I’ve written about this before, but since Paul Krugman just posted about it, perhaps it’s time to revisit the issue. Professor Krugman’s chart, in my opinion, doesn’t go far enough in that it does not provide sufficient context. While the chart does show the YoY percent decline in Real Government Expenditures & Investment, it does not give us the context of how Obama’s doing versus his predecessors, which I think adds the proper perspective.

So, how is the tax and spend socialist Obama doing on government spending relative to previous White House occupants? Let’s have a look at Real Government Expenditures & Investment and index it to 100 at presidential inaugurations:

(Click through for ginormous)

(Source: St. Louis Fed, Series GCEC1, author calculations)

So, it’s clear to see what spendthrifts the Democrats have been and how fiscally responsible the Republicans are what a canard it is to claim that Obama has been spending like a drunken sailor. In fact, Clinton and Obama have been the most fiscally responsible of the last five administrations – by a long shot (and do we really need to talk about St. Ronnie?). Of course, none of this matters because people just know what they know, notwithstanding the facts.

Oh, and do we really need to discuss what the graph above would look like rendered on a per capita basis?


See also:

Joe Weisenthal, Obama, The Austerity President

Gene Epstein, Where Government Shrinks

And adding a late entrant, H/T to Abnormal Returns: The Government Investment Drought


It’s fairly clear to see what it is I’ve been missing: Obama is a tax and spend Democrat, until the facts prove otherwise, at which point it becomes Congress that is responsible for the country’s purse strings. Except that, predictably, Mitt Romney didn’t get the message:

“So it came as no surprise when he told an Ohio audience Friday that massive government borrowing and spending under President Barack Obama was putting America “on track to becoming Greece.”

“Describing Obama’s “government-dominated society” as a breach of America’s tradition of letting free enterprise thrive, Romney said, “In my view, that takes us down a path to becoming more and more like Europe. And Europe doesn’t work in Europe.”

By the way, while I recognize the issues posed by the debt and deficit, does anyone think that maybe it’s at least a reasonable idea to borrow money at negative real interest rates?

I’m particularly amused by the suggestion that I should “stop posting unsolicited political claptrap and spare us all.” Thanks for that. I’ll take it under advisement. Send your complaint to Ritholtz and by all means don’t drop anything in the tip jar.

And, by the way, I’ve done the per capita chart I alluded to above, and it shows exactly what you’d expect it to show – even more of the same.

And to Joe Friday: Exactly.

Category: Current Affairs, Data Analysis, Economy, Markets, Politics

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.

81 Responses to “Hey, Big Spender”

  1. rdkaye says:

    Does this take into account future spending for Obamacare? Am I incorrect in thinking that if one projects out to when Obamacare kicks in these figures will change substantially?

  2. VennData says:


    Thanks for your data filled analysis. Thanks for your chart. Thanks for you wild-eyed guess.

    So uhh… I guess you won’t add any dicussion about how the Affordable Care Act is about health insurance… will you?

  3. Fred C Dobbs says:

    Are you telling us the POTUS, not Congress, controls federal government spending? I don’t think so. Your chart would be more interesting if it designated who controlled Congress during the indicated periods. As it is your chart is a needless distraction and misleads one into thinking a President, not Congress, is the source of spending.

    “…misleads one into thinking a President, not Congress, is the source of spending.”

    Invictus: And yet this is what the Republicans continue to do, day after day – try to have it both ways.

  4. RW says:

    “Am I incorrect in thinking that if one projects out to when Obamacare kicks in these figures will change substantially?”

    You would only be incorrect if you think the deficit increases when “Obamacare” gets up to speed; e.g., OMB, ACA, CBO and the deficit.

  5. vuk says:

    Has the Obama line been adjusted for “one-time” spend for TARP/stimulus during the first two years of his term? Excluding that spending, the slope of the line would probably change significantly.

  6. techy says:

    Come on this cannot be true….no way I wont believe it. How can a black non religious person be better than white religious person??

    Fred: really so it is supposed to be the congress, not from what I hear on TV on everywhere. In any case can we simply treat this as comparison of presidents vs presidents since the election is supposed to be a big deal about the president, right?

    vuk: so now you think TARP was initiated by OBAMA? Maybe he did that after he initiated the collapse of the economy since 2007??

  7. Conan says:

    This number is just good for an argument. To level the playing field take inflation adjusted dollars per American and I bet you get a different out come. Goverment needs to be fixed to some kind of peg. GDP or Inflation adjusted dollars per person or something else, but it just can’t grow to be whatever it wants..

    All this shows is that George W who the Democrats detest to the maximum, spent too much and Obama is spending more or less the same. Take Guatanamo or spending or the War in Iraq, what has the man of change done?? Aliented the far left and unified the right.

  8. Let’s just say it: The Republicans are the problem.

    By Thomas E. Mann and Norman J. Ornstein, Published: April 27

    Rep. Allen West, a Florida Republican, was recently captured on video asserting that there are “78 to 81” Democrats in Congress who are members of the Communist Party. Of course, it’s not unusual for some renegade lawmaker from either side of the aisle to say something outrageous. What made West’s comment — right out of the McCarthyite playbook of the 1950s — so striking was the almost complete lack of condemnation from Republican congressional leaders or other major party figures, including the remaining presidential candidates.

    It’s not that the GOP leadership agrees with West; it is that such extreme remarks and views are now taken for granted.

    We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party.

    The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.

