Spending and The Presidency

May 29, 2012

Has spending increased since President Obama took office? In Washington, a simple question like that is never easy to answer. One would assume that using simple math would yield accurate and reliable results, but Washington is never short of different perspectives on how math works. Tuesday, Rex Nutting of MarketWatch posted a blog describing of how spending has changed since President Obama took office in 2009; he sparked a conversation not only on what actual spending increases took place, but also on how one tracks those increases.

In this post we want to look at two of those perspectives, the math Nutting uses to claim spending has only increased 1.4 percent during President Obama’s tenure, and also the math that The Washington Post uses to claim spending has increased 5.8 percent increase during that same tenure.

  • Disagreeing on timeframe, the way in which the posts hold the president, or the president at that time, differ.
    • Traditionally spending by the president has been accounted for by fiscal year, meaning a President is only accountable for spending that occurs during fiscal years in which he submits a budget.
    • This would mean that nine months of 2009 would fall under President Bush’s purview.
    • Nutting attributes $140 billion to President Obama’s spending during the eight months of FY2009 that he was in office. In comparison, this is the same amount of debt Washington accrued in October of 2011 alone. Nutting does not attribute any of the funds used during the time from Jan – September of 2009 to President Obama’s overall spending aside from the above $140 billion. Instead it is counted under President Bush’s total. In the Washington Post article this is not the case.
    • Nutting does not specify where the $140 billion in spending he attributes to Obama in the 8 months leading up to Obama’s first fiscal year, but it is not enough to account for the appropriations bills or stimulus President Obama passed. Neither do Nutting’s calculations account for new spending that will occur in FY13, Obama’s final fiscal year. Secondly on this point, if Nutting were to assume this process of attribution to previous administrations for a majority of spending during the year they take office, then a number of spending examples in the Bush presidency would also fall under President Clinton.
  • When calculating how increases in spending are tracked, it is important to account for inflation, which is done for President Obama’s spending levels, but not for previous presidents.
    • In fact, as the Washington Post cites in its fact check, during President Regan’s administration, spending rose by 12.5 percent but inflation was rising at 6.5 percent, bringing the actual spending increase to 6 percent. Compared to the 5.8 percent that the Washington Post proposes President Obama spent, this number is nearly the same and happens to be a fitting comparison, as both presidents were following a recession and dealing with struggling economies.
  • The last point to keep in mind is an overall indication of where spending is historically, regardless of presidency. This would be a comparison of spending to the economy.
    • Historically this number has hovered around 18 percent of GDP in the post-WWII era and normally follows stable growth with modest increases in the debt.
    • In 2009 this number jumped from 20.8 percent to 25.2 percent as a result of the stimulus and emergency spending in reaction to the recession and housing crisis.
    • But, instead of returning to the traditional levels, this number first fell to 24.1 percent in 2010 and has remained there aside from a minor increase in 2012 to 24.3 percent. This will account for one of the longest stretches of increased spending in recent history.

While the math between the two articles we mention differs greatly, the fact remains that spending compared to the size of the economy is still above the historic 20 percent level and has been since President Obama took office.

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