In the comments of my recent Hey, Big Spender post, some readers took me to task because “Congress controls the purse strings” and it was therefore unfair to look at spending by President.

Bruman:

It may make more sense to break this down into rates of spending increases by congressional (2-year) intervals. Fortunately, these divide evenly into presidencies.

Jmccas:

I think it would be even more powerful to break out periods of time where power was split i.e. where a Republican was in the white house but the democrats controlled Congress.

It’s a fair enough point, and we here at The Big Picture are nothing if not intellectually curious and reader-centric.  So here is a chart addressing that point (FRED version is here).  I’ve indexed Nondefense Spending to 100 at each change in control of the White House or either house of congress.

Sources:  St. Louis Fed, About.com

My takeaway from this is fairly straightforward:  Democrats have never much claimed the mantle of fiscal responsibility.  And they don’t deserve it.  Republicans have made that claim, and they’re making it again now.  But they don’t deserve it, either.

Interestingly, just a scant couple of hours before this post was to go live, I could not help but laugh when I saw the following headline at the NY Times website: ”As G.O.P. Seeks Spending Cuts, Details Are Scarce.”  Scarce indeed.  One look at the chart will tell you it just ain’t gonna happen.

ADDING: Bruman has done a really nice job taking this one step further here.  Thanks.

Category: Data Analysis, Economy, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

28 Responses to “Big Spender, Part II”

  1. Michael M says:

    Why do we always focus so much on spending by Congress/President and so little on state spending?

    While part of the answer may be that Federal debt is much larger than state debt (2010: Federal is 13.8 Trillion vs 2.8 Trillion for states), note that federal spending is on par with state spending (2010: Federal is 3.7 Trillion; 2.8 Trillion if excl defence vs 3.2 Trillion for states).

    source: http://www.usgovernmentspending.com/

  2. machinehead says:

    The chart doesn’t go back far enough to show it, but the trajectory of deficits during the George W. Bush administration (R, 2001-2009) most closely mirrored that of Lyndon Johnson (D, 1963-1969). Both men escalated domestic spending, while piling on foreign war spending as well.

    Party identification is not a reliable guide to economic policy. In other countries, some of the most dramatic fiscal turnarounds were achieved by left-oriented leaders (Lula in Brazil; Paul Martin in Canada). Now a Conservative government is attempting the same in Britain.

    The two-party system in the US — nowhere authorized in the Constitution — is an corruptly enforced duopoly. Taxpayer-financed primaries unhealthily blur the line between party and state.

    On the biggest-picture issue of all — the crushing cost of maintaining a global military empire which doesn’t pay for itself — both parties have identical views. Defense contractors and the Pentagon don’t care whether you vote Dem or Rep — it’s ka-ching for them either way. And guess who’s the bagholder?

  3. Trevor says:

    This is a great chart, but I’d be REALLY interested to see it broken into 2-year segments. I suspect that it would reveal a greater depth to this story.

  4. Freestate says:

    You can analyze government spending three ways to Sunday but the answer is always the same: voters love more government spending if it benefits them personally – no matter what party they belong to and no matter what they publicly profess. I know a lot of Tea Partiers who benefit from either a government subsidy, government spending or a government program either personally or in their business. And NONE of them ever tell me that they want THEIR personal benefit to go away. Good luck actually reducing government spending – no one really wants it to happen.

  5. Lugnut says:

    Thanks for going back and re-doing it Barry. Very informative.

  6. ABetterDeal says:

    Why do you omit defense spending? Too be sure, it is far less likely to encourage jobs or economic growth at home or to be investment misclassified as “spending,” but it increases the deficit just like domestic spending.

  7. Steve Hamlin says:

    “Federal expenditures are (rising) about the same as they’ve always has been, while revenue has gone down and transfer payments have gone up because of the recession. We have been adding to the deficit, but it’s because of the recession, not because spending has spiraled out of control.” Charts to prove the point:

    http://krugman.blogs.nytimes.com/2010/10/15/big-spender-update/

    http://krugman.blogs.nytimes.com/2010/10/17/why-have-deficits-exploded/

    http://motherjones.com/kevin-drum/2010/10/government-spending

  8. tt says:

    everyone wants guns AND butter with no taxes. give the bill to the grandkids.

  9. SCTTD says:

    Much more informative. Would be curious to see an overlay on tax receipts for each of these periods as well. I suspect the earlier years increase in spending would look more reasonable.

    Nevertheless, this chart leads to a clear conclusion. The time has come to break up the federal government into smaller units – say 5 regions – with independent budgets but all part (subsidiaries) of the current federal gov’t. The only thing that stays in the current federal government is the military and judiciary. A breakup of AT&T unleashed great things in telecom and related. I suspect a reorg of gov’t in this fashion would engender greater accountability, more experimentation on how to address the various issues facing the USA and unleash American innovation. If you think about it, when the US was 13 States, this is almost precisely what we had.