    When one party moves this far from the mainstream, it makes it nearly impossible for the political system to deal constructively with the country’s challenges.

  9. vuk says:

    techy – that’s my point, obama did not initiate TARP. So, it should not be included in the base of that line.

  10. seneca says:

    Still, federal government spending RELATIVE TO INCOME

  11. greybelt says:

    I thought I’d look at this data series as a percentage of Real GDP and this is what I got going back to Eisenhower:
    EISENHOWER 32.9%
    JFK/LBJ 30.6%
    NIXON/FORD 26.9%
    CARTER 23.2%
    REAGAN 23.4%
    BUSH41 23.2%
    CLINTON 20.4%
    BUSH43 19.0%
    OBAMA 19.3% to date

    So… I’m a bit confused. Looks like this is on a long-term downtrend, and it was flat from the mid-70s to the mid-90s.

    I did have some trouble finding the exact definition of “Real Government Consumption Expenditures and Gross Investment” in the BEA site and others. It was unclear to me if it includes transfer payments. One thing it does not include is future liabilities such as Social Security now that the baby boomers are collecting after years of the government benefiting from taxes collected during their prime work years.

  12. seneca says:

    Still, federal government spending RELATIVE TO TAX REVENUES is the most out of balance since WWII. Since Obama came into office, the federal deficit as a percentage of GDP has been running between 8 and 11 percent, much higher than during the Reagan era.

  13. techy says:

    seneca: so you are saying that since tax revenues started falling because of what Bush did Obama should have fired all the cops to reduce spending? is that the right solution when economy is shrinking?

  14. denim says:

    No doubt about it. Dr. Krugman was not exaggerating when he renamed the president :
    “Barack Herbert Hoover Obama”. http://krugman.blogs.nytimes.com/2011/07/02/barack-herbert-hoover-obama/
    What would be edifying is to show the data plotted by state and each governor’s political party. Watch the austerians stick out like a sore thumb.

  15. Joe Friday says:

    Now everyone can clearly see where the supposedly great GDP came from during Bonzo Ronnie’s two terms: Good ole’ fashioned Keynesian spending. It was counted as GDP when the military industrial complex spent it, along with any economic activity it generated.

    Unfortunately, you get FIVE times the number of jobs if the government spends it directly out into the national economy than you do if the military industrial complex spends it, which is why there were no net new jobs paying over $20K created during those two presidential terms, according to the IRS.

    McJobs ruled under Reagan.

  16. carleric says:

    The agenda never changes for the liberal left…..you think the make of congress during the Reagan years might have been different than the one we have now? Its OK if you are an Obamaphile but stop posting unsolicited political claptrap and spare us all. They all encourage spending too much, lie too much and build out more and more unnecessary government. All items on some people’s agenda.

  17. I echo Fred C. Dobbs’ comment and add that this post seems to be more about “towing the party line” than digging into the data. Rearding Invictus’ reply to Dobbs’ comment, I don’t care what either party tries to do every day. That’s why I read this blog instead of political news. I don’t read The Big Picture for rhetoric or spin.

    Krugmen mentioned that most of the decline in Government consumption/investment was at the state/local level. If true, Federal consumption/investment may provide a better picture of “Obama’s” responsibility (indicators for party in control of the House/Sentate might be enlightning too).

    Also, Krugman probably focused on actual consumption and investment because transfers aren’t Keynesian stimulus. This post seems more focused on “responsible” spending, so transfers should be included, right? An indicaton of recessions (and the type) during each presidential cycle could also be helpful to determine which spending might be discounted as temporary stimulus.

  18. techy says:

    What do you think 8% unemployment means, is it federal or is it for United states of america??
    So if the states cut their budget and fire people and somehow that is obama’s fault but not the other way around?

  19. Glen says:

    Hmm, I’m going to sit this one out and just watch the heads explode.

    Besides, I really don’t care too much for Obama, it’s like we got Bush for a third term.

  20. ilsm says:


    The US navy can be less a “force for good” around the world so that boomers can have their SS. US marines do not have to charge in overseas to alleviate despair. And star wars contractors do not need to deliver defects just to keep their profits up (GA) 12-600T).

    GDP is not always a good measure. Unless you suppose that the war profiteers should be getting 8% of GDP so their PACs represent a continuously growing socialized industry despite the threats only being terrorists.

    For example, national insecurity spending by the pentagon for the military industry complex has been well over 5% of GDP from 1951 through today, with a brief decline to around 3% of GDP from the end of the soviet menace troughing during Clinton years.

    Today the military industry trough is as full in real dollars as in 1969, only today it is a trough for war profiteering.

    GDP is a bad measure, the use of the outlays and the efficiency of the outlays is more important.

    That militrists’ 20% of US government outlays is easily redistributed to SS as the loss of investments in producing things from tens of trillions in war spending has made it difficult to pay for the boomers’ outlays.

    There is the historic low % of GDP going to US G receipts!

  21. pedrocpaguy says:

    Joshua Ulrich: “I don’t care what either party tries to do every day. That’s why I read this blog instead of political news. I don’t read The Big Picture for rhetoric or spin.”

    Amen, bro’!

    For a blog with the subtitle “Macro Perspective on the Capital Markets, Economy, Technology & Digital Media”, it is quite tiring to come here and read political b..ls..t propagated by a blog writer.

  22. Dudes:

    The blog has 22000 posts — if you don’t like a weekend guest post click down to the next one.

