Whatâs Wrong
Today:
From the Wrongologist:
years, there have been eight Democratic and nine Republican Presidents. 6 of
the 8 Democrats (except FDR and Wilson), delivered to their successors smaller
deficits than they inherited. 7 of the 9 Republican Presidents (except
Eisenhower and Harding), delivered to their successors larger deficits
than they inherited.
Yes, every Republican President since Eisenhower has left
office with a larger deficit than he inherited, so says a study by Stephen Bloch,
a PhD mathematician at Adelphi University. Yesterday, the Ritholtz
Blog took the opportunity to compare Mr. Obamaâs performance over the past
5 years with his 4 predecessors. We have all heard something like this:
sailor since the day he was inaugurated
Truth or
Fiction? Ritholtz contributor, TBPInvictus, took a unique look at Federal government
spending for the last five administrations, (Regan, Bush I, Clinton, Bush II, and
Obama). The data are from the Federal Reserve Bank of St. Louis, (FRED).
Each
administration is color coded and its record in government spending is indexed
to 100 at the start of the first quarter of their administrations. This index
approach allows us to view the performance of each administration against
itself. Did they start low and go lower? Did they spend like drunken sailors? There
are some data issues that are obscured by strictly recording each
administrationâs results based on the quarter in which it takes power. You can
read about them at Stephen Blochâs site linked above.
What is represented
by the charts below is the relative growth or decline in expenditures vs. the starting
point, the quarter in which each President took office. Letâs start by looking
at the overall expenditure picture:
Reagan and
Bush II saw the greatest increases in quarter-over-quarter federal expenditures
from their entry into office to the ends of their administrations. Expenditures
grew the least under Clinton. The Obama
administration is the only administration to see a sustained downturn in the
growth of federal expenditures.
Stripping
out the defense portion of federal expenditures for each administration shows
this result:
It is
clear from this view of the data that Bush II wins the prize for profligate non-defense
spending when compared to the date he took office, while Obama doesn’t fare as well with non-defense spending.
Still, whenever you hear someone
say, âWe donât have a revenue problem, we have a spending problem,â show them these
charts and ask where that spending problem came from.
In 2011, The WaPo had an article by Deval
Patrick, Governor of Massachusetts:
reunion in 2003, Grover Norquist…and I, along with other classmates who
had been in public or political life, participated in a lively panel discussion
about politics. During his presentation, Norquist explained why he believed
that there would be a permanent Republican majority in America.
One person
interrupted, as I recall, and said, âCâmon, Grover, surely one day a Democrat
will win the White House.â
Norquist
immediately replied: âWe will make it so that a Democrat cannot govern as a
Democrat.â
When
you look at these charts and the record of spending they demonstrate, it is
clear that only Republicans can govern
as a Democrats.
The NYT wrote
on 11/8 about the impact of the cuts in the Supplemental Nutritional Assistance
Program (SNAP, otherwise known as food stamps). The damage being done to those
who can least afford it is hard to overstate. Beyond the pain inflicted on poor
families, an adverse âtrickle upâ effect is happening:
cuts are also hurting stores in poor neighborhoods. The average food stamps
household receives $272 a month, which then passes into the local economy…At
a Food Lion in Charleston where as many as 75% of the shoppers use food stamps,
managers were bracing for lower receipts as the month wore on…At a Met
Foodmarket in the Bronx, where 80% of the 7,000 weekly customers use food
stamps, overall food sales have already dropped by as much as 10%.
For some
perspective on food stamps, the program cost $78.4 billion in the 2012 fiscal
year. The amount given to each household averages $272 per month. In the 2010
fiscal year, 40.3 million people were enrolled. Two years later, that number had
jumped by 16%. Just over 45% of those getting food stamps are children,
according to the Agriculture Department.
Here is how
the SNAP program stacks up vs. federal defense spending:
(Source: BEA Table
3.12 Government Social Benefits and BEA Table 3.11.5. National Defense
Consumption Expenditures and Gross Investment by Type)
Does
this demonstrate a moral government position or does it show a lack of morality?
To Republicans, the poor are nothing but political poker chips. They are poster
children for the ever expanding government, as well as the preferred sacrifice
for the defense of principles. Anyone who suggests that we must care for the
poor, is considered to have an ulterior motive. The defense contractors? Thatâs
another story. You have to spend on defense, or the terrorists win.
Here is a small
step towards greater clarity of thought: Contrary to Republican claims, the deficit is not increasingâit peaked in 2009 and
has been dropping ever since, declining by $200 billion last year with
another $450 billion drop projected this year. These numbers have no partisan
bias:
As
all of the above show, this administration has turned the corner on spending. We need to start to fix the revenue problem.
Corporate
real income tax rates are at an all time low. Corporate America needs to
contribute more to tax receipts. We could start by ending âcorporate welfareâ.
That would put us on the path to fixing our revenue problem.
