Recently Ralph Nutting, an editor at MarketWatch.com, stirred up a hornet’s nest by claiming that political and media attacks upon President Obama’s spending were unjustified. His central contention was that “[g]overnment spending under Obama, including his signature stimulus bill, is rising at a 1.4% annualized pace — slower than at any time in nearly 60 years.” Nutting cited a number of statistics in defense of his claim. In fiscal year (FY) 2009, which represented George W. Bush’s last budget, federal spending rose by 17.9%, or $540 billion. Of that amount, he attributed only $140 billion to Obama because of his stimulus bill and other expenditures, leaving $400 billion the responsibility of George Bush. (The government’s fiscal year runs from October 1 through September 30.)
Moreover, Nutting claimed that spending actually fell 1.8% in Obama’s first budget in FY 2010. After rising 4.3% in FY 2011, it is scheduled to grow only 0.7% in FY 2012 and to fall by 1.3% in FY 2013. Nutting concluded that even Herbert Hoover presided over greater increases in spending than has Obama.
On May 23 White House spokesman Jay Carney cited Nutting’s article to admonish reporters not to blindly accept claims about the administration’s high-spending ways. He called them “BS” and challenged them to “check it out.” Glenn Kessler, who writes “The Fact Checker” column for the Washington Post, accepted the challenge. Here is what Kessler found.
First, Nutting made a mistake in accounting for the rate of growth in federal spending, which he calculated as 1.4% from FY 2010 to FY 2012. Beginning with the last full fiscal year before Obama took office, FY 2008, and calculating the rate of growth through FY 2012, the true rate of growth under Obama is 5.2%. Nutting also got the rate of growth from FY 2010 to FY 2012 wrong. Instead of the 1.4% that Nutting claims, it ought to be 3.3%.
To calculate FY 2013 spending, Nutting used the Congressional Budget Office’s baseline budget. That budget assumes that automatic spending cuts that are scheduled to occur will remain in place. However, Obama is trying to eliminate those cuts. It makes more sense to use the CBO’s analysis of the president’s proposed budget, which indicates that spending will be $3.72 trillion, not the $3.58 trillion Nutting suggested. That’s a difference of $140 billion.
Finally, Nutting overlooked the impact inflation and the size of the economy have on spending growth. For instance, he claimed that federal spending under Ronald Reagan increased by 8.7% during his first term. But inflation was then at 6.5%. The increase in spending growth of 5.2% under Obama was almost three times the rate of inflation. Moreover, under Obama, federal spending as a percentage of gross domestic product has increased to levels not seen since World War II. (See a follow-up comment from Kessler here, where he defends his criticism of the administration.)
On the same day Kessler published his article, Dan Mitchell, a Senior Fellow at the Cato Institute, performed his own analysis of Nutting’s figures. Mitchell was a severe critic of George W. Bush’s spending. Nevertheless, he notes that the growth in the current administration’s expenditures is one of the highest in recent history. Unlike Nutting, he controlled for factors such as inflation, defense spending (which is often dictated by external events, such as the 9-11 terrorist attacks, and therefore not fully discretionary), and the recession-driven bailouts, which established an artificially high threshold for Obama’s spending. Mitchell concluded that Obama’s expenditures have increased by 7.0% annually, second only to Richard Nixon since the 1960s.
Then, on May 27, the New York Times recounted a moment with Obama on the campaign trail, when Carney shared an on-line column with him that is clearly Nutting’s:
“[Obama’s] messages have an improvisational feel at times. On the flight to Colorado last week, Jay Carney, his press secretary, read him an online column concluding that he has presided over slower growth in federal spending than any president since Dwight D. Eisenhower. Mr. Obama liked it so much he inserted it into his campaign speech. “
Just like that, an online column, rather than a detailed study by a budget office, became fodder for his argument. “Since I’ve been president, federal spending has risen at the lowest pace in nearly 60 years,” he told supporters in a hotel ballroom in Denver. What he did not say is that the calculation did not count significant spending in his early months in office and assumed future cuts that he opposes.
As Kessler points out in a follow-up to his original piece, both the Congressional Budget Office and the administration’s own Office of Management and Budget employ professionals trained to do this kind of work. “We continue to find it curious,” Kessler says, “that the White House would rely on the work of bloggers for budgetary analysis rather than the career employees who do this for a living.”