Chart of the Day: Austerity? What austerity?

posted at 2:31 pm on February 1, 2013 by Ed Morrissey

What did the Q4 GDP number and the January jobs report show us?  To listen to the White House, the New York Times, and Obama administration apologists, it supposedly proves that “austerity” is the culprit behind the lack of growth.  Newsbusters catches the Times blaming “austerity efforts” are damaging economic recoveries in developed nations:

The drop in American exports stemmed in part from a decline in economic growth in Europe, where governments have also been cutting spending in a bid to balance budgets. The parallel contractions are likely to provide fodder for economists who argue that austerity efforts have gone too far in many developed economies.

The surprisingly weak numbers could also force politicians to limit the cuts that are scheduled to take effect if Congress fails to produce a budget bargain in the coming weeks and strengthen the argument that deficit reduction is a lesser concern than job creation.

“Our economy is facing a major headwind, and that’s Republicans in Congress,” said the White House spokesman Jay Carney.

Republicans said the White House was not advancing concrete plans for creating new jobs and stimulating the economy.

The “headwinds” referenced by Carney are the upcoming sequestrations of spending cuts — that were proposed by the White House, not Republicans, in 2011.  The excuse also assumes that the US has actually implemented austerity measures.  Despite the quarter-on-quarter reduction in federal spending in the GDP report this week, that’s not the case at present, nor is it the case in the future — even with the sequestrations in place.  John Merline of Investors Business Daily makes that plain in the chart of the day:

According to monthly spending data from the Treasury Dept., total federal spending — which includes transfer payments and other federal outlays not counted by the BEA — increased by $98 billion in Q4 compared with Q3. And spending was up $31 billion when compared with Q4 2011.

For the entire year, spending in 2012 was virtually unchanged from 2011, and was up $86 billion over 2010, a year when the government was still spending stimulus money in earnest.

Plus, the “fiscal cliff” deal worked out between President Obama and the Republicans actually added almost $50 billion to planned spending in 2013, and a total of $332 billion over the next decade, according to the Congressional Budget Office.

Almost half of the 2013 increase will go to pay extended unemployment benefits, which Democrats have long argued are highly stimulative.

Reid himself has said that unemployment benefits “help our economy because recipients spend the cash they receive on the things they need right away.”

We’ll get back to stimulus in a moment.  Merline points out that even the sequestrations aren’t cuts in overall federal spending, but reductions in the rate of increase, emphasis mine:

In addition, even if the “sequester” should go through, federal spending will continue to climb.

In fact, if nothing else changes, spending in 2013 will be $3.6 trillion, an increase of nearly 2% over 2012, according to data from the CBO. That’s because the sequester’s “cuts” are actually just reductions in planned spending hikes.

Nor is the federal government operating anything close to an austere budget when looked at as a share of the economy. According to the CBO, spending this year will account for 22.4% of GDP, a level reached only eight times since 1946 — four of which occurred under Obama.

This is why Republicans are smart to keep the sequesters in place.  The deficit explosion undermines confidence in the dollar and the overall American economy, which produces a downward pressure on expansion. That would be an acceptable short-term tradeoff if the extra spending produced long-term economic growth.  The Q4 contraction demonstrates that’s not the case, though.

Gerri Willis at Fox Business comes to the same conclusion after calculating all of the stimuli and bailouts provided by the government over the last six years or so (via Nick Gillespie).  The total? $7.6 trillion.  What did it do for us? Well …


Whew! That’s a lot of money and where are we? Nowhere, as far as I can tell. Unemployment is at 7.8%, exactly where it was when President Obama came into office.

The economy is contracting, shrinking, and consumers and taxpayers say they aren’t too happy. It’s no wonder. All of this money out the door and much of it will have to be paid back. Our economy hasn’t recovered. The stimulus spending was a bust!

Next time you hear Paul Krugman say we need more stimulus spending, ask him: where’s my $7.66 trillion, mister?


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Lack of trolls on the last thread. This one?

Bmore on February 1, 2013 at 2:35 PM

Dang Ed, I could have made one heII of a run here. Lol!

Bmore on February 1, 2013 at 2:37 PM

There is a very simple concept which defeats Mr. Obama and his apologist sophistry.

Past is not prologue or necessarily predicative of the future.

We are talking about number from past performance. Thet are talking about events still in our future. More simply- after the numbers were reported.

So count me as confused how a future event, which may or may not occur, has anything to do with a GDP decrease. Especially when one consider that sequestration may force some fiscal discipline by reducing spending and stave off a ratings downgrade.

Are they the cuts we want? Well, no but they do result in lower spending irresepctive.

Marcus Traianus on February 1, 2013 at 2:39 PM

Guess that last thread did everyone in. ; )

Bmore on February 1, 2013 at 2:39 PM

Support the moochers, domestic and foreign.

Schadenfreude on February 1, 2013 at 2:39 PM

Bmore, they’re still wondering what happened to their favorite republican Hagel and what it means to their front for destroying the military. Or maybe waiting for their Friday marching orders from OfA.

DanMan on February 1, 2013 at 2:40 PM

Not many talk about the fact that the 2009 stimulus was added to the baseline spending. We’ve have an $800+ billion stimulus every year. Democrats haven’t passed a budget since 2009 because they want to hide this fact.

jawkneemusic on February 1, 2013 at 2:40 PM

Ed, what you don’t understand is that even the faint whiff of austerity is enough to contract the economy.

