NO spending surge under Obama

Source: Paul Krugman

Martin Wolf has a piece in today’s FT making the case that (shock!) the deficit is not America’s biggest problem, or indeed a problem at all right now. His case is pretty much the same one I’ve been making; also, unlike Larry Summers yesterday, his piece doesn’t blur its point by starting with an extended exercise in dutiful deficit-bashing.

Wolf also puts this in the context of what has been happening to the private sector. As he says, the collapse of the housing bubble and a sharp rise in saving (due both to wealth destruction and to deleveraging) has led to a sharp movement from financial deficit to financial surplus in the private sector. Those who claim to be deeply upset about public sector deficits should be asked, what would have happened, given this attempt by the private sector to move into surplus, if the public sector had tried to stay in balance. Can you say Second Great Depression?

Meanwhile, via Mark Thoma I see that Robert Waldmann and Karl Smith have also gotten into the “what spending surge?” debate. Actually, here’s what may be the simplest way to see things. Here is total government spending (federal, state, and local) since 2000 on a log scale, so that a constant slope means a constant rate of growth. See the spending surge under Obama? Well, actually the reverse.

Yes, you can argue that spending was growing too fast under Bush, although it’s funny how few deficit scolds saw fit to mention that at the time. Or you can say that you just want less spending, although as always people who say this tend to be short on specifics. But the narrative that says that spending has surged under Obama is just wrong – what we’ve actually seen is a slowdown at exactly the time when, for macroeconomic reasons, we should have been spending more.

Update: Someone is going to claim that I cheated by looking at overall government spending, as opposed to Federal. Actually, no, not if you’re trying to confront claims about “big government” in general. But anyway, here’s the same chart for federal only:

You can see a bit of an acceleration early on in the crisis, reflecting unemployment benefits and food stamps. But since then, a flattening. Still nothing you would call a surge.

Advertisements

About James Crist

How do we stop America's decline? The country is in trouble and we can all feel it. Where did we go wrong? How do we fix it? We now have an auction-based government, for sale to the highest bidder. Politicians have become nothing more than corporate whores and pawns for the rich. If we want our representatives to represent us, let them get their campaign money from us, their constituents. We have to amend the constitution to get the big money out of politics.
This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s