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Why Obama is ill-disposed to call his policies “Keynesian”

I had been planning a post on Obama’s claims to be a skinflint, but other bloggers have easily disposed of the disingenuous claim that the Democrat has “has presided over slower growth in federal spending than any president since Dwight D. Eisenhower.

Funny how he makes that claim when my Obama-supporting friends defend their guy, claiming we needed a macroeconomic stimulus to jumpstart the economy.  “I thought,” writes Victor Davis Hanson,

. . . one Obama swore to us that borrowing $5 trillion was vital — Keynesian pump priming, stimulus, averting 8 percent–plus unemployment, and all that. But now another Obama claims that his serial $1 trillion deficits are proof not of “growth” of the sort that improved GDP and reduced unemployment, but rather of fiscal discipline that stopped reckless Republican spending. So Obama over the last four years brought both austerity that checked wild Bush spending, and also Keynesian growth that snapped us out of the Bush lethargy? Spending is saving? Record deficits are record fiscal restraint?

“These people are Keynesians“, quips one blogger, “Why can’t they say so?”

Maybe because part of Obama’s appeal in 2008 was that even as he reassured his liberal base by offering new spending plans, he reassured independent voters and libertarian Republicans dissatisfied with the spending record of the then-incumbent administration.  They’re finding it difficult to admit that Obama can’t be all things to all people.

And that’s one reason he’s going to have a lot of troubling building a winning coalition again this fall.  Coalitions built on amorphous appeals for hope and change tend not to hold together when the changes aren’t those many Americans hoped for.

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15 Comments

  1. A few months ago, they were claiming the huge spike in spending that happened in 2009 was necessary to avoid another Great Depression. Now, they’re saying it’s all Bush’s fault. spending… even though the Stimulus was the Obamacrats, the second tranche of TARP spending was Obama’s discretion, and even though the “spike” in spending became a plateau for a higher level of Federal spending under Obama.

    If Obama wants to prove he’s not a big spender, let him prove it by taking Federal Spending back down to its historical norms of 18% of GDP instead of his 24-25% of GDP.

    And BTW, all of those budgets that Obama has sent to Congress that got zero votes… actually contained even MOAR spending.

    Comment by V the K — May 30, 2012 @ 5:48 am - May 30, 2012

  2. Spending is Austarity
    Deficits are Restraint
    War is Peace
    Freedom is Slavery
    The Computer is your friend, Citizen.

    Comment by The_Livewire — May 30, 2012 @ 7:44 am - May 30, 2012

  3. At first glance, I thought the headline said “Kenyanesian”… whoa.

    I really hope (and change!) that Obama fails in his efforts to build his coalition but… It always amazes me, when reading comments on other sites, how many people are obsessed with who pays what in taxes; never what burdens taxes may or may not impose on the economy.

    Over at Business Insider, an article the other day was pointing out Romney’s garage elevator and that generated the usual envy comments. Romney put his home construction in La Jolla on hold until after the election and it never occurs to people that his home construction and garage elevator *employs* the working people the libs claim to care about so much and stimulates demand (real stimulus).

    Comment by SoCalRobert — May 30, 2012 @ 10:41 am - May 30, 2012

  4. Bush was bad on spending i.e. he increased it: contrary to left-wing myth, we have correctly criticized Bush for that in many years past.

    But Obama chose to build on what Bush did, and make it worse. And that has prevented economic recovery. It is partly why this recovery has been so feeble.

    If Obama wants to prove he’s not a big spender, let him prove it by taking Federal Spending back down to its historical norms of 18% of GDP instead of his 24-25% of GDP.

    Exactly. Obama owns FY2009 (since he signed it, after adding to it, after Democrats held it back for months, so that he could do both.) And FY2010, 11, 12. Obama has been running those $1.4 trillion annual deficits. No one else.

