. The plot to obstruct, to filibuster, to block and oppose his actions at every turn was hatched on inauguration night Jan 20, 2009 at a private dinner organized by Frank Luntz. Mitch McConnell said it. ‘The single most important thing we want to achieve is for President Obama to be a one-term president.” And so they did.
    It was the Republican’ts who held the economy hostage in a manufactured debt ceiling crisis that caused the nation’s credit rating to be lowered for the first time in history. It was the Republican’ts who voted down the deficit reduction resolution, apparently because they didn’t want the president to share credit.
    It’s the Republican representatives who conspired with one man, Grover Norquist, and signed his pledge to never raise taxes at any time under any circumstances, conflicting with their oath of office.
    It’s the Republican representatives that falsely campaigned on a platform of “Jobs, Jobs, Jobs” in 2010. Once in office, all their talk about jobs evaporated. For they are only concerned with abortion issues, tax cuts for the rich, and grabbing back the whitehouse.
    It’s the Republican representatives who secretly conspired with 300 corporations behind closed doors of American Legislative Exchange Council (A.L.E.C.) to write legislation advantageous to the corporate oligarchy at the expense of the American people. The only “people” in the United States the Republicans represent anymore are the corporations, as decided by an activist, conservative Supreme Court majority in the unprecedented ‘Citizens United’ decision and union busting via attacks on collective bargaining. One day the corportacracy’s strangle hold on the masses will be so complete, their control of Washington will be totally suffocating…not allowing any interference with their agenda, which is of course to turn the remaining population into virtual slaves. We have become a corporate obligarchy.
    The obstructionist Republican’t-controlled house have filibustered everything. The Republican’ts invoked the 60 vote majority rule in the Senate more times during this session than any Congress in history. The Republican’ts have blocked more than 60 Obama appointees forcing many agencies to operate without proper leadership. The Republican’ts have time and time again walked out of negotiations. The Republican’ts have repeatedly moved the goalpost. In the runup to the last elections, the Republican’ts campaigned on a platform of “Jobs, Jobs, Jobs”. Once in office, all their talk about jobs evaporated. I have not heard one word from Republican’is about jobs, except a false claim that Obama has not created any. ‘Just say no’ is the Republicant slogan. ‘No Compromise’ is the Republican’t mantra. ‘Defeat Obama’ is the Republicant agenda.
    Despite that, today the unemployment rate is down to its lowest level in 5 years. 26 straight months of Private Sector Job Growth, 10 straight quarters of Economic Job Growth and the best sustained growth in Manufacturing in 2 decades. Not to mention (but I will) Stock Markets are seeing Dow Jones rises to four-year high, The broad S&P 500 index tops the 1,400 mark for the first time since the financial crisis began and Nasdaq is Soaring. GM is once again the number one car company in the world. Chrysler’s improved financial performance pushed its value to $7.5 billion at the end of 2011, a 56 percent gain from its 2010 value of $4.8 billion.Chrysler had its best profit in 13 years, net profit is up 300% in the 1st quarter of 2012. Added 9500 jobs since June 2009. Only $1.3 billion debt left to pay back. And Osama Bin Laden sleeps with the fishes at the bottom of the deep, dark ocean floor.

    • DukeDacat

      Bravo!!! The most excellent and most comprehensive comment I have read on this website.
      Thank you for setting the record straight.

  • joyscarbo

    MEMORIAL DAY THOUGHTS…

    This just in from the AP:
    “A staggering 45 percent of the 1.6 million veterans from the wars in Iraq and Afghanistan are now seeking compensation for injuries they say are service-related. That is more than double the estimate of 21 percent who filed such claims after the Gulf War in the early 1990s, top government officials told The Associated Press.
    What’s more, these new veterans are claiming eight to nine ailments on average, and the most recent ones over the last year are claiming 11 to 14. By comparison, Vietnam veterans are currently receiving compensation for fewer than four, on average, and those from World War II and Korea, just two.”

    With the economy as bad as it is, how can the govenrment/taxpayers afford all these disability claims? Furthermore, how can we NOT find the money for our soldiers who served? The issue of providing our veterans with the support they need is something that neither side- repub or dems- are talking about as a very real issue.

    In the past 6+ years, I’ve worked as an ER RN and I’ve worked in Public Health. Vetrans are hurting. They’re showing up in crisis to the ER’s and the Public Health Veteran’s Services offices are overwhelmed. My city’s Veterans Hospital is also over-flowing and the services available are not able to meet the demand. We are at a critical turning point in our country. We need compassionate leadership and citizens to meet the needs of those who gave their minds, bodies and soul for our country. What these men and women deserve is enormous.