    Oh well dream on…

  10. gbgasser says:

    “Democrats have never much claimed the mantle of fiscal responsibility. And they don’t deserve it. Republicans have made that claim, and they’re making it again now. But they don’t deserve it, either.”

    First we must define fiscal responsibility.

    Its not “responsible” to focus only on the size of the deficit. Its responsible to look at the deficit relative to employment levels and inflation rates. When unemployment is high and inflation low, it is not responsible to talk about reducing the deficit no matter how large it is. The deficit is a meaningless number BY ITSELF.

    Far too often we only say someone is being fiscally responsible if they want to REDUCE spending. This must end. It wouldnt be thought of as responsible if a parent said they werent going to spend to take their sick child to a doctor just because they wanted to reduce spending.

    Fiscal responsiblity requires spending, but spending on socially responsible things.

  11. Invictus says:

    @gbgasser

    “…spending on socially responsible things.”

    Another can of worms.

  12. [...] have been following Invictus’ posts (Hey, Big Spender, and Big Spender, Part II) on Barry Ritholtz’s The Big Picture blog, one of my favorite blogs, both for its macro [...]

  13. Bruman says:

    Invictus, nice work.

    I’ve taken the FRED data and included the increases from year to year on my blog (and cross-linked to your posts). This shows the increase in spending by 2-year congressional period since the end of the Truman administration, and overlays your indexed data by administration.

    Take a look here: http://www.chadwickresearch.com/blog/?p=95

    It’s interesting to see how the last 30 years compares with some of the earlier data as well.

    Cheers, Bruman

  14. Invictus says:

    @Bruman

    It can be debated whether one should shift these figures one year further into the future, because current spending in the first year of a Congress is often determined by the last year of a previous Congress. Again, a topic for another day.

    Nice work, and thank you for advancing the point. Agree wholeheartedly with your comment above, and also agree it’s a topic for another day. Thanks.

  15. jmccas says:

    Great work; the Big Picture never fails to disappoint.

  16. jmccas says:

    @jmccas (myself) multi-tasking caused an errent post. Should have read “The Big Picture never fails to impress”.

  17. VRWC says:

    I understand and share the skepticism regarding republicans claiming to be for spending cuts given their record, but I truly do believe that it IS different this time.

    The freshman class is going to be huge in the 2011 Congress and at the core is going to be a large group who are being sent to washington to try and rip the pro tax and borrow and spend culture there apart.

    Make fun of the tea partiers all you like, but what you are witnessing is their slow motion takeover of the GOP…. they did not go the third party route this time, but they have made it clear that this is the GOP’s last chance in that regard…. if spending cuts are not acheived, then 2012 and thereafter will be about the destruction of the GOP thru a third party

    That would benefit dems in the short run and might even save obama…. but only until the GOP is replaced….

  18. Invictus says:

    @ABetterDeal

    Why do you omit defense spending?

    Because it would not be worth the brain damage that would ensue arguing endlessly about whether none, some or all of those outlays are actually necessary for national defense. Or whether it’s just a massive boondoggle for the military industrial complex. Or whatever. My head already hurts.

  19. DeDude says:

    I know how we can cut gobinment spending almost in half, without anybody losing anything gobinment has been doing for them. We just move social security and Medicare/Medicaid into a new non-profit entity so it is no longer part of gobinment. That way the dimble brains who are concerned about the size of gobinment can be really really happy. We did it with Fannie and Freddie so why not pull the same rabbit out of the hat again this time.

    The real issue is not the size of government, but how much of this countries resources should be deployed to what efforts/problems/purposes. How many resources should be deployed to education, health, transportation, energy, food, housing, defense, justice, personal items, entertainment, etc. For some of these categories the spending is best decided by the individual, for others it is best decided by “we the people” (government) and for some its best to leave it to the private sector (“them the billionaires”).

    Most of the debate about the size of government is just a cover for “them the billionaires” to take power and resources away from “we the people”. Look at the joke we call health care. It is being framed as an “individuals rights” against “we the people” (big government) issue. But the reality is that the fight against “soci@lized medicine” is a fight to allow “them the billionaires” to continue sucking huge sums of money out of individual sick people without any interference from “we the people”. Most of the “small government” debate is just a similar smoke screen to prevent the interference by “we the people” in the relentless efforts of “them the billionaires” to suck dry the sheeple. That is why defense never gets into the “small government” debate. Defense is a racket to transfer money from the sheeple to “them the billionaires” so that is “good” spending according to corporate media. The rest of the discretionary budget is directly or indirectly an obstacle to the transfer of money from the sheeple to “them the billionaires” – and that is the reason our masters corporate media attack it.

