Debunking the latest from the New York Times on “smaller” government spending

posted at 11:21 am on May 7, 2012 by Morgen Richmond

The government is getting smaller under President Obama, proclaimed an astonishing headline in the New York Times last Friday. Really?

For the first time in 40 years, the government sector of the American economy has shrunk during the first three years of a presidential administration.

Spending by the federal government, adjusted for inflation, has risen at a slow rate under President Obama. But that increase has been more than offset by a fall in spending by state and local governments, which have been squeezed by weak tax receipts.

In the first quarter of this year, the real gross domestic product for the government — including state and local governments as well as federal — was 2 percent lower than it was three years earlier, when Barack Obama took office in early 2009.

The story includes a link to a series of charts showing the growth rate in the Gross Domestic Product (GDP), and the government spending component of GDP, under President Obama compared to prior administrations dating back to the first Bush presidency. But the key chart is this one:

It took me a while to figure this out, but what they’ve done is plotted the percentage change in GDP and government spending relative to what the total was at the end of the first quarter of 2009. So the totals at the end of the President’s first quarter in office were used as the baseline to which all subsequent quarters through the end of March 2012 were compared to. This explains why the rate of GDP growth in the chart above (the black line) is shown exceeding 5% when it has never exceeded 4% for any quarter under President Obama, and has been no higher than 3% since early 2010. These figures are based on cumulative totals, computing the net percentage change in GDP since the end of March 2009. The cumulative increase in GDP over the last 3 years is actually 6.6%, which represents very stagnant growth on a historical basis.

The brown line in the chart then represents the percentage change in the government spending component of GDP since March 2009; and in fact, the total for the first quarter of 2012 was 2% lower than the total for the same quarter in 2009.

If you are confused by all this perhaps that’s what the Times intended because their data is misleading in a couple of critical ways. First and foremost, total government spending adjusted for inflation was actually higher on a calendar-year basis for 2009, 2010, and 2011 when compared to 2008, or any other year of the Bush administration. The only actual reduction in overall spending came in 2011 when spending declined by $54B relative to 2010, but the mid-term elections undoubtedly had a lot to do with this.

The Times piece is also misleading because by focusing on GDP, their data includes only direct government expenditures on goods, services, and investments, while leaving out two key categories which now make up well over 50% of total government spending: transfer and interest payments. Government transfer payments (e.g. Social Security, Medicare, food stamps) have increased by over 15% from March 2009 to March 2012, and interest payments on government debt have increased by over 30% (neither figure is adjusted for inflation). This spending ultimately shows up in the private sector for the purposes of computing GDP, but would normally be included in any discussion about the growth in government spending.

Even excluding interest and transfer payments (which really shouldn’t be excluded), the Times’ assertion that federal spending has “risen at a slow rate” under Obama is ridiculous. As you can see in the chart I created below, federal spending (included in GDP) has increased in every single quarter compared to March 2009, while state and local spending has dropped like a rock.

While the Times disclosed that the overall decline was due to spending reductions at the state and local level, I doubt many Americans would view a 5-10% increase in federal spending as a “slow rate” of growth, especially with their own incomes stagnating. And if the President had his way the past couple of years, these totals would be even higher.

But perhaps the most egregious point is from later in the Times piece where they suggest that overall growth, and hence poor President Obama, has suffered due to a lack of “acceleration” of government spending. Where exactly do they think the government gets the money that it spends? A dollar taxed is a dollar not spent in the private sector. After racking up an additional $5 trillion in debt since January 2009, is the Times suggesting that we should have borrowed even more?


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

So how did we rack up $5 trillion in new debt…?

NeoKong on May 7, 2012 at 11:25 AM

This reminds me of how ObamaCare was going to reduce the deficit. NYT continues to deface itself as a “news” operation.

Bitter Clinger on May 7, 2012 at 11:27 AM

After racking up an additional $5 trillion in debt since January 2009, is the Times suggesting that we should have borrowed even more?

Well, the NYT does employ Paul “More Stimulus” Krugman.

Bitter Clinger on May 7, 2012 at 11:28 AM

Debunking the latest from the New York Times on “smaller” government spending

Breaking! New York Times discovers unicorns are real—90% of liberals concur/agree.

Rovin on May 7, 2012 at 11:28 AM

So how did we rack up $5 trillion in new debt…?

NeoKong on May 7, 2012 at 11:25 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

Yeah, but FoxNews is toxic and lies or something.

JAM on May 7, 2012 at 11:32 AM

So how did we rack up $5 trillion in new debt…?

NeoKong on May 7, 2012 at 11:25 AM

This.

