Monday, September 5, 2011

Numbers Don't Lie; People Do

This is Labor Day, so I could talk about the anomaly that in the past month there was zero movement in unemployment. Kind of odd. But I’d rather go ahead with a number crunching piece I’ve been mulling over for several days. 

Last Tuesday I got one of those posts, you know the kind, meant to put me—and those who believe in economic and political freedom—in our place. 

The provocative headline read: 

3 Reality-Based Charts Your Right-Wing Relatives Will Have a Hard Time Ignoring

Here are some reality-based charts to help knock down absurd right-wing propaganda about the economy.

August 29, 2011 |

Problem: Your right-wing brother-in-law is plugged into the FOX-Limbaugh lie machine, and keeps sending you emails about "Obama spending" and "Obama deficits" and how the "Stimulus" just made things worse.

Solution: Here are three "reality-based" charts to send to him. These charts show what actually happened.

To my knowledge I do not send annoying political emails to anyone that would be irritating to them. Not to relatives or friends. But I do have this blog as a forum. Using it to refute this bait is normally not worth the effort. But since they claimed to use government data that was easily available, I was curious enough to run the numbers.  

You can read their full diatribe here, along with all three charts. The piece says they got info from the government budget office, so, with help from my son Economic Sphere, who does this kind of research more regularly, I checked the facts (here, we used pp 54-56 of Table 3.1--Outlays by Superfunction and Function: 1940-2016). 

Today we’ll deal with the first chart, US Government Spending, which contains, as you’d expect, both some inaccuracies and some distortions. 

Here’s a rule of thumb to start with: if liberals are making a claim that their liberal hero is spending less than his “conservative” arch-nemesis, you can be pretty certain the claims are wrong—because liberals don’t value lower spending by government. 

To be clear, budgets originate in the House, are amended and agreed to in the Senate, and then sent to the President for signature; while the President can guide and suggest, his budget is really the House budget, with as much influence by him as he could politically muster, but is not technically his budget. Budgets from 2006 on, therefore, are spending set by the Democrat-controlled House and Democrat-controlled Senate. But for the sake of this chart, we will call them Bush or Obama budgets, since they presided over them. And there are some way-beyond-budget spending outlays we’ll deal with as well. 

Bush Spending

The chart starts in 2002, even though Bush took office in 2001. That is because budgets get prepared the year before, so the 2001 budget was from Clinton’s last year, 2000. But they used numbers from the whole of Bush’s term, so I include them. 

Here are Bush’s numbers, rounded:
            2001    $1.86 T (last Clinton budget)
2002        $2.01 T
2003        $2.16 T
2004        $2.29 T
2005        $2.47 T
2006        $2.66 T
2007        $2.73 T
2008        $2.98 T
2009        $3.518 T 

Increase per year:
2001-2002              $0.15 T ($150 B)
2002-2003        $0.15 T ($150 B)
2003-2004        $0.13 T ($130 B)
2004-2005        $0.18 T ($180 B)
2005-2006             $0.19 T ($190 B)
2006-2007        $0.07 T ($70 B)
2007-2008        $0.25 T ($250 B)
2008-2009        $0.538 T ($538 B) 

Total increases for these 8 years add up to $1.658 T, literally an 88% increase. Divided by 8 that is an annual increase of $207 Billion, or 11% per year. 

But there are some things we should consider. Notice that, during the recovery from 9/11 and wars in Afghanistan and Iraq, increases are still steady in the $150 B range, and get even lower. In 2008 we have a sharp increase. That is TARP, a shocking $700 B. Many of us were against it, but it was supposed to be a one-time outlay, not a permanent addition to annual budgets, and much was indeed repaid as intended. So the 2008 outlay of $2.98 T would have been $2.28 T without that spike, an annual decrease from 2007 of $450 B. If only! 

