OMB: 4 Yrs of Spending 24%+ of GDP; WH: “Demonstrated Significant Fiscal Restraint’

Terence P. Jeffrey | May 23, 2012 | 5:21pm EDT
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President Barack Obama on Air Force One with Press Secretary Jay Carney, right, and Communications Director Dan Pfeiffer on May 2, 2012. (AP Photo)

White House Press Secretary Jay Carney, speaking with reporters on Air Force One on Wednesday, said that President Barack Obama “has demonstrated significant fiscal restraint and acted with great fiscal responsibility” and that “federal spending is rising at its slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s."

Carney then challenged reporters “to check it out.”

“[T]he rate of spending--federal spending increase is lower under President Obama than all of his predecessors since Dwight Eisenhower, including all of his Republican predecessors,” said Carney. “That is a fact not often noted in the press and certainly never mentioned by the Republicans.”

“I think it is simply a fact that despite the enormous challenges that this country faced when the President took office and the absolute essential need for taking dramatic action and significant action in passing a stimulus bill, as well as the other actions the President took, this President has been--has demonstrated significant fiscal restraint and acted with great fiscal responsibility,” Carney also said.

Later, Carney added: “I simply make the point, as an editor might say, to check it out; do not buy into the BS that you hear about spending and fiscal constraint with regard to this administration. I think doing so is a sign of sloth and laziness.”

What do the historical budget tables posted on the White House website by President Obama’s Office of Management and Budget have to say about this?

According to these tables, there have been only five fiscal years since World War II when federal spending exceeded 24 percent of Gross Domestic Product. These are fiscal 1946 (the first year after World War II ended) and fiscal years 2009, 2010, 2011 and 2012. (Prior to 1977, the federal fiscal year began on July 1 and ended on June 30. Since 1977, the federal fiscal year has begun on Oct. 1 and ended on Sept. 30.)

In each of the four later fiscal years (2009-2012), President Obama was in federal elected office. In each, he had some say in the government’s fiscal policy. For part of fiscal 2009 he was a U.S. senator, and for the rest of fiscal 2009 he was president. In each of the three fiscal years following 2009, he was president—with the authority not only to propose legislation but with veto power over federal spending bills.

In fiscal 1946, according to Obama’s OMB, federal spending was 24.8 percent of GDP. But in fiscal 1947, it dropped all the way down to 14.8 percent of GDP.

It did not breach 24 percent again until more than six decades later in fiscal 2009—a fiscal year in which Obama started out as a senator and then became president.

In fiscal 2008, federal spending had been 20.8 percent of GDP. But in fiscal 2009, it jumped to 25.2 percent.  In each succeeding fiscal year it has remained above 24 percent—hitting 24.1 percent in fiscal 2010, 24.1 percent in fiscal 2011, and an anticipated 24.3 percent in the current fiscal year of 2012, according to Obama’s OMB.

After fiscal 1946, the highest federal spending ever hit under President Harry Truman was 20.4 percent in fiscal 1953, a fiscal year that started with Truman in office and ended with Dwight Eisenhower as president.

Under Eisenhower, federal spending peaked at 18.8 percent of GDP in fiscal year 1954 and again in fiscal 1959. When Eisenhower left office in fiscal 1961, federal spending was 18.4 percent of GDP--a 9.8 percent drop from when he took office.

Under President John F. Kennedy, federal spending peaked at 18.8 percent of GDP in fiscal 1962.

Under President Lyndon B. Johnson, federal spending peaked at 20.5 percent in fiscal 1968.

Under President Richard B. Nixon, it peaked at 19.6 percent of GDP in 1972. Under President Gerald Ford, it peaked at 21.4 percent in fiscal 1976. Under President Jimmy Carter, it peaked at 22.2 percent of GDP in fiscal 1981—a fiscal year that ended with President Ronald Reagan in office.

Under Reagan, federal spending peaked at 23.5 percent in fiscal 1983.

When Reagan left office, in fiscal 1989, federal spending was back down to 21.2 percent of GDP—from the 22.2 percent it had been when he took over from Carter in fiscal 1981. That was a 4.5 percent drop during the Reagan presidency.

Under President George H.W. Bush, federal spending peaked at 22.3 percent of GDP in 1991. Under Bill Clinton, it peaked at 21.0 percent of GDP in 1994.

In the eight fiscal years that started when George W. Bush was president (2002-2009), federal spending averaged 20.5 percent of GDP, but peaked at 25.2 percent in fiscal 2009, the year he left the presidency and Obama entered it.

What happened in fiscal 2009? The nation was in a deep recession and there was a banking crisis. On Oct. 1, 2008, the first day of fiscal 2009, then-Sen. Barack Obama voted for the Emergency Economic Stabilization Act, which included the $700 billion Troubled Asset Relief Program. On Oct. 3, 2008, the third day of fiscal 2009, President Bush signed into law the $700 billion TARP program for which Obama had voted.

On Jan. 20, 2009, Bush left office.

President Barack Obama then asked Congress to enact the American Recovery and Reinvestment Act. The preamble to this act describes it as a law for “supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization, for the fiscal year ending September 30, 2009, and for other purposes.”

The CBO eventually determined that the full price tag for this supplemental appropriation was $831 billion over ten years.

Since the one-time TARP and the stimulus laws helped drive federal spending up to 25.2 percent of GDP in fiscal 2009, federal spending has never returned to anywhere near the 20.8 percent of GDP it stood at in fiscal 2008 or the 20.5 percent of GDP it averaged during the 8 years of Bush.

It has stayed above 24 percent.

According to the budget tables published by Obama’s OMB, Obama will be the only modern president except Franklin Delano Roosevelt--who served during World War II--to be president in four fiscal years when federal spending exceeded 24 percent of GDP.

In making his case that Obama “has demonstrated significant fiscal restraint and acted with great fiscal responsibility,” Carney quoted a columnist from Market Watch.

“This is from Market Watch's Rex Nutting,” said Carney. “He says, ‘Of all the falsehoods told about President Obama, the biggest whopper is the one about his reckless spending spree. Almost everyone believes that Obama has presided over a massive increase in federal spending, but it didn't happen. Although there was a big stimulus bill under President Obama, federal spending is rising at its slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s. Even hapless Herbert Hoover managed to increase spending more than Obama has.’”

According to the historical tables published by Obama’s OMB, federal spending was 3.4 percent of GDP in fiscal 1930, the first fiscal year that started when Hoover was in office, and was 8.0 percent of GDP in fiscal 1933, the year that Hoover left office.

Yes, it is true that in fiscal year 2012, under Obama, the anticipated federal spending of 24.3 percent of GDP is 3.6 percent less than the 25.2 percent the federal government spent in fiscal 2009, when Obama voted for President Bush’s $700 billion TARP and signed his own $831 billion stimulus.

But it is also true that the 24.3 percent of GDP that Obama’s OMB says the federal government will spend this year is 16.8 percent higher than the 20.8 percent it stood at in fiscal 2008--and a full three times as great as what federal spending was when Herbert Hoover left office.

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