  20. tradeking13 says:

    There is only one party in the US — the Republicrats.

  21. Molesworth says:

    My spouse and I both worked at big corps.
    All we did was figure out how to re-organize to reduce head count. Big corps don’t hire; they want to reduce costs.
    New companies hire. Old big corps don’t hire; old small companies don’t hire. NEW companies hire.
    * Tax credits for hiring have shown to work better for employment than tax cuts for all.
    * Incentives for innovations and support for entrepreneurs.
    * Plus tax credits for manufacturing in the USA. It’d be nice to get the middle class working again.

  22. M says:

    In “real” dollars since 1962 only the following budget items have seen substantial growth: military, social security, income security, medicare and health. The social programs are all growing exponentially and SSI surpassed military to become the biggest ticket item under HW Bush (but with a huge increase in military spending under W and O is now essentially tied with military again). Military spending is the only program with significant variance in its growth. Military spending trends look to be strongly linked with Presidential administrations not so much parties. LBJ pushed spending up very quickly and Nixon brought it down, Ford and Carter kept it flat, RR blew it back up, HW reduced it quickly, WC reduced it in his first term and kept if flat in his second and W grew it faster and higher than any other president in modern history. O is continuing the trend. Military spending is at historic highs in dollars and in percent GDP and percent population. The current trend is unsustainable. Maybe the good news is that military spending has been cut in the past. The bad news is that SSI, medical and pensions are also growing at unsustainable rates and no admin or congress has been able to do anything about them. The question is how are we going to deal with our aging population and massive increases in medical spending. There is no way to get a significant percentage saving from the budget without reducing spending on the military and SSI. Cutting HUD or farm subsidies, education, space or any or even all of the other little programs is not going to make a dent. Basically the five programs account for the budget. If you’re an austarian choose which ones to cut, if you’re a Keynesian figure out how you’ll control the growth in SSI, medical and pensions to a sustainable percent of GDP. This is not rocket science. The numbers are easy and the problems are obvious. What we need are some honest options and choices for solving them.

  23. philipat says:

    Yes, but as with the Banks (And Enron) this does not reflect the “Off balance sheet” items and future commitments, such as Obamacare which will be an enormous future burden because it did NOT address costs in any way.

  24. notakid says:

    Obamacare has nothing to do with it, hell most all the pugs are running on 70% of the Obamacare stuff that is front loaded, they JUST DON’T want to PAY for it.

    Kinda like that MedicareD thang!

    You do NOT have to worry, the day is fast coming when cuts will be made and big ones. Tea Party getting elected will not matter, once they get elected they will need to start fund raising and that as they say is THAT!

    Name one that is not taking pug support now or crying that are not getting enough?

    I didn’t think so.

    Change will not be accepted it will be IMPOSED!

  25. gbgasser says:

    @Invictus

    I’m not sure it is another can of worms. How can one talk about fiscal responsibility without deciding what the fiscal authority should be responsible for? I would argue that all govt spending is to improve social welfare in one way or another. Now maybe there are ways for the private sector to do it better but somewhere we must include a discussion of what the spending is addressing, as far a societal needs go. How can someone even talk about fiscal responsibility without discussing what a fiscal authority considers its social responsibility?

  26. M says:

    Still not sure why you are looking at non-defense spending. If you take away defense and SSI there isn’t a budget problem and SSI growth is not party correlated. In modern times defense has been either the first or second largest expense of the federal government. Seems to me that by removing defense spending you’re filtering out the signal and studying the noise for meaning. I think you would find the graph of defense spending in real dollars with presidencies (say LBJ to O) marked on it interesting. The timing of the inflections is remarkable.

  27. vinc says:

    @Invictus

    I don’t see why your reason for excluding defense spending (you don’t feel like arguing about how much of it is actually necessary) doesn’t apply equally to all other spending. And it’s ~5% of GDP and ~20% of government expenditure–worth a few arguments!

  28. Bruman says:

    Invictus, not to beat a dead horse, but I finally got around to looking at this with inflation-adjusted data, and the results are interesting. I’ve put the post here: http://www.chadwickresearch.com/blog/?p=108

    In addition, I ran a regression with dummy variables for control of the House, Senate, and the Presidency. Basic result – no real difference between Republicans and Democrats on nondefense spending. If you torture the data a bit, Democratic Senates seem to result in more spending, but only when they don’t control the House (which only happened once, when Senator Jeffords left and caucused with the Democrats from 2001-2002).

    I’m also working with the Fed data on GDP-adjusted spending levels, which are pretty interesting, for those who haven’t seen them. A post on that in a few days.