    Comment by ILoveCapitalism — May 30, 2012 @ 10:53 am - May 30, 2012

  5. I had been planning a post on Obama’s claims to be a skinflint, but other bloggers have easily disposed of the disingenuous claim that the Democrat has “has presided over slower growth in federal spending than any president since Dwight D. Eisenhower.”

    Actually, most of the bloggers you cite do no such thing. Instead the just bring up a red herring and hope their readers get distracted enough to forget what they were supposed to be debunking. Allow me to explain.

    Here is their central claim (I have chosen Hot Air for this one, as it is the most fallacious):

    In this case, too, the data shows that the Obama administration vastly expanded spending, starting in FY2009, the budget that Democrats kept away from George Bush and which Obama approved in March 2009. In FY2008, federal spending equaled 20.8% of GDP. In FY2009, it jumped to 25.4% — an increase of 22% in the rate of spending.

    The problem here is that rather than look at spending in terms of inflation-adjusted dollars (as would be the fairest means of judging government spending) they use spending-GDP ratio, a figure that was always going to be in their favour and for very obvious reasons.

    Spending-GDP ratio has two factors. First is spending, which we can all agree has increased under Obama, but the second is GDP, which we can also all agree has fallen under Obama. This brings us to the obvious outcome that in any recession in which government spending does not actually fall, the spending-GDP ratio will inevitably climb, and if that recession happens to be a large one (as this one is) the climb will be very steep.

    So we come back to the Hot Air quote, where the ‘increase of 22% in the rate of spending’ quote is the most fallacious part. You haven’t seen an increase of 22% in the rate of spending, you’ve seen an increase of 22% in the spending-GDP ratio. It’s an apples to oranges comparison. You’re left with no idea how much of that 22% is actual government spending increases (which, I remind you, is what the initial claim was all about) and how much of that is down to the fall in GDP.

    In fact, in their rush to use figures so much more favourable to their argument, they ironically end up implying that cutting spending is not the primary concern for the United States at the moment, increasing GDP is instead as that will have the greatest effect on the spending-GDP ratio. Something I would agree with, but I’m sure something they would strongly disagree with.

    Comment by Serenity — May 30, 2012 @ 12:33 pm - May 30, 2012

  6. Awww, amy, I’m disappointed. I figured since you couldn’t understand words, pictures would do. Apparently not.

    Sorry I don’t have a link to explain it with baby talk and crayons scribbling on the wall. We can only dumb things down so far.

    Comment by The_Livewire — May 30, 2012 @ 12:53 pm - May 30, 2012

  7. So, I see Stupidity has shown up to fling its desperate screaming lies.

    The problem here is that rather than look at spending in terms of inflation-adjusted dollars (as would be the fairest means of judging government spending) they use spending-GDP ratio, a figure that was always going to be in their favour and for very obvious reasons.

    Nope. It was actually shown in several different methods, and with pictures.

    And deliciously, your whining and screaming was already dealt with in the original WaPo piece.

    Another problem with Nutting’s analysis is that the figures are viewed in isolation. Even 5.5 percent growth would put Obama between Bill Clinton and George W. Bush in terms of spending growth, but that does not take into account either inflation or the relative size of the U.S. economy. At 5.2 percent growth, Obama’s increase in spending would be nearly three times the rate of inflation. Meanwhile, Nutting pegs Ronald Reagan with 8.7 percent growth in his first term — we get 12.5 percent CAGR — but inflation then was running at 6.5 percent.

    In short, you are screaming about “inflation” and insisting that its absence ruins the analysis when your original analysis you are citing did not take its effects into account.

    Now, Stupidity, you have been humiliated once again by facts, and as is typical for a worthless “progressive” bigot like yourself, you don’t have the balls to admit that you were wrong or made a mistake. So you’re going to run away, and we’re going to take your silence as an admittance that you screwed up and made a fool of yourself, just like when you ran away from the fact that you were screaming about making Nazi comparisons as being proof of ignorance and bigotry while simultaneously citing a Nazi comparer.

