Charts: What if Obama spent like Reagan?

[pampango]

In 10 of the past 12 quarters, total government spending and investment has fallen, dragging down the Obama economy. That’s in large part because state and local cutbacks have been so severe, but it’s also because federal spending and investment has, on the whole, been falling since 2010.

That made me curious: How does government spending and investment during Obama’s first term compare to Ronald Reagan and George W. Bush’s first terms? ... Whereas total government spending dropped in 10 out of the 16 quarters that comprised Obama’s first term, it rose in 13 out of Reagan’s first 16 quarters, and 13 out of Bush’s first 16 quarters.



Or, to put it differently, over Obama’s first term, falling government spending and investment snipped, on average, .11 percentage points of GDP off of (annualized) quarterly growth. During Reagan’s first term, it added .68 percentage points, and during Bush’s first term, it added .52 percentage points.



...these graphs simply establish a basic fact about Obama’s term: While deficits have indeed been high, government spending and investment has been falling since 2010. This is, in recent presidential administrations, a simply unprecedented response to a recession. Just for fun, I took Obama’s GDP growth, netted out the effect of government spending and investment, and then added the total government spending and investment numbers — which include state and local government — from Reagan’s first term. The result is a significantly better economy, with growth since 2010 averaging 3.2 percent rather than 2.4 percent.



http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/31/charts-what-if-obama-spent-like-reagan/

None of which will stop republicans from constantly referring to 'big-spending Democrats'.

It is interesting to see how much better off the economy would be under a 'big-spending republican' like the much revered (in republican circles anyway) Reagan. GDP growth now would be about 3% rather than the most recent -0.1%.

[JaneyVee]

1. I'm convinced that 7-8% unemployment is the new norm as long as we keep destroying public sec jobs.

Ask Reagan & Bush. The only way they lowered unemployment was by tripling the size of Govt. Reagan started his first term with 7.5% unemployment and after one term was at 7.3% unemployment. If we stopped laying off public sector workers during this recession unemployment would be around 6%. Also, Wall St. decimated jobs for many people including Americans in their 40''s & 50's who have a harder time finding new jobs. A WPA could solve our unemployment crisis quickly & easily. We NEED Govt spending or we need to accept the reality of 7-8% unemployment as a norm.

[Spitfire of ATJ]

7. Lower the reirement age to include workers nobody wants.

[xtraxritical]

12. For younger readers, WPA means Work Progress Association. Wikipedia it.

[Champion Jack]

2. K&R

[liberal N proud]

3. Every problem this country has is rooted in a Reagan policy or program.

Every one!

[Spitfire of ATJ]

8. It wasn't just Reagan,...it was Republicans who were against The New Deal.

[liberal N proud]

10. The actions taken during the Reagan years are direct contributors to our current problems.

[Spitfire of ATJ]

11. The Reagan years SUCKED but Republicans did historical revisionism....

They did it to fool the public and what's hilarious is they only convinced themselves.

Selling arms to Iran while claiming they're the enemy? Are you kidding?

[geckosfeet]

4. One way to read this is that government spending and investment (in the US) is good for gdp.

It's more a question of what the investment and spending is for.

[spanone]

5. or george w bu$h*?????

[SheilaT]

6. I've known since around 1980 that things are always more

prosperous when there's a Democratic President in office. It leaves me breatheless with astonishment that the mainstream media, and almost everyone out there, doesn't understand that.

[Spitfire of ATJ]

9. They understand. It's their JOB to sell the lie....

After all, the media is OWNED by the Conservatives.

[mostlyconfused]

13. So is your suggestion that we go back to spending 33-35% of GDP?

..like was happening under Reagan, instead of the higher rate we are spending now? I get your point about the economic impact of increased spending, but the problem is that the spending just doesn't come down again. During Obama's first term government spending was more like 40% of GDP.

If spending increases were temporary, with the intent to stimulate the economy, then once growth is achieved it seems like spending should come down. If the trend is that spending as a percentage of GDP generally just keeps going up and up (with a few variations), then what do we do? It's like the economy is an addict, and keeps needing a heavier hit government money to be stimulated. Does that course ever reverse, or in a decade will it take a bump to 45% of GDP to stimulate the economy?

[cthulu2016]

14. can haz chartz

In the figure below the blue line shows government spending at all levels as a share of GDP; the red line shows the share of potential GDP — what we’d be producing at normal employment — as estimated by the Congressional Budget Office; it’s lower than the first line because the economy is still operating well below capacity.

http://krugman.blogs.nytimes.com/2013/02/02/government-spending-in-the-crisis/

[pampango]

15. Annual growth in spending: Reagan - 6.8%, GWB - 7.7%, Clinton - 3.5%, Obama - 1.4%.

If spending is a higher percentage of GDP now than in 1980, we can see which party we have to thank for that. Reagan and the two Bushes has done more to increase the ratio of spending to GDP than Clinton and Obama have done.

[mostlyconfused]

16. Charts can say a lot of things. That one could suggest Reagan started fixing the problem

right? I'm sure that's not the point you were trying to make, and I'm not arguing that, but look at how spending growth was getting out of control up to Carter, then started to reverse course under Reagan...except for Bush 2 spending way, way too much.

How much less would the federal government be spending without the increases under Bush 2? How about we forget that period of irresponsibility and go back to Clinton era taxing and spending levels. What needs to be cut out of the current budget to get there?

[pampango]

17. If you think it suggests "Reagan started fixing the problem", you must be a big Obama fan.

Reagan lowered the growth in spending from 13.5% (under Carter) to 6.8%, so about 1/2 the growth rate of the previous administration. (Out of kindness I won't go into what Reagan did to the federal deficit.) Obama lowered the growth in spending from 7.7% (under Bush) to 1.4%.

If all you had were the percentages and no names: 13.5% to 6.8% and 7.7% to 1.4% which would look more like someone who was 'fixing the problem'? From the praise that Reagan gets in some circles you would think that he actually decreased spending (and the deficit) rather than increasing both.

As far as going back to the taxing and spending under Clinton: he raised spending at a 3.5% annual rate (1/2 of the Reagan rate, but 2 1/2 times the Obama rate) so I would like to at least go back to that Clinton standard and see more spending. And Clinton achieved a budget surplus (which Bush and the republican congress destroyed in a year) with that spending rate growth and modest tax increases, so I could live with his taxing policy too.

"What needs to be cut out of the current budget..." - Reagan cut nothing from the Carter budget. Obviously he increased some things and decreased others, but he increased overall spending by 6.8% a year over the amount of the Carter budget, so he was hardly a budget hawk. Obama has been much more of a budget hawk than Reagan ever was. (Much to the chagrin of many of us.)