    Alternatively, you could cancel your subscription and demand a full refund . . .

  23. kmayer98 says:

    More proof that Obama is better than Jesus. Is there anything this guy can’t do?

    We SHOULD spend more since government spending is always productive.

  24. Joe Friday says:


    Of course, none of this matters because people just know what they know, notwithstanding the facts.

    Not sure I’ve ever seen a prophecy play out so quickly.

  25. theexpertisin says:



  26. Jim Hancock says:

    Three thoughts…

    1) I don’t know, but would guess a big part of the government cuts are state and local. Most of them have to balance budgets or live with their reduced tax receipts …most of the job losses have been teachers and other government workers.

    2) If there was ever a time to spend more, NOW would be it (t-party be damned). The government should be investing in infrastructure, research, education, etc. The fact that less is being spent at the moment than should be is a huge failure imo.

    3) FDR didn’t ASK congress for permission …he made his case to the American people and pushed congress to do the right thing. Obama lacks the imagination and courage to do the right thing …unfortunately so does everyone else. :(

  27. G3 says:

    This is at best a complete BS.

    I guess it started with Weisenthal, who has a habit of digging FRED and believes he knows more than other people. So some people picked up the topic without any thought.

    If you look into the GCEC series in FED, the latest data point is 2462.2 billion. It is not even the total budget Obama announced to the world.

    People: have you read anything before opening your mouth?

    GCEC is NOT the entire Fed Government spending.

    GCEC is NOT the entire Fed Government spending.

    Invictus: And my claim that it is is where, exactly?

  28. Malachi says:

    How can you not say this is an interesting data point? Even if you wanted to consider more things? I guess that’s what you do if you already have your conclusion before you begin reading. That’s a tough pattern to avoid.

  29. Northeaster says:

    “This is at best a complete BS.

    I guess it started with Weisenthal, who has a habit of digging FRED and believes he knows more than other people. So some people picked up the topic without any thought.

    If you look into the GCEC series in FED, the latest data point is 2462.2 billion. It is not even the total budget Obama announced to the world.

    People: have you read anything before opening your mouth?

    GCEC is NOT the entire Fed Government spending.

    GCEC is NOT the entire Fed Government spending.

    Invictus: And my claim that it is is where, exactly?”

    h/t G3

  30. Bridget says:

    ” Let’s have a look at Real Government Expenditures & Investment…”

    Yes, let’s. Since Krugman has pulled this rather obscure data set out of a hat, nicely graphed and really official looking and all, surely this puts to the lie these Republican canards that Obama has run up debt and deficits unequalled in the entire history of the world.

    Except, except…what, exactly is GCECL aka Government Consumption Expenditures and Gross Investment? A quick google will show that Government Consumption Expenditures and Gross Investment includes all government expenditures on domestically produced goods and services. Like an individual or family, the government consumes food, clothing, furniture, and other goods and services in its administrative, military, correctional, and other programs. Governments also invest in buildings for program use and in improvements to harbors, rivers, roads, and airports. Transfer payments, like subsidies to the unemployed or the retired, are not included in this item, since they are simply a movement of money from government to citizens, rather than a purchase of goods or services.”. http://en.wikipedia.org/wiki/National_Income_and_Product_Accounts

    And my bet is, transfer payments ain’t the only thing left out. Like government salaries, interest payments, bailout money, all of the money blown on non tangibles. And oh, by the way, unless I miss my guess, the GSA would be the primary source for data on what our government is spending on “domestically produced goods and services”. Pardon me while I LMAO!

    Invictus: Well, he who laughs last, I suppose. You must have missed the part in Krugman’s post where he wrote: “Look at government (all levels) purchases of goods and services, that is, actually buying stuff as opposed to transfer payments like Social Security and Medicare.” He actually told readers, though apparently not you – you sharpie, exactly why he chose GCEC1. Thanks for following Barry’s comment instructions to the letter.

  31. Bridget says:

    You, however, told readers nothing about the limitations of the data set encompassed by Government Consumption Expenditures and Gross Investment”, did you? Except to insinuate that that the graph demonstrates that Obama is not spending like a drunken sailor, when plainly he is, and that Obama and Clinton have been the most fiscally responsible of the last five administrations. Clinton and the Republican Congress, true. Obama/Reid/Pelosi, not. A sorely lacking bit of context.

    Invictus: I linked to Krugman’s piece and used the same series he did. Those who read his post, which you apparently did not, would have understood what the series represents. I’m sorry that the facts don’t fit your narrative, but it just goes that way sometimes.

  32. Oral Hazard says:


    Circle Jerks, “When the Shit Hits the Fan,” live Dec. 17, 1985. As true now as in 1985 under St. Ronnie.

  33. advsys says:

    Barry, please don’t ever stop posting on topics like this. They are immensely helpful in understanding the big picture. Thanks, for all your hard and valuable work.

  34. G3 says:


    (1) Krugman’s piece says at most Obama is unfortunate as a President. Why?

    Because GCEC includes all government spending. There had been tremendous spending cuts from State and local governments. So the total does not indicate Obama spent less. He may (who will believe that?). But the data series simply can’t tell.

    (2) My point is that given GCEC does not even cover the total spending, it can not be used as an indicator of someone’s spending record.

    (3) To your response of my early post, please see “…how is the tax and spend socialist Obama doing on government spending…” where you use GCEC to prove your point. All I was saying was that you did not prove it at all.

