Friday, May 25, 2012

Obama the fiscal conservative?

A column by Rex Nutting has been making the rounds. It shows conclusively that the Obama spending spree never happened and that Obama is actually a fiscal conservative who cut taxes and spending.


So how did Nutting come up with his figures? He fudged them.

He began with a true statement, that the president takes office part-way into the fiscal year and he has limited influence over it. Obama's first year was an exception in many ways.

When fiscal year 2009 began, the Democrats wanted to increase spending. President Bush refused and threatened to veto any major increases. To keep government running, Congress passes a series of continuing spending resolutions. These kept the government running at 2008 funding levels. Soon after taking office, President Obama signed a new omnibus spending bill. This had all of the increases that Bush refused to approve. Nutting assigns these to Bush instead of Obama.

There is also the TARP. This was divided into two pieces. The first piece was to be spent before January 1, 2009. If it was not enough then the President could go to Congress to authorise the second half. Both parts were passed under Bush but he asked for the second half at Obama's request as a courtesy. The actual spending of the second half was totally under Obama's direction.

So that is several hundred billion in spending that Nutting attributed to Bush but should have gone to Obama.

There are other factors that distort these figures. Bush's biggest spending came in his last few months as a response to the international financial crisis. The bailouts and the TARP were unplanned and one-time occurrences (we hope). They inflate Bush's spending (especially the way that Nutting applied them). Anything following these special cases would look restrained.

Obama started his administration with an enormous stimulus. This also distorts spending, making it look like regular spending has gone down.

The biggest ticket item for Obama is totally unaccounted for - Obamacare. That is the biggest expansion in entitlement spending in a generation but the spending for it has not started yet so Nutting ignores it. Worse, some of the taxes to pay for it are already in place which temporarily reduces the deficit. These taxes will not actually pay for Obama care but by figuring the taxes over a ten year period and the costs over a seven year period, it looks like Obamacare is paid for.

Obama appears to be a fiscal conservative only because the emergency spending levels of 2008 and 2009 are unstastainable, not because Obama is a model of restraint.

UPDATE: Obama is using a version of this in his campaign speech. The AP's factchecker is not kind to it.
The MarketWatch study claims that spending is grown only 1.4 percent over 2010-2013, or annual increases averaging 0.4 percent over that period. Those are stunningly low figures considering that Obama rammed through Congress an $831 billion stimulus measure in early 2009 and presided over significant increases in annual spending by domestic agencies at the same time the cost of benefit programs like Social Security, Medicare and the Medicaid were ticking steadily higher.

A fairer calculation would give Obama much of the responsibility for an almost 10 percent budget boost in 2009, then a 13 percent increase over 2010-2013, or average annual growth of spending of just more than 3 percent over that period.

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