"When they allow a talk show host to play them like a two-dollar banjo, they demonstrate what kind of backbone they'll bring to the job later on, if we elect them. After they get elected will they continue to allow Jeff Crank to put a nickel in them and wind them up every Saturday morning?"

Barry Noreen, former columnist, Colorado Springs Gazette

Friday, June 1, 2012

Spending Record Chicanery


You would think that President Obama, as a Keynesian progressive, would eagerly tout his Keynesian progressivism – that he would be proud of his “investments”. Suddenly, however, he and his surrogates seem poised to depict the President as a positively Paul Ryan-esque slasher of government spending.

It would appear to be part of a systemic re-imaging of Barack Obama. The President has spent an inordinate amount of time over the last year trying to characterize himself as a sort of Chicago community-organizer version of Rambo, claiming credit every chance he can for personally taking down Osama Bin Laden, and ostentatiously advertising his prowess at eliminating America’s enemies with Predator Drones. Now he is extending that remodeling to include fiscal policy.

Last week, prompted by an article by Rex Nutting in MarketWatch, hapless White House Press Secretary 
Jay Carney stated, to the stupefaction of many, that “the rate of spending — federal spending — increase is lower under President Obama than all of his predecessors since Dwight Eisenhower”. The President wasted little time in repeating the claim on the campaign trail.

This is, of course, patently untrue, and once economic and political observers in Washington realized that no, actually, Carney hadn’t misspoken, and no expected correction was forthcoming, it did not take them long to unravel the knot that Nutting and the Administration made of the federal budget numbers.

The ludicrous allegation is an almost unparalleled act of legerdemain that can only be made remotely plausible if one ignores one of Obama’s two crowning achievements, the Stimulus Bill (the other being Obamacare). The formulation goes that since the fiscal year starts in October, four months of the FY2009 came under President Bush’s watch. Further, that, in normal times, the first year of a new President’s term is largely operated under the budget enacted by the outgoing administration. That, in theory, would make 2009 Bush’s year.

Except for a few things. The Democrat-controlled Congress, anticipating a 2008 Obama victory, held back the bulk of their key appropriations bills, fearing that President Bush would dust off his much under-utilized veto pen to kill that spending. These were resuscitated and enacted under the new administration.

But the most preposterous oversight regards the $830 Billion stimulus. As much fun as it is to see “blame Bush” syndrome extended to include the failed stimulus spending, it is nonetheless entirely on the shoulders of one Barry H. Obama.

There is more. TARP (enacted, yes, under President Bush, albeit with Senator Obama’s blessing) distorts the overall picture enormously, which the Obama Administration takes full advantage of by painting repaid TARP money, which most of it has been, as spending cuts.

A final artifice involves budgetary projections; the Administration (and Netting) are using as an end point the CBO’s baseline budget of 3.58 trillion – not the 3.72 trillion that Obama actually wants and intends to spend.

The bottom line is that POTUS and his staff can twist, hammer, and chisel the figures all they want, but they cannot credulously defend any claim that they have not increased federal government spending to hitherto unheard of levels. The most damning figure, which happens to be the one which is most relevant to the question, is the amount of federal spending as a percentage of the GDP, which is historically high.

Case in point: in 2008, federal government spending came in at 20.8% of the GDP. In 2009 (the year of the 
Stimulus, lest we forget) that rose by over 21% to 25.2% of GDP – and has not dropped below 24% since.

Incidentally, it has not been at the 24% level since about 10 years before Dwight Eisenhower took office.

In fact, the only reason that the spending numbers are not even more dismal is due to Congress (especially the Republican-led House of Representatives) holding the train back to the extent that they did. If President Obama exercised any trace of “fiscal restraint”, it was only due to being forced to, kicking and screaming, by the Republican House.

Which brings us back to the initial question; if the President really believes the hyper-Keynesian approach is the correct one, why is he running from it like a frog from a French chef? As a Liberal Progressive, he should embrace his record.

But he can’t, of course. And so the President is left floundering about for a workable persona; Bain-trashing class warrior one day, champion of fiscal discipline the next. And counting the whole time on most people not being inclined to dig much into the facts.

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