    Comment by North Dallas Thirty — May 30, 2012 @ 2:44 pm - May 30, 2012

  8. All of Insipidity’s desperate spin won’t erase the pure mathematics of 25% of GDP spending levels and Trillion Dollar deficits.

    Comment by V the K — May 30, 2012 @ 6:32 pm - May 30, 2012

  9. Serenity, the spending to GDP ratio is an important statistic because, as GDP falls, so does revenue and therefore so should spending. The spending to GDP ratio is perhaps even more important than the absolute spending increase, because it gives some insight into the extent to which the government is spending irresponsibly.

    At first glance, I thought the headline said “Kenyanesian”

    heh

    Comment by Rattlesnake — May 30, 2012 @ 6:45 pm - May 30, 2012

  10. Serenity, the spending to GDP ratio is an important statistic because, as GDP falls, so does revenue and therefore so should spending.

    Okay, so say I grant this for the sake of argument. Then what? This is about what has happened, not what should happen.

    The spending to GDP ratio is perhaps even more important than the absolute spending increase, because it gives some insight into the extent to which the government is spending irresponsibly.

    A misleading insight. You’re using the current GDP to define ‘normal’ then saying spending should be cut to match. The current GDP is anything but normal.

    Also, I talked inflation adjusted figures, lamented how no one seemed to have done them, then I remembered. Thank God for PolitiFact.

    As I suspected, using inflation-adjusted figures slows George W. Bush’s average increase from 10.2%/year to 5.9%/year. But it also slows Obama’s average increase from 1.4%/year to -0.1%/year. Technically, once the effects of inflation are taken into account, that’s a cut in spending.

    I think the PolitiFact article is pretty fair as it notes several caveats to this. That government debt has still increased due to depressed tax revenues as a result of the recession, spending as a percentage of GDP has increased due to the same factors, and the elephant in the room that all of this is looking at discretionary spending, not entitlement spending. The last fact is a pretty important one, arguments over discretionary spending really are a sideshow next to the continually unsolved problem of how to deal with entitlement spending.

    As for the MarketWatch infographic:

    Rule 1: Already dealt with, FY2009 spending is split in the analysis. Spending already proposed by Bush is assigned to Bush, anything on top of that goes to Obama. There needs to be a compromise on calculation transitional years like that and that seems a fair compromise to me.

    Rule 2: Bush’s spending for one year goes down by less than 0.01% if we use a different way of calculating it. Wow. Maybe there’s more to that than it seems, but if there is, it would’ve been nice if they’d put important information like that in the graphic instead of just going “Look! $20 billion! That’s big! Right? Isn’t it? Guys?”.

    Rule 3: Screw it. I’m too tired, so I’m admitting defeat. I have looked at this one several times, cross-referenced it with other articles, then just tried staring at it until it makes sense with no joy. What the bloody hell is it talking about?

    I mean, it says do not use 2009 CBO estimates for Obama! So they must make him look really bad! But then the graph sarcastically refers to the 2009 estimate as ‘super accurate’. So it makes him look good? Then the 2010-2013 estimates are referred to as ‘vicious right wing lies’. So they make him look bad! But then the next graph shows the 2010-2012 estimates making him look good, while it’s the ‘actual spending’ figures that make him look bad.

    I think it’s just badly laid out. Though PolitiFact says Nutting used “historical data from the Office of Management and Budget along with projections from the nonpartisan Congressional Budget Office”. So was there no historical data for 2009-2011? Were CBO projections all that were available? If so, then where did the ‘actual spending’ figures mentioned above come from?

    I’ve said it before, and I’ll say it again. I hate economics. I really, really do.

    Rule 4: This one is quite simple. The president’s budget includes additional spending from a load of spending cuts he wants halted. The CBO doesn’t believe that will happen, so their baseline assumes it won’t. Frankly, that seems like a good call if you want an accurate estimate since the chances of him getting congress to agree to hold those spending cuts is slim at best.

    Rule 5: Yeah, that graph does make Bush’s record look like crap next to Clinton’s and Obama’s. I’m sorry, what was the point of this part supposed to be?

