Krugman continues to perpetuate the myth that Obama is not, as his opponents maintain, a Big Spender. This time he points out how obvious it was that "Obama would get no credit for fiscal responsibility, no matter what he offered by way of spending cuts."
Let's roll the
video tape. The Office of Management and Budget around early February of each
year submits its proposed federal government budget for the upcoming fiscal
year (ending September). Next week, OMB will release its proposed budget for
fiscal 2013 and we'll update these graphs when that data is available.
The three
graphs show US Government Receipts, Outlays and Deficits for the proposed
budgets FY 08 through FY 12. The F08 and F09 budgets are from George W. Bush.
The F10, F11 and F12 budgets were submitted by President Obama. The fiscal 10
budget was called, "A New Era of Responsibility: Renewing America's
Promise." You'll see the irony later.
The
first graph is receipts. The F08 Bush budgets forecast 5.4% compound annual
growth from F07 through F12. His F09 budget estimates a higher rate of 6.3% for
the five year forecast period. The Obama budget reflects lower receipts due to
the recession and from the large tax cuts implemented as part of the stimulus
(writ large, not just the American Recovery Act). It looks like the Obama
estimate of receipts gets back to Bush trend line in the out year, but they
don't. At the trend line receipts under the latest Obama budget are about $500
billion lower in Fiscal 2020.
This
graph is the same concept, but for outlays. The trend line growth for the Bush
budgets is about 3% per year. If we apply that trend line to the out years we
arrive at F21 outlays of about $4.2 to $4.3 trillion versus the proposed outlay
of $5.7 trillion for Obama in the F12 proposal. Now this isn't entirely fair
since I’m taking the Bush trend line from F08 through F13 and applying it to
the subsequent 8 years. A trend line isn't a budget. But it is a proxy, or a
benchmark we can use to judge claims of fiscal probity. The graph is pretty
clear, as is the math. Proposed spending under Obama has taken a significant
leap upwards.
You
may object: He had to spend, he had to cut taxes. Otherwise we would have seen
the Second Great Depression. Well, as I've pointed out before, the NBER dates
the end of the recession as June 2009, well before much of the stimulus could
have taken affect. So the claim of risking a Second Great Depression I would
regard as dubious. Secondly, the whole point of a stimulus is it ends. And the
fiscal 2012 proposal calls for a permanent stimulus, at least relative to
trend.
But
here's the eye-opener. It shows the proposed deficits for Bush F08/F09 and
Obama F10/F11/F12. I'm not exactly sure what "fiscal responsibility"
Krugman is looking towards. I don’t see it. I see a $1.4 trillion deficit
estimate in F09 falling to $600 billion in fiscal 2015 and then flat lining
until the spending for ObamaCare kicks in in F19.
The
argument usually goes like this:
Obama
is a big spending
- No
he isn't.
Yes
he is look at the numbers.
-
Well he had to otherwise we would be in the Second Great Depression.
But
the recession ended in June 2009, so how did his stimulus do that
-
<cricket>
And
if it was stimulus why is it permanent?
-
<cricket>
-
<cricket>
-
<cricket>
-
Well he had to otherwise we would be in the Second Great Depression. Damn that
George Bush.
So it
goes.
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