And can anyone tell us what we spent the $5T on? Hookers, Vacays to Spain and Hawaii, and what else?

faraway on May 7, 2012 at 11:33 AM

just go with it, the lib talking heads will EAT THIS UP

valerie sending out email texts to them all now

cmsinaz on May 7, 2012 at 11:33 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

That darn Bush….
We need to vote him out this November.

Electrongod on May 7, 2012 at 11:34 AM

Do you think Romney will prop up the NYT once he becomes President
to save the other face for the “moderates”?

George Bush should have let GM die…..

redguy on May 7, 2012 at 11:34 AM

Lot of stories about the Times lately, eh?

thebrokenrattle on May 7, 2012 at 11:35 AM

And to think Bill Keller doesn’t like partisan media (aka FOX)…. and yet feels his NYT is unbiased and not partisan.

The lefts capacity for capricious LYING is growing.

and their emperor is naked.

FlaMurph on May 7, 2012 at 11:36 AM

The Jon Corzine defense. We don’t know where the money went. All we know is it didn’t get spent.

antipc on May 7, 2012 at 11:36 AM

And then at the NYT you decline comments so no one can point out that you cooked the books. Pathetic

Bensonofben on May 7, 2012 at 11:37 AM

Where exactly do they think the government gets the money that it spends? A dollar taxed is a dollar not spent in the private sector. After racking up an additional $5 trillion in debt since January 2009, is the Times suggesting that we should have borrowed even more?

According to Paul Krugman that’s exactly what the United States should be doing.

Krugman does write for the NYT.….. so there’s that.

Dr Evil on May 7, 2012 at 11:37 AM

spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

I believe that cost $800B cumulative. Any ideas on the other $4T? Greek columns?

faraway on May 7, 2012 at 11:39 AM

Where is the comment section on that article? There were LOTS of comments questioning the statistical math and the twisted logic behind this article……

bicraftuallass on May 7, 2012 at 11:39 AM

And thank you, Morgen Richmond.
We in the qualitative wing of the social sciences depend upon people like you with the patience to wade through all the rhetoric regurgitated by buffoons with Ø credibility and paint it black.
~(Ä)~

Karl Magnus on May 7, 2012 at 11:39 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

….THIS! ^^^ IS YOUR BRAIN… ON DRUGS!

KOOLAID2 on May 7, 2012 at 11:39 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside

Like your messiah, you repeatedly show you have no idea what you are talking about, you have no idea what is going on and you haven’t a clue about the economy, taxes or how wealth is created.

“From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. According to the Treasury Department, individual and corporate income tax receipts were up 40 percent in the three years following the Bush tax cuts. And (bonus) the rich paid an even higher percentage of the total tax burden than they had at any time in at least the previous 40 years. This was news to theNew York Times, whose astonished editorial board could only describe the gains as a “surprise windfall.” Washington Times

But like our 4 yr. old in the WH, who plainly admitted that even though higher revenues are realized, he doesn’t want to give tax cuts b/c it’s “not fair”! Even though the “rich” paid more with lower tax rates! You are an epic tool!

JAM on May 7, 2012 at 11:40 AM

Government spending is down and chocolate rations are up.

FruitedPlain on May 7, 2012 at 11:40 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

The wars are about $80 billion a year. The tax cuts account for around $400 Billion less revenue.

The other 4 Trillion comes from INCREASED SPENDING. The stimulus of 2008 was added to the baseline and the government has been gladly spending it ever since. Guess you didn’t read the post . ..

PastorJon on May 7, 2012 at 11:40 AM

You really can”t make this sh!t up!

If only we as a nation could hold these liars accountable.

D-fusit on May 7, 2012 at 11:41 AM

Guess you didn’t read the post . ..

PastorJon on May 7, 2012 at 11:40 AM

It wasn’t in the talking points DWS sent over to him this morning.

D-fusit on May 7, 2012 at 11:45 AM

A dollar taxed is a dollar not spent in the private sector. After racking up an additional $5 trillion in debt since January 2009, is the Times suggesting that we should have borrowed even more?

Fifth Column Treasonous Media… Words have meanings, are you getting it yet Ed???

SWalker on May 7, 2012 at 11:48 AM

In essence…..Figures do not lie…but liars do figure!!!

logicman_1998 on May 7, 2012 at 11:52 AM

Where exactly do they think the government gets the money that it spends?

I really don’t want to know the answer to this question.

In fact, you can’t even have a legitimate discussion without some idiot blaming it all on the Bush era tax cuts and GWOT. No mention of entitlement reform or any of the other real issues. Just partisan ignorance worthy of anybody who thinks the NYT is a legitimate media source but Fox News is propaganda.

