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The Obama Spending Non-Surge
Blogging is a lot like teaching the same class year after year; you’re always encountering the same arguments you’ve refuted in the past, and you want to demand why they weren’t listening the last time.

Anyway, what I’m seeing in comments and reactions, once again, is the claim that Obama has presided over a vast expansion of government — a claim backed not by describing any specific programs, but by pointing to the share of federal spending in GDP. Indeed, federal spending rose from 19.6% of GDP in 2007 to 23.8% in 2010 (it was briefly 25 in 2009, but that was a number distorted by the financial bailouts). So there has been a roughly 4 points of GDP rise in the spending share. What’s that about?

Well, part of the answer is that the ratio is up because the denominator is down. According to CBO estimates, in fiscal 2010 the economy operated about 7 percent below potential. This means that even if what the government was doing hadn’t changed, the federal spending share of GDP would have risen by 1.4 percentage points.

Then, look inside the budget data (pdf), specifically at Table E-10. You’ll see a surge in spending on “income security”; that’s basically unemployment insurance, food stamps, and similar items. In other words, spending on safety-net programs is up because the economy is depressed, and more people are falling into the safety net.

You’ll also see a sharp rise in Medicaid; again, this is because the lousy economy has pushed more people into hardship, making them eligible for the program.

I’ve done a bit of number-crunching, and here’s my allocation of the sources of the rise in federal spending as a share of GDP:



So a depressed economy plus safety net programs that have grown as a result of a depressed economy are, overwhelmingly, the real story here.

What’s in that “other” category? Some of it is stimulus spending. Some of it is the leading wave of the baby boomers, who are starting to collect Social Security and enter Medicare. Some of it is rising health care costs.

What isn’t there, no way, nohow, is a massive expansion of government, which is a figment of the right wing’s imagination.

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One side wants it big here, the other side wants it big there.

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he's just talking about the effect on the spending/GDP ratio that comes from GDP (the denominator) shrinking - he's not trying to describe what an economy's potential is.

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do you see what I'm saying? A ratio is a ratio.

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But for absolute certain the ratio is representative of federal spending, BY DEFINITION

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But Krugman's almost bumping up against saying that SPENDING hasn't increased

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and using the 2007 economy is just plain arbitrary.

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We're spending more on support nets, which seems to ultimately be his point, but that's also not something you can really just ignore when you're talking about whether there's been an increase in spending

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Revenue is fairly static, so deficit jumps only occur when spending increases.

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The spending/GDP ratio has its uses undoubtedly, but doesn't really have much relevance to this debate.

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He's highlighting the difference between a swelling of existing government programs (in exceptional circumstances), and a massive expansion of new government programs, which people are claiming, but only exist via dodgy/disingenuous maths. To you and many other taxpayers this may sound like the same thing - an increase in spending; but the point is Obama could be blamed for one but not the other.

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Not only did GDP INCREASE

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