    (4) I see you added an Appendix. Romney is big hypocrite. I don’t believe he will ever cut spending. But this proves nothing about Obama.

    You will have to use Obama’s total spending to prove your point, which is very different from Krugman’s. It is very hard for anyone to believe Obama spent frugally as we know our deficit has increased by (about) 1.3 trillions per year since he took office.

    I am all for a good point. So I want to see some solid facts to back arguments up.

  35. Plissken says:

    Don’t you ever forget: “Reality has a well known liberal bias.”

  36. GetReal1 says:

    Republicans like to spend and not pay for it. Democrats like to spend but want everyone to pay for it. Democrats may be a bit better than Republicans here but the fact is that both parties like to spend.

  37. 873450 says:

    Does the chart depict fiscal prudence or is it more a reflection of President Obama’s initially unforeseen inability to confront or push back the political opposition crippling his domestic agenda.

    I’ve read that Steve Jobs was infuriated leaving his final meeting with Obama. With a lot of media hype the White House publicly invited Jobs and other business leaders (including of all people, Jeff Immelt and Jamie Dimon) for advice about creating and repatriating exported jobs for millions of unemployed Americans. Jobs said Obama’s response to just about every suggestion he proposed was to shrug his shoulders, shake his head back and forth and say Tea Party Republicans in Congress will never let him do that, so it wasn’t worth trying.

    Reagan (cutting top tax rates will increase revenues, reduce deficits and the benefits will trickle down to everybody) and Bush #2 (fabricated 9/11 links + fabricated WMD intell = justification for wrongful invasion and wrongful occupation of wrong country) barnstormed the nation galvanizing public support and stomping down political opposition to advance their, at best illogically flawed ideology or, at worst cynically deceptive crony capitalist agendas that bankrupted our country.

    More than a 3.5 years passed before Obama mustered up sufficient backbone to make a recess appointment. That is an incredibly long learning curve for POTUS, particularly during multiple crises. Reagan and Bush #2 hit the ground running. Were they that much smarter?

  38. 873450 says:

    Please use the comments to demonstrate your own ignorance.

    More than a 3.5 years passed before Obama mustered up sufficient backbone to make a recess appointment.
    Ignorance demonstrated.
    More than a 3 years passed before Obama mustered up sufficient backbone to make a recess appointment.
    Ignorance corrected.

  39. Frilton Miedman says:

    Observation, there are no “solid facts” when you refuse to acknowledge solid facts.

    -Spending deceases under Obama are going to drive Neocons and Fox muppets insane, there’s no chart, data or other empirical fact that will keep them from disputing & cherry-picking to disprove it, don’t bother arguing.

    - Holy cow, though I’m admittedly surprised spending has dropped so much under Obama, I never would have guessed Reagan would beat G-dubya for top prize of the coveted “Liberal-spendaholic-socialist” award.

    I’ve learned some lessons in recent years on certain topics when discussing with a corn fed neocon.

    Despite the ship sinking & water gushing around your feet, there is no winning a debate that “tickle down” and special tax treatment for corporations/wealthy is a failure, there are too many ways for a Neocon to arouse possible doubt or cite obscure/distorted theory.

    The water around your feet doesn’t prove the ship is sinking, the middle class seeing parabolic increases in debt with flat wages sine 1980 is purely coincidental to “trickle down” economic tax policies.

    A chat that shows less government spending under Obama doesn’t mean less spending, because, it just can’t.

  40. mddwave says:

    Thanks for pointing me a place to look for data so I can have “the proper perspective”.

    I found the original source for the chart
    Real Government Consumption Expenditures & Gross Investment link

    I found a more detailed summary since 1995 broken down by Federal/Defense/State, etc.

    To me, the chart tells a different story. In the first three years of Obama, there was no change in the annual investment in federal government infrastructure. From what I seen on government facilities, the current level is not enough to sustain to current standards. It is a shame that for 5 trillion more debt, there has been little change in government capitial investment.

    I remember a previous post explaining the severity of the infrastructure problem more clearly.

    “Borrow and spend” is different that “Borrow and build”

  41. Syd says:

    “Are you telling us the POTUS, not Congress, controls federal government spending? I don’t think so.” -Fred C. Dobbs

    The Congress obviously has a huge say in the budget process, but so does the President. Besides the veto, which requires a two thirds vote of both chambers to override, Presidents can and do submit budgets or tax/spending proposals to Congress that get enacted largely intact.

    Ronald Reagan did, with his tax cuts and Cold War spending. Bush the Younger did with his tax cuts and elective war with Iraq. Obama did, with his stimulus package and health care plan.

    Sometimes the Executive branch end-runs the Congress and spends money to do things Congress has expressly forbidden (e.g., supporting the Contras in Nicaragua; spying on citizen communications without prior court approval).

    Others who are not the President or Congress wield tremendous clout on spending/tax decisions, through lobbying, campaign donations and other inducements (cough:bribes).

    The main point of this piece though is to point out the falseness of Republican presidential candidate claims that Republicans can be counted on to be more fiscally responsible than Democrats. The record of the last thirty years shows otherwise.

    Here are links to other relevant data that Barry posted awhile ago:



    Here is a Wikipedia page on party divisions in US Congresses:


  42. philipat says:

    I’m not saying this is not correct, just asking for more data. If this IS correct, how is it that the National debt under Obama has increased by 5 Trillion in less tha 4 years (And will shortly hit 16 Trillion). More than any other President in history according to some sources. So what is the truth here?