Happy Nomad on May 7, 2012 at 11:57 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

You fail to mention the soaring price of chocolate, and the never-ending war with Eastasia.

drunyan8315 on May 7, 2012 at 11:57 AM

Romney needs tO make a commercial out of this, pointing out that they don’t even know how to figure spending, much less reduce it.

Jaibones on May 7, 2012 at 11:57 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

Don’t forget the fact that Obama supporters don’t pay taxes.
No doubt that Uppereastside is just like Charlie Rangel, dodging taxes and collecting welfare payments while screaming that taxes need to be raised on others.

Wonder how much the Federal government could make if it actually required Obama supporters like Uppereastside to pay their taxes and prosecuted tax cheats like Obama supporter Warren Buffett?

northdallasthirty on May 7, 2012 at 11:58 AM

The NYT’s shilling for Obama? I’m SHOCKED!

GarandFan on May 7, 2012 at 11:59 AM

Where exactly do they think the government gets the money that it spends?

Deficits, baby! It’s like free money!

Keynes FTW!!

thirtyandseven on May 7, 2012 at 12:00 PM

The ghost of Walter Duranty smiles down upon today’s New York Times reading chumps.

MNHawk on May 7, 2012 at 12:03 PM

Can someone explain that last chart? It still shows an eventual decline in spending, right? but that’s due to local and state spending not necessarily Fed spending, right?

(I hate stats…really I do)

GadsdenRattlers on May 7, 2012 at 12:06 PM

The NY Times is worse than Pravda was between 1912 and 1991 — may it soon die a similar death.

At least Pravda was honest about being an official organ of the Communist Party …

ShainS on May 7, 2012 at 12:09 PM

NYT: “These are composite numbers”

faraway on May 7, 2012 at 12:15 PM

You fail to mention the soaring price of chocolate, and the never-ending war with Eastasia.

drunyan8315 on May 7, 2012 at 11:57 AM

What are you talking about? We have never been at war with Eastasia. Those were kinetic military actions. And chocolate rations have been increased to negative 3ozs. per month compared to the Bush/Emanuel Goldstein Years. So neither one has ANY bearing on the economy at all.

Lily on May 7, 2012 at 12:15 PM

Can someone explain that last chart? It still shows an eventual decline in spending, right? but that’s due to local and state spending not necessarily Fed spending, right?

(I hate stats…really I do)

GadsdenRattlers on May 7, 2012 at 12:06 PM

I think you got the gist of it, but remember this important caveat made by Morgen Richmond:

… focusing on GDP, their data includes only direct government expenditures on goods, services, and investments, while leaving out two key categories which now make up well over 50% of total government spending: transfer and interest payments. Government transfer payments (e.g. Social Security, Medicare, food stamps) have increased by over 15% from March 2009 to March 2012, and interest payments on government debt have increased by over 30% (neither figure is adjusted for inflation).

ShainS on May 7, 2012 at 12:27 PM

Government transfer payments (e.g. Social Security, Medicare, food stamps) have increased by over 15% from March 2009 to March 2012,

Er, why is this shocking when one considers the impact of the worst recession since the 1930s and historically high levels of unemployment? Do you seriously think we’d be better off if these kinds of programs were drastically cut while we are in a deep recession???

Funny how the need for deficits was almost universally accepted in the early 1980s and early 2000s when the President was a Republican trying to move the country out of a recession.

MARCU$

mlindroo on May 7, 2012 at 12:27 PM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

I notice you fail to mention the fact that MILLIONS of Americans who were once working and paying taxes are no longer doing so. Yep, rather than contributing they are taking unemployment and the feds are “loaning” the states money to pay and pay and pay.

The Bush tax cuts and the wars were present during nearly all of Bush’s presidency, yet the deficit spending wasn’t nearly as high.

Jvette on May 7, 2012 at 12:28 PM

How about this chart http://finance.yahoo.com/echarts?s=NYT+Interactive#symbol=nyt;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Amazing some guy in pajamas just debunked the “gatekeeper” of reliable news.

Don’t know how you guys read this liberal drivel in order to debunk it. I can’t believe people still read (and believe) the NYT propaganda.

bigbeas on May 7, 2012 at 12:29 PM

How in the he11 can there be a reduction in Federal Government spending when there has not been a budget passed for the past two years? For those who forget, Federal spending has built in increases in spending.

Morgan, you have fallen for the classic liberal smoke and mirrors act. Don’t compare Federal spending to anything, simply state the amount of money the Federal government spends each year. I’ll bet a years salary that there is an increase in each year – how else has 0bama doubled the debt from all previous Presidents combined?

