Thursday, January 28, 2010


It's almost like Spy vs. Spy.

Former CBO director and current Obama Budget Director Peter Orszag on his blog:
It is thus correct that federal spending rose by roughly 4 percentage points of GDP between 2008 and 2009 -- and it is also the case that the increase in spending has helped to stabilize the economy -- but it is wrong to attribute that increase primarily to Administration actions since it took office. The increase was already on the books when we arrived. [E.A.]
While I agree the Obama administration inherited quite a bit of spending, this didn't seem quite right to me, so I went to the CBO Budget and Economic Outlook: Fiscal Years 2010 to 2020 and found this:

Much of the rise in outlays in 2009 came from mandatory programs. After growing by an average of about 6 percent a year from 1999 to 2008, mandatory spending (excluding net interest) soared by 31 percent ($499 billion) last year, to $2.1 trillion. Three initiatives accounted for nearly two-thirds of that increase. Outlays recorded for the Troubled Asset Relief Program (TARP) totaled $152 billion in 2009; net payments to Fannie Mae and Freddie Mac accounted for another $91 billion; and fiscal stimulus legislation, the American Recovery and Reinvestment Act of 2009 (ARRA), increased mandatory outlays by $80 billion (largely for Medicaid, unemployment benefits, payments to Social Security beneficiaries, and supplemental nutrition assistance). [E.A].
Certainly you can lay TARP and Fannie/Freddie bailouts at Bush's feet, but Mr. Orszag seems to have forgotten about the substantial contribution to increased spending by the Obama administration's stimulus bill.

If there was a case for the stimulus spending, then make the case. Don't make meaningful increases in spending then try to pawn them off on your predecessor just because he spent even more.

1 comment:

J. Strupp said...

"If there was a case for the stimulus spending, then make the case."

This goes for his boss in particular. If you believe public spending is the means to offset the collapse in aggregate demand, then SPEND. Don't stand up in front of Americans at the State of the Union and talk spending freezes 9 months after you advocated Keynesian principles.

....somewhere Roosevelt is rolling around in his grave.