But there’s an additional problem with 2009: the Bush budget for 2009 did not include $825 B in “economic stimulus” and $700 B in bailouts, spread over two years (divided with $1.175 T spent in 2009 and $412 B in 2010). So the Bush budgeted outlays for 2009 are $1.175 T less than Obama spent.  

            $3.518 T - $1.175 T = $2.343 T  =  Bush budget spending for 2009 

So Bush’s actual outlay increases from 2001 through 2009 are this: 

            $2.343 T - $1.863 T = $0.480 T   =  Bush spending increases from 2001 to 2009, around 25.8 %,—much much lower than the chart’s 88%. That’s an annual increase of around $60 B, about 3.2% per year, not far off from the rate of inflation.

Obama Spending

Let’s look at the rest of the chart, the Obama years. The story starts Obama spending in 2009, showing a decrease from 2009 to 2010, then a sharp increase in 2011, followed by approximately flat spending from 2011 through 2013 (the first year of the next presidential term, but presumably budgeted in Obama’s last year). 

The numbers listed for these years are as follows: 

2009        $3.518 T (Bush budget plus stimulus and bailouts)
2010        $3.456 T
2011        $3.818 T (estimate)
2012        $3.729 T (estimate)
2013        $3.771 T (estimate) 

Increase/Decrease per year:
2009-2010              $0.062 T lower (lower by $62 B)
2010-2011              $0.362 T higher (increase of $362 B)
2011-2012              $0.089 T lower (lower by $89 B)
2012-2013       $0.042 T higher (increase of $42B) 

Doing the straightforward math this way, you get a 4-year increase of $0.253 T ($253 B), or about 7.2%. Annually, that’s an increase of $63 B, about 1.8% per year. Looks good, but… 

Since $1.175 T spent in 2009 was Obama spending above the Bush budget, this is inaccurate.  The most accurate way to go about this would be as follows: 

            2009 Bush budget out            lays      $2.343 T
            2009 Obama outlays               $1.175 T
            2010 Obama outlays               $3.456 T
            2011 Obama outlays               $3.818 T (estimate)
            2012 Obama outlays               $3.729 T (estimate)
            2013 Obama outlays               $3.771 T (estimate) 

Increase/Decrease per year:
            2009 Bush-2010 Obama         $1.113 T increase
            2010-2011                               $0.354 T increase ($356 B more)
            2011-2012                               $0.089 T decrease ($89 B less)
            2012-2013                               $0.0.42 T increase ($42 B more)           

The increases for these four years total $1.336 T, or 57% more—not 7.2%. Annually that is $0.334 T ($334 B). Remember, Bush’s total 8-year increase was about $483 T, or $60 B a year. Obama’s annual increase is nearly 6 times Bush’s annual increase. His annual increase of around 14.2 % is about double what the chart claims is his 4-year increase. 

There are a couple of other curiosities about Obama’s spending according to the chart. He takes over, and there’s a decrease in spending from 2009 to 2010? Yes, because $1.175 T of the stimulus and bailouts were assigned to 2009, and only $412 B of was assigned to be spent in 2010. A cut in spending? Only if you expected those spikes to come year after year (not a totally wrong assumption with this crew in power).  

Here’s another curiosity: there hasn’t actually been an Obama budget yet. In 2009 and 2010, the Democrat-controlled House failed entirely to even do their basic duty of writing a budget. Without a budget, they guaranteed a specified level of automatic increases, without having to justify any increases before their opponents in the House. In 2011, we had a newly elected Republican House, which put out a budget almost immediately (without real cuts, but with reductions in the automatic increases). The Senate, still controlled by the Democrats, refused to take up the budget for a vote. So if there is a sharp increase for 2011 (and the chart shows there is), then it is because Obama ordered additional spending spikes over and above automatic budget increases. The relatively flat estimates for 2012 and 2013 imply there won’t be any such one-time outlays during those years. Good luck trusting that. 

I’m undecided about spending time on the other two charts. If I find it worthwhile, I’ll cover those later in the week.

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