  43. boogabooga1114 says:

    OK, let’s be serious: Yes, assuming the data’s correct, the government is buying less stuff (and I’d speculate the military-industrial complex accounts for 75 percent of that spending). It’s also borrowing a trillion bucks a year, primarily to keep the unemployed from sleeping under bridges and the like. That counts. And indeed your economists love to talk about the steep multiplier of those transfer payments that Krugman suddenly wants to leave aside — you know, because poor people spend their money and all.

    Austerity? For real?

  44. [...] Why isn’t the government borrowing more at negative real interest rates?  (Big Picture) [...]

  45. romerjt says:

    People have beliefs which they think are supported by facts. The actual fact content of their beliefs varies widely. The more religious a person is the less they feel the need to use facts to support their beliefs.

    Confronting people with facts that contradict their beliefs annoys them and strengthens their beliefs as they respond with ad homonim arguments and personal attacks. The proliferation of information sources has weakened, not strengthened a more factual reality by making it easier to find facts that support beliefs. I find this really ironic and threatening.

    Imagine being governed by people who believe that dinosaurs and humans lived together, that burning trillions of tons of carbon has no effect in the environment, that wealth will trickle down, Obama is a Socialist, capitalism doesn’t require government regulation and Fox is fair and balanced and the financial crisis was caused by the Community Reinvestment Act to name a few. Can America survive these fact-free beliefs?

  46. StatArb says:


    how about that NFL draft ?????

  47. RW says:

    “…how is it that the National debt under Obama has increased..”

    philipat asks a straight question so here’s the straight answer:

    1. economic downturns produce less money and more underemployment so less income to tax (subtracts from the deficit denominator, revenues)

    2. more people suffer under- or unemployment so automatic stabilizers, from food to unemployment transfers, ramp up in volume (adds to the deficit numerator, spending)

    When the denominator goes up more than the numerator you get a bigger deficit.

    There are too many folks who forget there is a denominator or simply can’t do arithmetic.

    That’s it.

  48. RW says:

    Ah hell, where’s the edit key …when the denominator goes down more than the numerator (sheesh)

  49. AlexM says:


    None of the negative reactions here should be surprising; the same mentality that compels people to vote against their own self interest is at work here. These views have been intentionally reinforced by the corporate owned media, the corporate owned congress, and the right wing oligarchs who run this country.

    The entire population as a whole has been propagandized and brain washed for decades to believe and promote the quaint notion that the evil Democrats were responsible for everything that has gone wrong while smug Republicans while spending like drunken sailors use the right wing echo machine to promote the message that “Deficits Don’t Matter”, that is until a Democrat gets into office and they can then lay the blame on them.

    I cannot tell you how many times I have heard that Obama not only is responsible for the current economy, but that he CREATED the problems that were decades in the making. The push back for your pointing out the obvious truth is not surprising, but an inevitable outcome of decades of brainwashing.

  50. RW says:

    Aside from another cautionary tale about writing comments on a Sunday morning before sufficient caffeine that little slip-up reminds me of how common the numerator or denominator gets left out of these kinds of arguments.

    Many times it is simple forgetfulness or lack of knowledge but some times — in an election year probably a lot of times — it is an attempt to bamboozle the audience.

    Another classic example is when someone starts in about the $13 trillion in US debt but does so without any reference to the asset side of the equation. In the case of the US that is somewhere in the (very rough) neighborhood of $160 trillion so the debt to equity ratio works out to about 0.09

    Now a sovereign nation, particularly one in control of its own currency, is not equivalent to a corporation or household so that metric is not necessarily meaningful but most people who make these kinds of arguments really seem to like to making that analogy too so …

    …would a rational investor think a debt to equity ratio > 0.1 was indicating a pretty healthy situation with room for further leverage? Of course they would.

    Anyone who thinks America is analogous to a corporation or household should regard Obama as fiscally conservative at the very least.

    From my POV and with interest rates in negative territory, Obama is not merely a fiscal conservative, he is a bloody Scrooge.

  51. bart says:

    Using actual total Federal debt changes, rather than the limited GCEC data, here’s how the picture changes:


  52. Joe Friday says:


    It is very hard for anyone to believe Obama spent frugally as we know our deficit has increased by (about) 1.3 trillions per year since he took office.



    If this IS correct, how is it that the National debt under Obama has increased by 5 Trillion in less tha 4 years

    Both of you are overlooking the fact that we had trillion-dollar+ federal deficits prior to Obama being inaugurated. It’s just that the Chimpy Bush administration and the Republican Congressional Majority chose to LIE to you about it by placing so much federal spending OFF-BUDGET. After taking office, Obama said this was all ridiculous, and put it all back ON-BUDGET.

    You are being misled by appearance when you should be paying attention to reality.

  53. bart says:

    Here’s the actual factual record – change in total Federal debt vs. budget deficit data from the Treasury.


  54. Frilton Miedman says:

    To Bart’s chat, relating to what I said above,

    “.. . there’s no chart, data or other empirical fact that will keep them from disputing & cherry-picking to disprove it, ”

    I see that he has “corrected” the data & created his own chart.

    I have decided to go back to the 1987 World Series and re-evaluate the outcome because as long as the ball touches the player attempting to catch it, it’s not an error, but a legitimate out.

    In this scenario Bill Buckner is MVP and the Red Sox won the World Series.

