I felt like Rip Van Winkle, waking up from a 20-year sleep and seeing a world I didn’t recognize.
On May 22, Rex Nutting, the international commentary editor for MarketWatch, a financial website affiliated with the Wall Street Journal, published a column entitled “Obama spending binge never happened.” The author posited that he had reviewed data of presidencies covering the last 60 years and concluded that President Barack Obama had presided over the smallest increase in federal spending. Within hours, the column had gone viral on Facebook, and the media dutifully reported Nutting’s findings as the truth delivered from Mount Sinai.
Hitting the campaign trail in Des Moines, Iowa, President Obama declared: “Federal spending since I took office has risen at the slowest pace of any president in almost 60 years.”
I quickly checked to see whether I had taken my medication that day. I had. I then checked to confirm that I was wearing my latest optical prescription. Affirmative. How, I asked, could my president be cast as the biggest spender of federal dollars one day and then be cast as a miser the next? The answer was in the details.
First, Nutting made the decision that a president’s first year in office is not really his, since the fiscal year is already four months old at the swearing-in ceremony. This made President George W. Bush largely responsible for the economic-stimulus package, the Children’s Health Insurance Program, and the 2009 expenditures under the Troubled Assets Relief Program (TARP). In short, Nutting raised the Bush expenditure baseline and decreased that of President Obama.
Second, Nutting cast roughly $110 billion of bailout money, which was paid back to the federal government, as “spending cuts.” If you combine the TARP lending in 2009 and the money paid back in 2010, Nutting says that President Obama spent $261 billion less than the record shows.
Third, the federal takeover of Fannie Mae and Freddie Mac also makes Obama’s record look better than it was. Uncle Sam spent $96 billion in 2009 on the takeover, but only $40 billion in 2010. Guess what? Nutting claims the $56 billion as a spending cut. If you combine the TARP bailout and the Fannie-Freddie takeovers, these two bailouts account for another $72 billion in spending “cuts” in 2011.
Fourth, the MarketWatch analysis incorporates the Congressional Budget Office’s (CBO) annual “baseline” as its estimates for fiscal years 2012 and 2013. The CBO assumes $65 billion in automatic, across-the-board spending cuts that will take effect in January, cuts in Medicare payments to doctors, and the expiration of refundable tax credits that are “scored” as spending in the federal ledgers. The likelihood of these spending cuts occurring is, at best, dubious.
Douglas Holtz-Eakin — a former professor at Syracuse University’s Maxwell School; former Congressional Budget Office director; and current president of the American Action Forum, a free-market think-tank — believes that a better analysis of federal spending is to view TARP and Fannie–Freddie as one-time budget anomalies and remove them from the comparison. The result is an explosion of federal spending under the Obama Administration.
Are there benchmarks Nutting ignored? How about the fact that the federal debt has increased 14.6 percent each year President Obama has presided in office? How about the explosion of federal spending as a percentage of GDP, which has reached levels not seen since World War II? How about the budgets presented by the president, restrained only by a House of Representatives controlled by the Republicans?
Nutting and the press call President Obama “tightfisted.” Maybe this is what the president meant when he campaigned on “hope and change.” Hope for the best and change reality.
Norman Poltenson is publisher of The Central New York Business Journal. Contact him at firstname.lastname@example.org