Nuts to Nutting: Under Obama, Real Spending Has Exploded

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.