  55. HarleyHoward says:

    Once again, entrenched elites forming a circle to blow smoke up each other’s ass! Simple facts gentlemen, deficits exceeding $1.3 TRILLION per year, adding that amount to an already unsustainable debt level AND printing more money to buy that debt!

    Make all the excuses you want, blow whatever smoke you want, but you cannot change the fact that this time is NOT different. Have none of you read Reinhart and Rogoff?

    Common Sense from the Heartland – http://howardwemple.com

  56. bart says:

    FM said: “.. . there’s no chart, data or other empirical fact that will keep them from disputing & cherry-picking to disprove it, ”

    If it’s cherry picking to just show total Federal debt growth across the last five presidents instead of the very limited GCEC data, I guess that shows me!
    I must be one of those evil (choose one: Demolisher/Reprobate/Libtard/Other).

    Can I get a grunt too? *sigh*

  57. louiswi says:

    Invictus and Barry,

    This is yet another outstanding piece! Can’t quite say the same about the peanut gallery comments however.

  58. Joe Friday says:


    Make all the excuses you want, blow whatever smoke you want, but you cannot change the fact that this time is NOT different.

    I could not agree more, it’s NOT different. We’ve seen this movie before:

    * After the MASIVE tax cuts for the Rich & Corporate pushed through in 1981, federal incomes tax revenues plummeted down to 1940s levels, resulting in MASSIVE federal budget deficits eventually being well over 50% of GDP, setting up a death spiral of the debt growing faster than the national economy.

    Then, primarily as a result of raising taxes on the Rich & Corporate, in six short years we went from massive federal deficits & debt, and that debt growing faster than the economy, to federal budget surpluses as far as the eye could see, with an economy growing much faster than the debt, and record federal income tax receipts.

    * In Part Duex of this movie, we simply have to reverse the failed policy which the independent non-partisan CBO indicates is overwhelmingly responsible for our current MASSIVE federal deficits & debt, the numerous rounds of tax cuts that overwhelmingly benefited the Rich & Corporate pushed through by Chimpy Bush and the Republican Congressional Majority, which resulted in federal income tax revenues plunging down to 1950s levels.

  59. Joe Friday says:


    By the way, while I recognize the issues posed by the debt and deficit, does anyone think that maybe it’s at least a reasonable idea to borrow money at negative real interest rates?

    Speaking of which, with TIPS bearing negative interest rates, the government should be borrowing with BOTH HANDS and using the money to do infrastructure, not just that we would LIKE to do, not just that we SHOULD do, but that WILL be done eventually in the future, only it could be done now and financed completely for FREE, while putting millions of Americans to work.

    Of course this would never get past the Neanderthal Crazies that want massive spending cuts and even more massive tax cuts for the Rich & Corporate.

  60. ApolloAntiochus says:

    The numbers posted by Krugman (and cited by Invictus) is completely deceptive. Why don’t we use total federal government spending? Why carve out and look just at “Real Government Expenditures & Investment”? Does that mean the rest of government spending is “imaginary government expenditures”? Can taxpayers get their money back for that portion?

    Benjamin Disraeli said “There are three kinds of lies: lies, damned lies, and statistics.” And these numbers illustrate exactly the point. Krugman defines government spending as “government (all levels) purchases of goods and services”. So when government buys things, it counts as government spending (and do all sort of magical Keynesian things like stimulate the economy), but when government gives money to other people/groups to spend (for example subsidized student loans), it doesn’t count at all. That money never existed. No impact on the economy. Nothing. Maybe Obama should funnel all government spending through a shell company called Government Inc. Then, he wouldn’t be spending any money at all according to Krugman.

    Ordinarily, congress is responsible for the budget. The way that US government works is that the House drafts the budget which gets passed by the Senate and adopted by the President. Congress (and most importantly the House) is therefore responsible for budgets which gets passed. Except no budget has been passed for over 1100 days because all attempts at passing a budget by the Republican House has been blocked by the Democrat controlled Senate and the President. You can blame the Republican House for being too weak or too wimpy to exert their constitutional role (like I do), but you can’t blame them for the budget because of the simple fact that they haven’t been able to pass their budget and Obama has been deciding how much to spend.

    If you really wanted to look at how much Barack Obama is spending, you don’t cook up a number like “government (all levels) purchases of goods and services”. In addition to the idiocy of looking only at purchases and services, why lump state and local spending into that number? Look at the United States Federal Budget. That’s the total amount of money the federal government spends, plain and simple. Graph real numbers and you have no point.

  61. gman says:

    “DEBT THREAT” “The US will soon be like Greece!”

    OR NOT..US govt debt service at 30 yr low!


  62. FrViper says:

    Gees, what a fire storm! Seems we’re talking about ‘discretionary’ spending? All I look at is how much gov’t takes in and how much it spends, ie. cash accounting. Both parties are out of whack. I think what’s ‘fair’ is we live within our means and the lucky help the less fortunate, but individually within their pwn communities where they can monitor the needs vs. the abilities. We need to get off our respective ‘butts’ and help where and how we can. How about the ‘building bee’ concept that America used to have before insurance and big gov’t.

  63. NoKidding says:

    “Indexed to 100 at inauguration”


    Invictus: Awesome contribution. Really. Stellar. Way to distinguish yourself.

  64. wally says:

    Amazing how so many people simply cannot accept facts. Their biases are so strong they must reject reality in order to keep their equilibrium.

