Yep, Obama's a big spender ... just like his predecessors

White House/Pete Souza

President Barack Obama prepares for his meeting to discuss ongoing efforts to find a balanced approach to the debt limit and deficit reduction with Congressional Leadership during a briefing in the Oval Office, July 11, 2011.

Article Highlights

  • There is considerable confusion surrounding President #Obama’s record on spending, debt, and deficits. @MichaelRStrain

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  • A low rate of spending growth does not imply the absence of an extremely high amount of spending. @MichaelRStrain

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  • Go back to 1946 to find a year when federal outlays were as large as they have been every year of Obama’s presidency.

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  • Obama inherited a gov’t moving in the wrong direction & he put his foot on the gas pedal. But he didn't change course.

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There is considerable confusion surrounding President Obama's record on spending, debt and deficits. Some point to the slow growth rate of federal spending under the president and use it to argue that he "has actually been tighter with a buck than any United States president since Dwight D. Eisenhower."

At the same time, some on the right argue that with respect to spending and debt the president is an aberration, an anomaly, a radical departure from the tradition of post-war American presidential stewardship. Both views are wrong. In reality, the president has been very bad on spending, debt, and deficits, but he has not been radically different than previous presidents.

It is easy to dispense with the argument that the president has been tight with money. Assume that during the year 2009 your already-overweight friend gained forty extra pounds, and since then your friend has continued to overeat such that his body weight has remained roughly constant. Since he hasn't gained much weight in the past four years, can I conclude that he doesn't have a weight problem? Of course not. Same goes with the president and his spending; a low rate of spending growth does not imply the absence of an extremely high amount of spending.

It's harder to argue that the president hasn't been a radical departure from previous presidents with respect to spending, debt, and deficits, but here goes. As a starting point, let's have a look at the chart below, which shows federal outlays as a percentage of GDP.

The first year of the Obama presidency, 2009, is the largest year in decades, with federal outlays totaling a whopping 25.2 percent of GDP. Since then, federal outlays relative to GDP have fallen, but they are still incredibly large. In fact, you have to go back to 1946 to find a year when federal outlays were as large as they have been every year of the Obama presidency.

Having said that, it is impossible to look at the chart and not to see a large ramp up in outlays under George W. Bush - the president who reversed the direction of federal outlays, which had been falling. Indeed, it is perfectly reasonable to argue that much of the responsibility for 2009's 25.2 percent rests with President Bush, and not with President Obama; in January 2009, before President Obama took office, the CBO released its forecast that fiscal year 2009 would see outlays of 24.9 percent of GDP based on pre-Obama policies.

Don't get me wrong: President Obama bears responsibility for federal outlays being larger for each year of his presidency than at any time since 1946. If George W. Bush bears a lot of responsibility for FY2009, then Mr. Obama bears even more responsibility for the three years that followed - responsibility for both the very high spending and the questionable composition of the spending.

So is Mr. Obama's performance on spending quite bad? Yes. But a difference in kind rather than in degree? Over his four fiscal years as president the average outlays-to-GDP ratio is 24.4 percent. During the Reagan years the average was 22.4 percent. Given the Great Recession, this two percentage point difference, though deceivingly very large, isn't enough to claim that President Obama represents a radical departure from post-war presidents with respect to spending.

What about the deficit? Here's the picture.

This chart is startling. It shows that President Obama walked into a massive budget deficit and he made the situation worse. Prior to President Obama's inauguration, and in the absence of any of his policies, the CBO estimated that the FY2009 budget deficit would be an incredible 8.3 percent of GDP. George W. Bush again bears a lot of the responsibility, and as with spending, President Obama turned bad into worse.

Each of Mr. Obama's annual deficits has been larger than any since the 1940s. Deficits aggregate into debt, and as I have previously written it is reasonable to think of President Obama and George W. Bush as each being responsible for roughly one-third of the debt - with all presidents from George Washington through Bill Clinton responsible for the remaining third. (In the absence of George W. Bush, it would of course be much harder, perhaps impossible, to argue that President Obama has not been a radical departure from previous presidents on debt.)

President Obama did significantly increase the path of future federal outlays - e.g., Obamacare - at a time when we need to decrease them. Given our extremely poor long-term budget outlook, this decision strikes many as particularly shocking. Though again, previous presidents have increased future outlays when they needed to be cut. Check your encyclopedia for Bush, George W.

And perhaps most importantly the president has not seriously tackled the medium- and long-term growth of our middle-class entitlement programs like Medicare and Social Security. For all his happy talk of needing to make hard choices and have "adult conversations," he has, either through choice or lack of political ability - in a system predicated on presidential leadership, it is the president who bears a disproportionate share of the blame for political gridlock - fallen tragically short. But again, as frustrating as this failure is (not embracing Simpson-Bowles as at least a starting point never ceases to amaze), it must be acknowledged that previous presidents have understood the need to reform these entitlements but have not succeeded in doing so.

So is the president an aberration in post-war American history? Is he something radically different than what we have seen in the past ten presidents? Nope. He really isn't. President Obama inherited a government moving in the wrong direction and he put his foot on the gas pedal. But he didn't change course. His record on spending, debt, and deficits is quite bad, but he is not a radical departure from the American presidential ethos.

In fact, he is, sadly, fairly typical. Like previous presidents, he has enacted new federal policies at great expense to the taxpayers. Like previous presidents, he has found it very hard to cut spending. Like previous presidents, he has not made substantial progress on controlling the current and future costs of our middle-class entitlements. Like his immediate predecessor, he has dramatically increased the size of the federal debt.

Perhaps we need a president who isn't typical in this regard? Would Governor Romney be a new type of president, able to control spending, reform our middle-class entitlements, and rein in the debt? If so, then that would be change I could believe in.

Michael R. Strain is a research fellow at the American Enterprise Institute

 

 

 

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About the Author

 

Michael R.
Strain
  • Michael R. Strain is a resident scholar at the American Enterprise Institute, where he studies labor economics, public finance, and applied microeconomics. His research has been published in peer-reviewed academic journals and in the policy journals Tax Notes and National Affairs. Dr. Strain also writes frequently for popular audiences on topics including labor market policy, jobs, minimum wages, federal tax and budget policy, and the Affordable Care Act, among others.  His essays and op-eds have been published by National Review, The New York Times, The Weekly Standard, The Atlantic, Forbes, Bloomberg View, and a variety of other outlets. He is frequently interviewed by major media outlets, and speaks often on college campuses. Before joining AEI he worked on the research team of the Longitudinal Employer-Household Dynamics program and was the manager of the New York Census Research Data Center, both at the U.S. Census Bureau.  Dr. Strain began his career in the macroeconomics research group of the Federal Reserve Bank of New York.  He is a graduate of Marquette University, and holds an M.A. from New York University and a Ph.D. from Cornell.


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