Green Room

Another Liberal Myth Down the Drain

posted at 10:05 pm on May 7, 2012 by

Last week, a New York Times piece by Floyd Norris, Chief Financial Correspondent for the NY Times and The International Herald Tribune, claimed government spending has gone down under President Obama. The claim, which relies on half-truths and incorporates only certain areas of spending in the federal government, has been debunked by others – Morgen Richmond already hit it on the Hot Air main page, for example – but I think it deserves further shredding.

First, this canard has been proven wrong before. Just Facts President Jim Agresti debunked this myth just over 18 months ago, when Paul Krugman and Ezra Klein made the same argument. Jim pointed out that according to the Bureau of Economic Analysis, not only had spending not gone down under Obama, but

furthermore, since Krugman’s central premise in these articles is that government spending is a salve that heals unhealthy economies, why does he limit this question to spending “under Obama”? The recession officially began in December 2007, when total combined government spending was $4,637 billion. Thus, from the outset of the recession through the second quarter of 2010, spending has risen 19% in a period with 4% inflation.

On top of this, in the four years leading up to the recession, total combined government expenditures grew by 21% with 13% inflation.

2. As Richmond aptly noted, The New York Times piece did not include transfer payments in its analysis of the federal budget, which includes – but is not limited to – Social Security and welfare payments. Since when do Social Security and welfare not count in federal spending? In reality, total federal spending has grown significantly over the last three years (See Chart 2), and the totality of local, state and federal spending combined has gone up as well. (See Chart 1)

CHART 1                                                          CHART 2

[Credit for the creation of both graphs goes to Agresti]

3. When I mentioned this myth to an economist friend, he guessed the argument from the left would be that tax revenues are too low. Liberals are correct that tax revenues are low by historical standards – according to the Tax Policy Center (TPC), revenues are near record lows as compared to Gross Domestic Product, and have been at these low levels for longer than any three-year period since just after World War II. However, this argument only goes so far. Consider:

A. According to TPC, last year’s revenues were 15.4% of GDP. If revenues hit 20% of GDP in 2011 (a percentage surpassed only three times since 1934, which is as far back as the TPC chart goes), this means revenues would be up by 30%.

B. 30% greater revenues is a significant amount of money – about $690 billion.

C. However, $690 billion is barely more than half of the $1.3 trillion deficit the nation boasted in 2011.

D. To recap: if revenues hit near-record levels in 2011, we would still have had a deficit in 2011 of $610 billion.

High spending didn’t start with President Obama or even President Bush, but both of these men have been the Executives who let the problem get out of control. Few in either party are willing to step up and prevent the coming fiscal collapse that people like Senator Coburn (R-OK) are predicting, yet it must be done. If we don’t start slashing spending, eliminating federal bureaucracies, eviscerating fraud/waste/abuse/duplication, aggressively reforming entitlements and starting over on the tax code, my generation (the “Debt-Paying Generation”) will suffer greatly. Unfortunately, people like Norris who should know better are willing to create cheap (no pun intended) talking points instead of informing Americans of this reality.

 

Dustin Siggins is an associate producer with The Laura Ingraham Show and co-author with William Beach of The Heritage Foundation on a forthcoming book about the national debt. The opinions expressed are his own.

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We are SO screwed…

climbnjump on May 7, 2012 at 10:28 PM

As the old doctors’ wisecrack says, bleeding always stops.

OhioCoastie on May 7, 2012 at 11:07 PM

If things don’t turn around in the second quarter, then it is too late for Obama. Say things are flat in the second quarter or only very sluggish growth. By the time Q3 numbers come out it will be September. If things improve in Q3, one single quarter doesn’t make a trend. There are still going to be an increasing number of Americans whose unemployment benefits have run out.

Someone recently said that Obama has a lock on a lot of voters because of benefits. The trouble is that benefits are expiring for an increasing number of people and at that point they hold no allegiance to Obama. In fact, the case is likely to be just the opposite.

crosspatch on May 7, 2012 at 11:36 PM

Sorry for hijacking the thread, but how do I add a new thread to the Green Room?

fabrexe on May 7, 2012 at 11:56 PM

Leave out the green energy spending and loans to the Muslim Brotherhood and we could very well balance the budget this year.

Kissmygrits on May 8, 2012 at 9:19 AM

High spending didn’t start with President Obama or even President Bush, but both of these men have been the Executives who let the problem get out of control.

W. did make a modest proposal to make changes to future Social Security recipients, and got hammered by the Democrats over it. Yes, he should have pushed back, but there’s been no Democrat since Daniel Patrick Moynihan who’s been willing to even consider changes.

Tax revenues (is this all, federal, state & local income, sales, etc.) are down because the economy is down. And I do wonder just how much state & local sales taxes are down do to Amazon, etc. What was the ratio of collected sales taxes to consumer spending before Amazon and what is it now?

rbj on May 8, 2012 at 9:50 AM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Allahpundit on May 9, 2012 at 1:57 AM