  65. gman says:

    I am also amazed the extent to which people of both parties fail to get the basic concept of a government acting COUNTER CYCLICALLY. Instead we get wars and tax cuts in the boom years and austerity in the busts…actual PRO CYCLICAL policy.. make the booms more bubbly and busts more protracted! BRILLIANT!

  66. AtlasRocked says:

    This article could also be titled “Always fact check”

    chart says 2012:Q1: *********************************** 2,462,200 trillion

    First qrtr gov’t spending: http://fms.treas.gov/mts/index.html
    ( 261 (jan) + 335 (feb) + 369 (mar) ) * 4 (annualized) = ***** 3,864,800 trillion

    The chart used here is $1.4 trillion lower from other treasury data.
    Something is being left out.

    What liberal policy advocates often do is they don’t count most of the federal
    budget that congress has deemed “off books” and “mandatory” debt.

    If you let me leave out any data I wish to leave out, I can tell any story I want
    about what the federal goverment is doing.

  67. Joe Friday says:

    Something is being left out.

    Oh, sumthin’s being left out all right.

  68. gman says:

    “The chart used here is $1.4 trillion lower from other treasury data.
    Something is being left out.”

    Atlas, the chart above is not of “governement spending” like you cite, but of government consumption which is a different metric. The differences were discussed at length up thread.

  69. AtlasRocked says:

    Oh $1.4 trillion is negligible now. 1.4 times 10 to the 12th power is negligible.

    A number that is 12 orders of magnitude in size can now be disregarded according to the same guys that can’t provide a Keynesian success example in all of world history.

    You’re sure it is safe to assume 1.4×10^12 of gov’t spending is not anything America should concern itself about.

    Do these statemens capture what you’re trying to say?

  70. sherparick says:

    The religious beliefs of the Austerians, Austrians, and Tea Party rentiers on this blog LOL funny!! Well, there is my little indulgence in ad hominem. Now for a few facts. Most of the deficit is the result of Bush’s and Obama’s tax cuts (for all the talk he does of raising taxes, he has mostly cut them the last 4 years.

    Bruce Bartlett pointed out in 2011 that at 14.8%, Federal taxes were at the lowest % of the GDP since WWII. ” The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. ” http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-or-low/

    Contrary to assertions, the 2009 Recovery Act was spent out on temporary tax cuts, aid to states and cities, and a variety of infrastructure projects (to few and to limited by the “shovel ready” criteria in 2009 and 2010. It did not increase the baseline of the Government or increase the level of spending.

    Most of the spending increases resulted in vast decline in employment that the lower and working classes suffered from during the 2007-2010 recession, a loss of employment that has seen little recovery. This lead to increases in unemployment insurance, food stamps, medicaid, and social security disability, the last refuge from extreme poverty and homelessness for older workers with health problems who find themselves unemployable. Yes, these are Casey Mulligan’s “lucky duckies” who prefer Government supported poverty to middle class independence.

    Again, in other columns, Krugman has pointed out that the U.S. Government is basically an insurance company with an Army since 2/3d of the money going out is Social Security (which we boomers paid extra taxes on for 30 years to subsidize Atlas Rock’s low tax rate), Medicare, and Medicaid. And if you want to cut that spending now, you can’t just screw over those under 55 , but have to tell all the current 60, 70, 80, and 90 year olds to go out and get a job. The DoD makes up about a 1/5. And none of you guys have met a recent war that you are glad to let someone else fight and pay for. That reminds we, we have to tell all those shattered bodies and shattered minds in the military and VA hospitals that they to need to learn “self-reliance” and learn to stand if not on their non-existent legs, perhaps on that one remaining arm.

  71. AtlasRocked says:

    tax vs GDP rate – compare Bush and Obama

    Lowest Bush tax rate: 16.1% in 2004, 2 years after the Bush rates enacted.
    …………………..18.5% in 2007, 20% higher than Obama’s highest rate.
    ………………..: 17.5% in 2008,

    Obama tax rates : 15.1, 15.1, 15.4%

    Per GDP, clearly Obama taxed lower than Bush, yet the liberal policy advocates still bash Bush for making taxes too low. Obama whipped him good here.

    @sherparick – You left out that Obama/Pelosi quickly and decisively re-adopted the Bush rates, which were deemed the spore of the anti-Christ during the 2008 election. Why? I’ll tell you why.

    Deficit spending goes right into the GDP equation, especially during a downturn. Watch for both parties to abandon the tax increases and spending cuts at the year’s end, since they will cause a new recession.

    If we cut the deficit, we cut the GDP. It’s baked into the equation. This is the trap the conservatives and libertarians feared 30 years ago when Reagan first started deficit spending: Hooked on deficits, the only way out of the trap is to force recession on everyone, so neither party will take on either tax increases or spending cuts because both will recess the economy.

    We need leaders in America to stand up and say what we’re doing now is fundamentally, unerringly wrong. The Fed’s policies, seemingly healthy in better times, have been perverted into a 2nd tier welfare support system, buying the debt created by the Federal gov’t to pay what are not alms for the indigent, but broad, middle class benefits programs based on math that we knew wouldn’t work 30 years ago when Reagan/O’Neill first showed us there appeared to be no problems with deficit spending. It is clear the system is broken now, since 2.9×10^12 money has been printed, and the economic is not returning to sustainable health. Almost 10% of the economy is now federal spending – that is unsustainable. It’s economic suicide. We’re just leaving debt for our kids – our future. We must own our own problems on our own dollar.

