It’s The Spending, Stupid!

In 1992, Bill Clinton was running for President of the United States against George H.W. Bush. Mr. Clinton had a tendency to go off topic when answering questions in debates and interviews. He battled a reputation as a policy wonk, and (like many Democratic candidates of recent vintage) this reputation allowed Republicans to paint him as the second coming of one-term President Jimmy Carter. As the United States had recently been in a recession under the leadership of Mr. Bush, Clinton’s strategist James Carville used the phrase as a gentle reminder that if Clinton was to win he would only do so by attacking Mr. Bush’s failed economic policies. If you’re just emerging from the rock you live under, President Clinton later became the 42nd President of the United States.

Let me advise any opponent to the current President of the United States: “It’s the spending, stupid!”

Bush the 41st vs. Obama the 44th

In a parallel to President Bush (the elder, that is…), President Barack Obama has very strong foreign policy credentials. While Bush had the Cold War and the Persian Gulf war to thank, Obama merely has to point to the covert mission to take the life of Osama Bin Laden as his main success. Does his success mean Mr. Obama is unassailable? No, but similar to Bush, any attack on the performance of President Obama has to come from an economic standpoint. Let me highlight one such story which concentrates on the fiscal health of the country.

Currently, the oldest living former President is Jimmy Carter (Ed: Cameron points out George Bush, Sr. is older), who first took office in 1977. With that in mind, I took federal outlays from 1977 to 2011 (estimated) from the Office of Management and Budget (strictly on balance sheet spending) and inflation index data from the St. Louis Fed on the first on the year for every year since 1977. I plotted both Federal Outlays and ‘Real Spending Increases’ (namely, spending above and beyond increases in the CPI) to show Federal Spending for all living presidents (and Ronald Reagan, who served in between Mr. Carter and the elder Mr. Bush.) Note that the OMB uses its own definition of a fiscal year; click through to the OMB to determine their methods. Also, click through if you’re in a reader… this is a Javascript graph.

The Presidents and Congress

As anyone who has completed a civics or social studies class will tell you, it takes more than a President to enact laws, it also requires a willing Congress. Presidents have been unfairly punished or lauded for economic activity on their watch, when sometimes success or failure was merely the result of fortuitous or perilous timing. Remember, victory has many fathers and defeat is an orphan. Also remember (especially when you hear any politician take sole credit for something) that it takes 9 months to produce a baby no matter how many doctors you assign to the task. Caveats aside, here are the five worst and five best years of recent vintage listed along with party control of the House and Senate.

What do you know? You can’t trust either party!

To spoil the party again, remember that in some cases decreases may have come after increases, in effect ‘locking’ the budget in… that is illustrated in the recent period 2009-2011, all three in the chart above. For example, if new spending in 2009 had been split into two years, 2009 and 2010 would have both been in the highest increases since Mr. Carter’s presidency. Also note that, in many cases, spending levels are set before a new session of Congress begins (new bills passed under a previous Congress).

Back to the Spending!

I suppose now I’ll have to make an article about total spending over the term of a Presidency, or perhaps I can do something like I did when ranking Fed Chairmen. Either way, I hope I have proven that spending increases are off the chart under President Obama. To Mr. Obama’s opponent? It’s the spending, stupid!

What do you think? Did I find a winning slogan for November? If someone is a budget hawk, which party should they vote for?

Posted by PK on February - 8 - 2012

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http://www.thefreefinancialadvisor.com/average-joes-money-blog/ AverageJoe

Wow! It appears the only correct answer is “none of the above.”

http://www.dqydj.net/ PK

From The Simpsons Treehouse of Horror VII:

Kodos: It’s true, we are aliens. But what are you going to do about it? It’s a two-party system… you have to vote for one of us!
Man 1: He’s right, this is a two-party system…
Man 2: Well, I believe I’ll vote for a third-party candidate!
Kang: Go ahead, throw your vote away!

http://myuniversitymoney.com/ My University Money

Loved that episode. So PK, does Ron Paul represent a viable third party alternative if he chooses to go it alone then? Is his energetic core what the country would need in order to create a third party?

http://www.dqydj.net/ PK

As attractive as that is in many respects, I don’t think that his style of politics is ready for prime time yet – but since he keeps pulling young followers into the fold, his ideological heir (Rand Paul, perhaps?) will have better timing. Just as Barry Goldwater set the stage for Reagan in the Republican party, I think it is much more likely Ron Paul sets the stage for someone else.

Remember, RP did run as a Libertarian on his own at one point (receiving 0.5% of the popular vote in 1988), but recognized the advantages of running inside one of the major parties. If Libertarianism becomes the norm, I believe it will come from within a party, not from candidates striking out on their own.

I promise – I will expand on this point. I’ve just been lazy at putting pen to paper (fingers to keys?).

http://www.faithandfinance.org/ Tim @ Faith and Finance

Good article. I can’t stand the ‘create jobs’ talk. The real problem is the spending. I don’t buy the Keynesian approach to spending your way out of things. Whoever is running against Obama had better make the spending an issue if they want to have a chance.

http://www.dqydj.net/ PK

Here’s my issue: everyone is an interest group. I’ve been increasing influenced by Frédéric Bastiat who discusses bias against the unseen – the jobs never created, the companies never started… With spending, who worries about the generations not yet created? If, theoretically, all debts have to be repaid with an increase in revenues or a debasement of currency (inflation), it’s the next generation which will be picking up the tab.

Of course, It’ll still be a tough topic to run upon (and it certainly shouldn’t be the only point). Spending is politicized – there is roughly a 50/50 split on people that think it matters. A candidate would have to articulate exactly why the spending is a problem… perhaps by linking all new spending to future tax increases (and inflation, really, is a regressive tax).

It makes for an interesting election!

Andrew @ 101centavos

Sure, if breaking windows is such a whippy boost to the economy, let’s not just stop at one, let us go on a window-breaking spree, and see how much richer we all get!! No? Yes? Any takers?
The fact that we keep voting for Administrations that do nothing but increase spending proves the point that the American people *love* deficit spending.

http://www.dqydj.net/ PK

“In the long run we’re all dead.” – were you thinking about that quote, or the fact that Mr. Keynes had no children?

I think this is one of those issues where the ‘other side’ hasn’t been properly presented. If you ask voters if the rich should pay more in taxes… yes, you’ll get a high percentage of people saying they should. If you attach the increased revenue with specific programs and spending, that’s where it gets hairy.

I’m optimistic – I believe that we can pivot to fiscal order just as soon as someone points out the folly of the current spending. Then our kids and their kids will be in better shape!

http://marriedwithdebt.com/ John @ MarriedWithDebt

Excellent breakdown. I’ve read some articles that say Obama is the biggest tax cutting President in recent history. Not to give you more work, but that would be an interesting claim to verify. I did read it in some reputable publications.

http://www.dqydj.net/ PK

John – I love taking requests. Do you think you can find the article(s) you saw?

By one measure, tax collected as a percentage of GDP, the President truly hasn’t been collecting as much money. However, I don’t think that’s a bragging point – it’s certainly a byproduct of high-beta rich taxes and the recession in general. I hope no publication sinks that low, haha.

http://www.mastertheartofsaving.com/ Jen @ Master the Art of Saving

I think they all spent too much.
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