    Comment by Serenity — May 31, 2012 @ 2:50 am - May 31, 2012

  11. Thank God for PolitiFact.

    Only lefties think Politifact is in any way objective. It’s hardly an independent organization. It’s operated by the editorial board of a left-leaning Florida newspaper. It’s standards of “truth” reflect that bias.

    Politifact is a joke; but then, so is Insipidity – who doesn’t believe in God anyway.

    Comment by V the K — May 31, 2012 @ 5:56 am - May 31, 2012

  12. And, V the K, as this pointed out, Politifact just plain lies.

    What makes this even more hilarious is that all of this financial chicanery is coming from Barack Obama and Stupidity, both of whom are engaging in accounting tricks that would have them in jail if they were one of the corporations that both of them so completely decry.

    Stupidity and Barack Obama cannot follow their own accounting rules and standards. That should show beyond a shadow of a doubt that they are crooks and liars, since they insist that any company that in any way violates accounting rules is run by crooks and liars.

    Comment by North Dallas Thirty — May 31, 2012 @ 1:43 pm - May 31, 2012

  13. Rule 4: This one is quite simple. The president’s budget includes additional spending from a load of spending cuts he wants halted. The CBO doesn’t believe that will happen, so their baseline assumes it won’t. Frankly, that seems like a good call if you want an accurate estimate since the chances of him getting congress to agree to hold those spending cuts is slim at best.

    That looks like a very confused account of things. The CBO is bound to use existing law in its baseline projections, so in that case it doesn’t matter if the CBO believes the changes will occur or not. Where the CBO has doubt about whether the changes will happen it publishes an alternate scenario. The CBO did just that, and the numbers are higher across the board than for the baseline scenario. Nutting used the baseline scenario even though it’s unlikely to occur. The OMB projections were also substantially higher than the CBO’s baseline. So Nutting was cherry picking.

    Comment by Bryan White — May 31, 2012 @ 3:50 pm - May 31, 2012

  14. Okay, so say I grant this for the sake of argument. Then what? This is about what has happened, not what should happen.

    It’s also about what has not happened. Keynesians argue that government spending is necessary in a recession. To someone like me, that is insane because during a recession, GDP falls and so the total amount of money the government can take out of the economy decreases (assuming it takes the same amount, or less, out of the economy as it did before, which is also something Keynesians argue for), so if you don’t cut spending during a recession, you are spending more money relative to the amount of money you have than you were before the recession started (which either takes money away from the economy, or causes the accumulation of debt). Apparently, though, it is a matter of opinion as to what the best course of action during a recession is, but I would argue that Obama’s failure to cut spending was irresponsible (incidentally, he said the same thing about George W. Bush before becoming president).

    As for which president is to blame for the spending, I would say both. Undoubtedly, Bush should have been much more willing to stop the spending. But Obama is also to blame for signing the stimulus and other things (and his failed budgets do give some insight into what his preferred course of action is, even if they weren’t passed).

    Also, I talked inflation adjusted figures, lamented how no one seemed to have done them, then I remembered.

    Is GDP not adjusted for inflation? Maybe I’m wrong, but I would think, if you’re going to talk about spending to GDP ratio, inflation is irrelevant because you’re talking about a ratio. If you’re going to talk about absolute expenditure (i.e. make comparisons based upon absolute expenditure), then inflation becomes relevant.

    Comment by Rattlesnake — May 31, 2012 @ 6:06 pm - May 31, 2012

  15. The funny part is, a few months back, when I suggested cutting spending to 2008 levels to reduce the deficit (by about a trillion dollars), Insipidity dismissed it as a partisan stunt, accusing e of picking that year because it was the last budget before Obama took over. Now, she’s changed course, and is claiming that 2009 spending was Bush’s too.

    Stupidity indeed.

    Comment by V the K — May 31, 2012 @ 8:30 pm - May 31, 2012

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