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Obama’s Spending Binge

Posted by Steve Markowitz on June 14, 2012

Last week President Obama had the audacity to say, “Since I’ve been president, federal spending has risen at the lowest pace in nearly 60 years“.  This claim was the subject of an op-ed in the Wall Street Journal by Arthur Laffer and Stephen Moore titled Obama’s Real Spending Record.

Laffer and Moore conclusions on Obama’s spending record are based on a chart they created covering 1992 to today showing US government spending based on National Income and Product Accounts (NIPA) as a percent of total GDP.

  • Bill Clinton significantly cut government spending as a percentage of GDP.  In 1992 government spending was 23.5% of GDP, but dropped to 19.5% by the time he left office.  The Republican Congress and speaker Newt Gingrich deserve some credit too.
  • As the chart indicates, the biggest jump in government spending since 1992 occurred during the last two years of President George W. Bush’s presidency.  Bush rarely used his veto authority to cut spending.  In addition, a Medicare prescription drug benefit was added in 2003 and his Administration bailed out AIG, Fannie Mae and Freddie Mac, $600 per person tax rebate in 2008 and also during that year approved the TARP fund.  The Democrat House and Senate and its leaders Nancy Pelosi and Harry Reid are also responsible for this spending spike.
  • Barack Obama took the oath of office in January 2009.  On top of a Bush supplied deficit of nearly $1 trillion, he rammed through a $830 Billion Stimulus Program that the Congress didn’t even read.  In addition, there were bailouts that included auto companies, mortgage relief and Obamacare.  Total spending for 2010 decreased only because of TARP loans being repaid to the government.  Spending slowed in 2011 and 2012 as a result of the Tea Partiers elected to Congress that has been during this period controlled by Republicans.

Laffer and Moore come to two overall conclusions based on the chart.  First, as government spending increases as a percentage of GDP, the economy suffers.  Just as significant, the increased in spending under Bush and Obama are the main reasons that the current recovery is the weakest since the Great Depression.

President Obama and his fellow Progressives are true believers of Keynesian economic theory whose main premise is that government spending is necessary to offset an economy’s weakness during recessions.  Given this philosophy, one would think that the President would be bragging about his free spending programs rather than trying to distance himself from them.

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