It’s a safe bet – I’ve been unemployed since graduating from college in 2010.

jackal40 on May 7, 2012 at 12:37 PM

So how did we rack up $5 trillion in new debt…?

NeoKong on May 7, 2012 at 11:25 AM

Bush’s fault??? :-)…

jimver on May 7, 2012 at 12:38 PM

I notice you fail to mention the fact that MILLIONS of Americans who were once working and paying taxes are no longer doing so. Yep, rather than contributing they are taking unemployment and the feds are “loaning” the states money to pay and pay and pay.

The Bush tax cuts and the wars were present during nearly all of Bush’s presidency, yet the deficit spending wasn’t nearly as high.

Jvette on May 7, 2012 at 12:28 PM

You just have to laugh. These liberals are like a doll you pull the string to make talk. They spout nonsense and when you try to engage/respond, they just blurt out something new. In fact, I get better conversation from the magic eight ball we had as kids.

arnold ziffel on May 7, 2012 at 12:38 PM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

So basically, the BEST that the 2 time Graduate from Ivy League school can do is ride the coattails of a prior Administration?

Is there nothing about him that he’s done originally?

PLUS: If President Bush Tax Cuts were that bad an idea, why did it take nearly 4 years for *anyone* working for him or for the President himself to realize that its a bad idea?

Would LOVE to hear your rational for that…

BlaxPac on May 7, 2012 at 12:40 PM

Bush Tax Cuts Such Bad Idea, They Generated Record Surges in Tax Revenue, and Obama Has Steadfastly Refused to Touch 80% of Them.

Film at 11.

The Schaef on May 7, 2012 at 1:02 PM

WTF….The budget went up 30% in his first year… they must not be including stimulus, and any FY 2009 spending. Typically FY2009 would be “Bush’s Budget”, but it wasn’t. San Fran Nan and Dingy Harry only passed a continuing resolution while Bush was in office, and the MASSIVE budget increases were signed by Barry…

phreshone on May 7, 2012 at 1:38 PM

As the old saying goes, “Figures don’t lie, but liars sure figure.” It’s all in how you select the numbers and base the comparisons.

State and local spending drops, due in large part to the federal government spending way too much and the state and local governments having to squeeze everything to be able to come up with enough Medicaid — which, coincidentally, is not really part of state and local spending they are “reporting” as smaller. So they use that reduction in spending to make the federal government spending look better.

I think you could sift the story from the NYT multiple different ways without being able to catch every distortion and invalid measurement they snuck into this story.

tom on May 7, 2012 at 1:42 PM

So how did we rack up $5 trillion in new debt…?

NeoKong on May 7, 2012 at 11:25 AM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.

Uppereastside on May 7, 2012 at 11:31 AM

Let me help you summarize:

Boooosh!!!!! Blame Booosh!!!

No charge.

tom on May 7, 2012 at 1:43 PM

Also, Haliburton, Gitmo, Chimp, Hitler.

The Schaef on May 7, 2012 at 1:47 PM

In essence…..Figures do not lie…but liars do figure!!!

logicman_1998 on May 7, 2012 at 11:52 AM

Looks like you beat me to it. Now I have to fall back to the old Mark Twain quote.

“There are three kinds of lies: lies, damned lies, and statistics.”

To be fair, the NYT may have managed to tell all three kinds in one story.

tom on May 7, 2012 at 1:48 PM

Obabanomics: Three men rent a hotel room. Each pays $10 for a total of $30 spent on the room. The next day the hotel owner tells the three men that they over paid for the room as it only costs $25. The three men tell the owner to give them each a dollar back and he can keep two dollars.

If you do the math, each man paid $9 a piece for the room for a total of $27. The owner kept $2 which brings the total to $29.

The question is where did the other dollar go?

If you don’t know, dial “O” for Obama.

timberline on May 7, 2012 at 1:55 PM

So it’s bullcrap.

forest on May 7, 2012 at 1:57 PM

Even excluding interest and transfer payments (which really shouldn’t be excluded), the Times’ assertion that federal spending has “risen at a slow rate” under Obama is ridiculous. As you can see in the chart I created below, federal spending (included in GDP) has increased in every single quarter compared to March 2009

And let’s look at the levels of Deficit spending….

Go to Debt to the Penny, and search on the periods 1/20/2001 – 4/20/2004 and 1/20/2001 – 4/20/2012.

