On Tuesday, Rex Nutting of MarketWatch, who per his Linkedin profile is the site’s Washington bureau chief, published a column titled “Obama spending binge never happened.” This column will show that it did, but that clever accounting has largely concealed its existence.
Citing historical and projected figures from the White House’s Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), Nutting calculated that projected spending in 2013 of $3.573 trillion will only be 1.6% higher than the $3.518 trillion incurred in fiscal 2009, representing annualized growth of 0.4%. To be “fair,” he subtracted $140 billion in stimulus spending from fiscal 2009 and assigned it to Obama, thereby reducing the 2009 total to $3.378 trillion. As adjusted, the 5.8% in projected four-year spending growth ($3.573 trillion divided by $3.378 trillion) works out to 1.4% per year, as seen in an accompanying graph supposedly proving that Obama has engaged in more spending restraint than any president “since Dwight Eisenhower brought the Korean War to an end in the 1950s.”
Liberal and administration apparatchiks have of course jumped for joy at Nutting’s nuttiness, with the once occasionally valuable but now completely useless PolitiFact web site, which describes Nutting as MarketWatch’s ”international commentary editor,” evaluating Rex’s ruse as “Mostly True.” The correct evaluation of PolitiFact these days is “Mostly Farce,” which will be demonstrated herein.
The simplest riposte to ridiculousaurus Rex is to isolate the discussion to which party has controlled Congress. To do so requires comparing officially reported spending in fiscal 2007, the last full fiscal year with a budget passed by a Republican Congress which was signed by George W. Bush, to fiscal 2011, the last of four full years driven by Democratic Party legislative spending priorities with a budget signed by Oba- … oh, wait a minute. The federal government, solely because of Democratic Party obstruction, first bicameral but now limited to the Senate, hasn’t passed a budget in over three years.
We still know the reported spending figures for the two years involved: $2.729 trillion in fiscal 2007, and $3.603 trillion in fiscal 2011. That’s a 32% increase, or a 7.2% compounded annual rate, all of which occurred while Democrats controlled both houses of Congress. Even if one concedes (which I don’t) that a spending increase of many hundreds of billions was at first necessary as the recession hit, what possible legitimate justification is there for staying at or above that level in perpetuity after that?
This argument of course will not satisfy those who insist on a Bush 43-Obama faceoff, so let’s have at it.
The effect of Obama’s failure to rein in spending once his failed stimulus plan ran its course is obvious if you compare his administration’s reported four-year historical and projected spending total for 2010-2013 to 2006-2009, revised upward in fiscal 2008 to properly treat Bush’s $94 billion in IRS stimulus checks as spending instead of as negative receipts (who says we can’t be fair about this?). After incorporating that change and the Obama stimulus-related adjustment Nutting made, Obama will have spent 21% more by the end of fiscal 2013 than the government under Bush and then Obama did during 2006-2009 – if we really believe that Obama would show any kind of restraint should he win reelection:
Despite Obama occupying the White House for over eight months of fiscal 2009, Nutting believes that Bush should be responsible for all other spending which occurred that year. Since I just did the same with fiscal 2007 above, what’s wrong with that? That’s easy. Because the newly installed Democratic Congress was obsessed with other matters during the first nine calendar months of 2007 (e.g., trying to create defeat in Iraq, attempting to discredit General David Petraeus, and pushing for amnesty for illegal immigrants, all of which fortunately failed colossally), there were no significant new spending initiatives.
The same thing certainly cannot be said of most of fiscal 2009, even beyond the stimulus, but Nutting wants to make it so, contending that “the major spending decisions in the 2009 fiscal year were made by George W. Bush and the previous Congress.” Unsurprisingly, Barack Obama and his teleprompter don’t understand the relevance of Nutting’s attempt to exempt him from fiscal 2009′s non-stimulus spending increases. On Thursday, this ignorance caused Obama to completely mischaracterize the MarketWatch writer’s weaselly work at an Iowa campaign rally (bold is mine):
But what my opponent didn’t tell you was that federal spending since I took office has risen at the slowest pace of any president in almost 60 years.
That of course is not what Nutting wrote.
We could spend days arguing about what other incremental fiscal 2009 costs belong to Bush and Obama, with one indisputable exception which will suffice to render Nutting’s absurd exercise utterly worthless: TARP — specifically, TARP’s non-cash accounting entries.
In fiscal 2009, Obama’s Treasury Department effectively added at least $157 billion to that year’s “outlays.” That amount represents estimated losses on TARP investments which ultimately never materialized. How do I know that? Because in March 2010 and May 2011, Treasury reduced reported outlays by $115 billion and $42 billion, respectively, both of which were “attributable to a reduction in the estimated cost of the TARP” (to reduce a cost, it first has to have been recorded).
The issue at the moment isn’t whether Treasury Secretary Tim Geithner was playing fiscal games, though there’s a good chance he was. The immediate point is that these accounting entries don’t represent “spending” as any normal person would define it. Therefore, to get a handle on true spending from 2009 through 2012, the impact of these non-cash entries must be reversed. As a result, the Obama vs. Bush excess reaches over 24%:
Even more important, look at what happens to each fiscal year’s historical outlays — the arc of spending, if you will — if the Nutting adjustment and the TARP corrections are properly assigned to the respective fiscal years (Nutting’s $140 billion had to go somewhere, and the most logical location was fiscal 2010):
That explosion you just heard in the background was Rex Nutting’s premise being blown to bits. As to PolitiFact, it should consider changing the short “a” in its name to a short “u.”
What a difference cutting through the fog makes. Spending as adjusted leaped by 15% in fiscal 2010, even though the recession was officially over three months before it began. That percentage increase would probably be a modern single-year non-wartime record if the government handled its accounting properly. Even Nutting, if he had integrity, would have to admit that this constitutes a “spending binge.” Adjusted outlays only ramped back a bit during fiscal 2011. Given how spending rose during the two preceding years, the 6.4% compound annual rate of spending in fiscal 2010 and 2011 is inexcusable.
As to 2012 and 2013, Obama should get no credit if spending flattens as projected, for two reasons. First, what far too many people in Washington now consider the annual baseline of $3.6 trillion thanks to the 2010 spending binge is way too high. Second, for the past two years (this year; last year), his “president’s budget” has fantasized about spending $3.8 trillion.
That a president would even consider going there in our current debt-hobbled circumstances should long since have ended the discussion over whether Barack Obama deserves a second term. He doesn’t.