    Where are the citizen-leaders ? Not politicians – they will not bring answers to us. We, the citizens, have to stand up and do the right thing, return the fiscal system to sound, moral leverage with true counter-party risk. The money printers cannot be the folks loaning money to themselves. If the fed is going to print money, the benefits programs have to be returned to the state level so the gov’t is not printing money to loan itself. 50 state benefits programs based on fiscal sanity instead of 1 insane, federal printer-self-loaner needs to be put on the table again.

    The US gov’t’s split of state and federal responsibilities was a key part of a 200 year successful balance of power. That has been removed.

    For a life sustaining system with unknown, sometimes catastrophic inputs, is a single point failure system better or a system where there are zero single point failure possibilities, and dozens or more small failure points that could only threaten the life of a fraction of the population, while the remaining healthy fractions figure out how to fix the damaged ones?

  72. Frilton Miedman says:

    Atlas, Hauser’s Law, read it and weep.

  73. Joe Friday says:


    Deficit spending goes right into the GDP equation…

    Except anyone attempting to utilize “Per GDP” in this context is overlooking the fact that has been previously laid out here, as well as by Krugman, DeLong, and others, that fractions do indeed have denominators, and would be reinforcing their cluelessness.

    If we cut the deficit, we cut the GDP. It’s baked into the equation. This is the trap the conservatives and libertarians feared 30 years ago when Reagan first started deficit spending: Hooked on deficits, the only way out of the trap is to force recession on everyone

    Except the Clinton administration and the Democratic Congressional Majority raised taxes on the Rich & Corporate, and turned the federal deficits & debt into federal budget surpluses, with the exact opposite result of “to force recession on everyone“.

    You simply have no idea what your posting about.

  74. AtlasRocked says:

    post the link to the treasury data that shows Clinton surplus. Here’s the data I got :

    I have a copy of the 2007 CBO Historical tables.

    Year 2007 historical tables


    1997 5,369,206
    1998 5,478,189
    1999 5,605,523
    2000 5,628,700
    2001 5,769,881
    2002 6,198,401
    2003 6,760,014 Note the Clinton Debt ALWAYS GOES UP.

    Thanks for documenting your consistent fraudulence, Joe. You are a serving a valuable purpose for our country.

  75. AtlasRocked says:

    Wiki: Joe Friday – good post on Hauser’s law, Wiki conveniently posts data that proves it is wrong, data that is consistent with my findings.

    Hauser’s law is the proposition that, in the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.[1]

    Fact listed under Hauser’s law:
    From fiscal year 1946 to fiscal year 2007, federal tax receipts as a percentage of gross domestic product averaged 17.9%, with a range from 14.4% to 20.9%.[2]

    You guys should get paid for doing this, you are a huge service to the US.

  76. [...] recent Hey, Big Spender piece (the third in a series, it turns out) drew a fair amount of hyper-partisan commentary. Most [...]

  77. [...] recently read an interesting article over at Barry Ritholtz’s blog (one of my daily mandatory reads after Advisor Perspectives) [...]

  78. RightRob says:

    Surprised to find real intelligence here – and the usual Left Wing propaganda, of course:
    - Read the constitution – Congress (House) has the sole responsibility to initiate spending measures. The president can propose and/or veto. Unfortunately, Bush II did too much of the former (Medicare Part D, No Child…,etc.) and too little of the latter.
    - Reagan was saddled by a Democrat Congress (Tip O’Neil) the whole time – remember, Democrats controlled Congress (and spending) for 40 years – until Gingrich and “The Contract for America” took the House in 1994 elections! Gingrich “forced” Clinton into 4 years of balanced budgets, Welfare reform (AFTER two attempts to veto).
    - Democrats took Congress (both houses) back again on January 2007! Watch the deficits climb from there! Plus, welfare is ratcheting up again, unemployment benefits are now 99 weeks, and when that runs out they apply for disability. There is a very large cadre of “Takers” that have learned how to live off the taxpayer – just like Europe!
    - The so called “stimulus” paid off Obama’s debt to the unions, underwrote salaries and benefits for public sector union teachers, firemen, police, etc. Now, since there was no reform of those costs the states have to find other ways to save jobs and balance budgets. It’s happening in NJ, IL, IN, WI, FL, etc. (Republican states) while Democrat states are raising taxes – again!

  79. Joe Friday says:


    post the link to the treasury data that shows Clinton surplus.

    Just how many times I gadda prove you wrong ?

    From the independent non-partisan CBO, citing the Treasury Department:

    1998 – $069 billion SURPLUS
    1999 – $126 billion SURPLUS
    2000 – $236 billion SURPLUS
    2001 – $128 billion SURPLUS



  80. AtlasRocked says:

    But – your data makes an ass out of you, Joe.

    CBO puts a rosier picture forward than the US treasury:

    2004-2006 deficit
    $321B, $352B, $405B
    $160B, $184B, $226B

    2008 deficit:

    Clinton debt from the treasury:
    1997 5,369,206
    1998 5,478,189
    1999 5,605,523
    2000 5,628,700 Note the Clinton Debt ALWAYS GOES UP.

    “Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000.” – Democratic Senator Ernest Hollings, October 28, 1999

  81. Joe Friday says:

    No, the independent non-partisan CBO states the facts, while you spin fantasies. Let’s see, whom to believe ? Tough call.

    You do not posses even a rudimentary understanding of basic economics or the federal budget, cannot even read let alone comprehend treasury data, and are hopelessly deluded.