/sarc

gwelf on February 1, 2013 at 2:42 PM

I’ve always hated the 10 yr forward looking financial accounting as con man BS. Yeah, lets talk in terms of what we need in 2022, while were burning down today. Its always been a way to obfuscate the real waste amd fraud in the Govt. numbers.

Lets look at what we have spent for, say, the last 10 years. Lets add up those numbers and ask where’s the beef.
Like the Dept of Education?

What have they done with $100+ Billion over these years?

FlaMurph on February 1, 2013 at 2:42 PM

DanMan on February 1, 2013 at 2:40 PM

They sure haven’t been busy defending any of this nonsense, that’s for sure. The IRS thread was squeaky clean. ; ) I hope they enjoy the misery fully, that they helped create.

Bmore on February 1, 2013 at 2:43 PM

The answer is to print more money. That way anybody who has, in the past, created or saved wealth will be impoverished. Runaway inflation will insure that that sort of behavior cannot be repeated. Everyone will be equally dependent on the government. All of those pesky nails that stick their head up or shoots of grain that grow too fast? Pound them down or whack them off. Problem solved.

Fenris on February 1, 2013 at 2:46 PM

The complicit GOP overwhelmingly voted to raise the debt ceiling until May. Another glorious media moment for Dear Leader.

Mr. Arrogant on February 1, 2013 at 2:48 PM

They sure haven’t been busy defending any of this nonsense, that’s for sure. The IRS thread was squeaky clean. ; ) I hope they enjoy the misery fully, that they helped create.

Bmore on February 1, 2013 at 2:43 PM

Well, if you feel slighted, let me play devil’s advocate…

“We’re still paying for Reagan’s tax cuts.”

Was I able to help? *LOL*

Liam on February 1, 2013 at 2:48 PM

Our economy hasn’t recovered.

Obviously you haven’t heard from Harry Reid. As for the economy, things are GREAT! in Washington, DC. You know, where they constantly ask “What recession?”

GarandFan on February 1, 2013 at 2:52 PM

Liam on February 1, 2013 at 2:48 PM

Lol! Your nom gives you away. ; ) I have the same trouble. Must get a sock.

Bmore on February 1, 2013 at 2:53 PM

“Our economy is facing a major headwind, and that’s Republicans in Congress,” said the White House spokesman Jay Carney.

That’s not wind you idiot. It’s corporate flatulence from all the stuff your side pulls out of it’s rump regions to explain away failure, ineptitude, corruption, and dogma. Four years from now, we’ll still be getting bad numbers attributed to Hurricane Sandy.

Happy Nomad on February 1, 2013 at 2:55 PM

OK. I was planning on buying a new car and a bunch of other stuff next year, but because I’m broke, I’ll have to ‘sequester’. Since I won’t be spending that money, I am now flush with cash. Whew! Am I doing this right?

ghostwalker1 on February 1, 2013 at 2:56 PM

Happy Nomad on February 1, 2013 at 2:55 PM

Depends on how you parse that statement.

Our economy is facing a major headwind, and that’s Republicans in Congress,” said the White House spokesman Jay Carney.

Bmore on February 1, 2013 at 2:58 PM

“Our economy is facing a major headwind, and that’s Republicans in Congress,” said the White House spokesman Jay Carney

…I knew I should have bought a sailboat…a four year non-stop headwind!…sailors dream!

KOOLAID2 on February 1, 2013 at 3:00 PM

Ok, but what does Paul Krugman think?

moo on February 1, 2013 at 3:02 PM

Plus, we spent $7 trillion on stimulus and didn’t even get a lousy T-shirt.

Ed Morrisey

.
Let ‘em wear wear fig leaves.

listens2glenn on February 1, 2013 at 3:10 PM

How is borrowed government spending legitimately counted as a part of GDP? It should not be.

besser tot als rot on February 1, 2013 at 3:22 PM

How is borrowed government spending legitimately counted as a part of GDP? It should not be.

besser tot als rot on February 1, 2013 at 3:22 PM
.
It’s easy, when your friends are the “information gatekeepers.”

listens2glenn on February 1, 2013 at 3:37 PM

According to monthly spending data from the Treasury Dept., total federal spending — which includes transfer payments and other federal outlays not counted by the BEA — increased by $98 billion in Q4 compared with Q3. And spending was up $31 billion when compared with Q4 2011.

This needs to be repeated to anybody peddling the out and out lie of government spending cuts.

MNHawk on February 1, 2013 at 4:08 PM

This is NOT “under both BOOOOOOOSH and Obama”!!! LYING B@@@@@@!!!

EVERY ONE OF THESE were ENACTED AFTER THE DEMOCRATS TOOK OVER CONGRESS – OR UNDER OBAMA, MOSTLY BY EXECUTIVE FIAT!!!

I am SO SICK OF the Journalist TOADYS playing: “HEY! It’s both Conservatives AND Liberals!! Democrats AND Republicans!!”

NO – IT’S NOT!!!!

IT’S LIBERAL DEMOCRATS – PERIOD!!!!

williamg on February 2, 2013 at 12:49 AM