Deficit spending (increase in total national debt for George W. Bush in his first 3.25 years in office =
Total Debt on 4/20/2004 – Total Debt on 1/20/2001 $7,141,785,769,842.52 – $5,727,776,738,304.64 =
$1,414,009,031,537.88 ($1.414 Trillion)

Deficit spending (increase in total national debt for George W. Bush in his first 3.25 years in office =
Total Debt on 4/20/2012 – Total Debt on 1/20/2009
$15,617,358,530,369.93 – $10,626,877,048,913.08 =
$4,990,481,481,456.85 ($4.990 Trillion)

The rate at which the national debt grew under Obama is MORE THAN 3.5 TIMES the rate at which the national debt grew under George W. Bush for the comparable time period!

It’s truly shocking how fast the Democratic Socialists are making our National Debt skyrocket!

ITguy on May 7, 2012 at 2:27 PM

Sorry, there’s a type in my last comment. I’ll fix it below.

ITguy on May 7, 2012 at 2:28 PM

By extending the Bush Tax Cuts and spending endlessly on the Cheney/Bush war of choice. We can’t just pull out now you know.
Uppereastside on May 7, 2012 at 11:31 AM

That’s what he said.

Lily on May 7, 2012 at 2:31 PM

Even excluding interest and transfer payments (which really shouldn’t be excluded), the Times’ assertion that federal spending has “risen at a slow rate” under Obama is ridiculous. As you can see in the chart I created below, federal spending (included in GDP) has increased in every single quarter compared to March 2009

And let’s look at the levels of Deficit spending….

Go to Debt to the Penny, and search on the periods
1/20/2001 – 4/20/2004 and
1/20/2009 – 4/20/2012.

Deficit spending (increase in total national debt for George W. Bush in his first 3.25 years in office =
Total Debt on 4/20/2004 – Total Debt on 1/20/2001
$7,141,785,769,842.52 – $5,727,776,738,304.64 =
$1,414,009,031,537.88 ($1.414 Trillion)

Deficit spending (increase in total national debt for George W. Bush in his first 3.25 years in office =
Total Debt on 4/20/2012 – Total Debt on 1/20/2009
$15,617,358,530,369.93 – $10,626,877,048,913.08 =
$4,990,481,481,456.85 ($4.990 Trillion)

In his first 3.25 years that President George W. Bush was in office, the total national debt grew by $1.414 Trillion.

In his first 3.25 years that President Barack H. Obama was in office, the total national debt grew by $4.990 Trillion.

The rate at which the national debt grew under Obama is MORE THAN 3.5 TIMES the rate at which the national debt grew under George W. Bush for the comparable time period!

ITguy on May 7, 2012 at 2:31 PM

It’s truly shocking how fast the Democratic Socialists are making our National Debt skyrocket!

ITguy on May 7, 2012 at 2:32 PM

In the old Soviet Union the people would stand in line for hours waiting to get some food or “milk in their buckets”.

They would listen to the propaganda on the radio touting the abundant harvest and other miracles. The people used to look at each other and say; “Take your bucket to the radio.”

And they don’t think that we will notice?

The Rock on May 7, 2012 at 2:46 PM

spending endlessly on the Cheney/Bush war of choice.

Uppereastside on May 7, 2012 at 11:31 AM

From your friends at the Far-Right NPR…2003

December 24, 2003

Current criticism over Halliburton’s lucrative Iraq contracts has some historians drawing parallels to a similar controversy involving the company during Lyndon B. Johnson’s administration.

Nearly 40 years ago, Halliburton faced almost identical charges over its work for the U.S. government in Vietnam — allegations of overcharging, sweetheart contracts from the White House and war profiteering. Back then, the company’s close ties to President Johnson became a liability.

-snip-

The story of Halliburton’s ties to the White House dates back to the 1940s, when a Texas firm called Brown & Root constructed a massive dam project near Austin. The company’s founders, Herman and George Brown, won the contract to build Mansfield Dam thanks to the efforts of Johnson, who was then a Texas congressman.

After Johnson took over the Oval Office, Brown & Root won contracts for huge construction projects for the federal government. By the mid-1960s, newspaper columnists and the Republican minority in Congress began to suggest that the company’s good luck was tied to its sizable contributions to Johnson’s political campaign.

More questions were raised when a consortium of which Brown & Root was a part won a $380 million contract to build airports, bases, hospitals and other facilities for the U.S. Navy in South Vietnam. By 1967, the General Accounting Office had faulted the “Vietnam builders” — as they were known — for massive accounting lapses and allowing thefts of materials.

No need to thank me, Kid! That’s what I’m here for lol.

Del Dolemonte on May 7, 2012 at 3:05 PM