Update: The text has been updated to include spending growth numbers for President Bush excluding financial rescue programs.
An article by Rex Nutting on MarketWatch claiming the "Obama spending binge never happened" lit up publications across the Internet last week. Nutting claims that spending under President Obama has only increased at 1.4 percent annually in his first term (through FY 2013), lower than any president since Dwight Eisenhower. Not surprisingly, numerous disputes have arisen over the methodology, who deserves blame for what, what measures should be used, and what the article means. Even two main fact checkers, Politifact and the Washington Post's Glenn Kessler, are split on the claim's accuracy.
Overall, we think Nutting's methodology is technically accurate, but the numbers are somewhat misleading. There are myriad ways to break down the numbers, which we discuss below.
To check the claim, we have produced our own numbers by presidency going back to the Kennedy Administration, measuring annual spending growth in a number of ways. They are:
- Nominal growth of total spending
- Inflation-adjusted (real) growth of total spending
- GDP-adjusted growth of total spending
- Real growth of primary (non-interest spending)
- Real growth of total spending excluding automatic stabilizers
|Annual Spending Growth by Administration|
|Total Spending||Primary Spending||Non-Stabilizer Spending|
|Administration||Nominal Growth||Real Growth||GDP-Adjusted Growth||Real Growth||Real Growth|
Sources: CBO, OMB, Bureau of Labor Statistics, CRFB calculations
*Uses President's budget spending for FY 2012 and 2013
In terms of nominal and real total spending growth, the measures that Nutting used, President Obama does have the lowest growth of any president since the Eisenhower Administration. Our growth numbers are somewhat higher than his, though, due to our use of President's budget spending for FY 2012 and FY 2013. In the three other measures, the President comes in at the second lowest growth mark.
One point of controversy in the MarketWatch article is that he assigns the FY 2009 spending level largely to President Bush, since much of the budget was already determined before the presidency changed hands and a lot of the 2009 spending increase was due to automatic stabilizers in the budget increasing as the economy deteriorated in late 2008 and through 2009. Of course, there is some spending -- the 2009 stimulus, the Children's Health Insurance Program (CHIP) reauthorization, and the March 2009 continuing resolution -- that President Obama initiated that had effects in 2009, which Nutting appropriately assigns to him in 2010. Then he measures the increase from 2009 to 2013.
Assigning this spending to 2010 does help make the numbers more fair, but it doesn't correct for all of the problems. Perhaps most significantly, certain financial programs -- the Troubled Asset Relief Program (TARP), the takeover of Fannie Mae and Freddie Mac, and FDIC efforts to help banks -- registered more than $250 billion of spending in 2008 and 2009, but those have since tapered off to about $10 billion. These programs are charged to President Bush, which makes sense since he passed TARP and the Fannie/Freddie conservatorship, but they are also built into President Obama’s "base" so that he gets credits as these programs naturally unwind. Excluding these three programs yields somewhat higher spending growth, annualized at 4.5 percent (or 2.5 percent after adjusting for inflation). Spending growth rates of that size would no longer give Obama the lowest growth rates.
|Spending Under President Obama Excluding Financial Programs (billions)|
|2009*||2010*||2011||2012^||2013^||2009-2013 Annual Growth|
|Outlays in 2009 Dollars||$3,112||$3,659||$3,483||$3,437||$3,423||2.5%|
*Obama spending initiatives with costs in 2009 are shifted to 2010
^Reflects President's budget spending
One could also do the same for President Bush. However, one could assign the 2009 spending for the Fannie/Freddie conservatorship to President Bush, since it did pass during his presidency. If you include Fannie/Freddie but exclude TARP and the FDIC, the nominal and inflation-adjusted growth rates would be 7 and 4.5 percent, respectively. If you exclude Fannie/Freddie as well, doing the same thing as was done for President Obama above, the nominal and real growth rates would be 6.7 and 4.1 percent, respectively.
Some conservatives have argued (see here for example) that measures of spending growth are much less relevant than the levels of actual spending. Even if President Obama came into office at a time when spending was set to swell due to the recession, he kept those inflated levels of spending throughout the budget. To some extent, that is true. Although spending will continue declining as a percent of the economy after the economy recovers, it will never get down to pre-2009 levels. The Affordable Care Act is the main Obama-specific factor that permanently raises spending over the longer term. Still, there are also demographic factors that will automatically push spending up above their historical levels.
In short, Nutting's article may be technically accurate from one perspective on how much spending growth there has been under President Obama, but it likely understates that amount by including the reductions that automatically occurred in financial crisis-related programs such as TARP.
Overall, though, the article and the ensuing controversy miss the bigger point. Assigning blame or credit to presidents ignores the fact that they must work with an entire Congress to pass legislation. In addition, their budgets can be significantly affected by the decisions of previous Congresses and presidents. The blame game is much less important than trying to find a bipartisan solution to our budget problems.