He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.
Latest posts by Peter Ferrara (see all)
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Obama campaign operative Rex Nutting surprised a lot of people with an article on the Wall Street Journal‘s MarketWatch website claiming that the “Obama Spending Binge Never Happened.” Adding a new chapter to Aesop’s Fables, Nutting fantasized that “under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.”
Just like if Jack in the Beanstalk and the Jolly Green Giant both eat the same feast, the percentage weight gain for the Giant will be so much smaller than for Jack. Or as the Journal’s editorial page explained it in its weekend May 26-27 edition, “This is like an alcoholic claiming that his rate of drinking has slowed because he had only 22 beers today and 25 beers yesterday.”
Nutting does not offer evidence in his article that he has any idea what he is talking about. But he seems to have been fed some storyline by Nancy Pelosi, who is to Sarah Palin what Dorothy’s Strawman was to Sherlock Holmes.
Nutting’s confusion is what he claims as his insight — that George W. Bush’s last fiscal year was 2009. Fiscal year 2009 ran from October 1, 2008 until September 30, 2009. Most 4th graders could spot the error.
Sure federal spending grew more slowly after Obama’s first year starting on January 20, 2009. But it was that first year that began the wildest spending binge in world history, “under Obama.”
Nutting begins his stumbling by explaining to us, “What people forget (or never knew) is that the first year of every presidential term starts with a budget approved by the previous administration and Congress.” Not exactly.
The previous administration, or President, proposes a budget. The previous Congress approves a budget. And what Congress approves can be radically different from what the President proposes.
For fiscal year 2009, President Bush in February, 2008 proposed a budget with a 3 percent spending increase over the prior year. But Nutting seems to have no memory that the
Congress in 2008 was controlled by Democrat majorities, with the renowned budget skinflint Nancy Pelosi as Speaker of the House, and the restlessSenator Obama already running for President, just four years removed from his glorious career as a state Senator in the Illinois legislature.
As Hans Bader reported on May 26 for the more careful Washington Examiner, the budget approved and implemented by Pelosi, Obama, and the rest of the Congressional Democrat majorities provided for a 17.9 percent increase in spending for fiscal 2009! Not that President Bush was a fiscal conservative. Far from it. But Obama and Pelosi have served as drunken sailors to Bush’s comparative Boy Scout on the issue.
Actually, Obama and the Democrats were even more deeply involved in the fiscal 2009 spending explosion than that. As Bader also reports, “The Democrat Congress [in 2008], confident Obama was going to win in 2008, passed only three of fiscal 2009’s 12 appropriations bills (Defense, Military Construction and Veterans Affairs, and Homeland Security). The Democrat Congress passed the rest of them [in 2009], and [President] Obama signed them.” So Obama played a very direct role in fiscal 2009 spending that Obama operative Nutting, working hand in glove with the campaign, hides in his short story for MarketWatch.
Reagan v. Obama
But poor President Obama pleads that when he came into office in January 2009, he was just unable to do anything about the Animal House, binge drinking, frat party he and Pelosi ordered up for the year, with Rep. Barney Frank co-starring as John Belushi. Unlike when a real adult came into office in January, 1981. Then President Reagan didn’t just go along with the wild spending binge of the previous Democrat Congress when he came into office in fiscal year 1981.
Too bad almost no one remembers the much vilified at the time 1981 Reagan budget cuts, the new president’s first major legislative initiative. Then Democrat Rep. Phil Gramm joined with Ohio Republican Del Latta to push through the Democrat House $31 billion in Reagan proposed budget cuts to thefiscal year 1981 budget, which totaled $681 billion, resulting in a cut of nearly 5 percent in that budget. But that is actual history, while Nutting seems to be more of a novelist.
Reagan then ramped up the spending cuts from there. In nominal terms, non-defense discretionary spending actually declined by 7.1 percent from 1981 to 1982. But roaring inflation at the time actually masks the true magnitude of the Reagan spending cut achievement. In constant dollars, non-defense discretionary spending declined by 14.4 percent from 1981 to 1982, and by 16.8 percent from 1981 to 1983. Moreover, in constant dollars, this non-defense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms! By 1988, this spending was still down 14.4 percent from its 1981 level in constant dollars.
Even with the Reagan defense buildup, which, remember, won the Cold War without firing a shot, total federal spending as a percentage of GDP declined from a high of 23.5 percent of GDP in 1983 to 21.3 percent in 1988 and 21.2 percent in 1989. That’s a real reduction in the size of government relative to the economy of 10 percent. That is a huge achievement.
In sharp contrast to Reagan (of course), Obama’s first major legislative initiative was the so-called stimulus, which increased future federal spending by nearly a trillion dollars, the most expensive legislation in history up till that point. We know now, as thinking people knew at the time, that this record shattering spending bill only stimulated government spending, deficits and debt. Contrary to official Democrat Keynesian witchcraft, you don’t promote economic recovery, growth, and prosperity by borrowing a trillion dollars out of the economy to spend a trillion dollars back into it.
Obama’s Spending Binge
But that was just a warm up for the Swedish socialist in American drag. Obama worked with Pelosi’s Democrat Congress to pass an additional, $410 billion, supplemental spending bill for fiscal year 2009! As Ann Coulter, far sharper than Nutting and relying on far better economists, explains, “Obama didn’t come in and live with the budget Bush had approved. He immediately signed off on enormous spending programs that had been specifically rejected by Bush. This included a $410 billion spending bill that Bush refused to sign before he left office. Obama signed it on March 10, 2009.” But in the fairy tale by Nutting, who appears to have been a lot more than one toke over the line when authoring his story, that spending is attributed to the evil and notorious President Bush.
Next in 2009 came a $40 billion expansion in the SCHIP entitlement program, as if we didn’t already have way more than too much entitlement spending. But that was just a warm-up to the biggest single spending bill in world history, Obamacare, enacted in March, 2010. That legislation, not yet even counted in Obama’s spending record so far because it mostly does not go into effect until 2014, is now scored by CBO as increasing federal spending by $1.6 trillion in the first 10 years alone, with trillions more to come in future years. Indeed, as explained in detail in my 2011 book, America’s Ticking Bankruptcy Bomb, that is surely still a gross underestimate.
After just one year of the Obama spending binge, federal spending had already rocketed to 25.2 percent of GDP, the highest in American history except for World War II. That compares to 20.8 percent in 2008, and an average of 19.6 percent during Bush’s two terms. The average during President Clinton’s two terms was 19.8 percent, and during the 60-plus years from World War II until 2008 — 19.7 percent. Obama’s own budget released in February projects the average during the entire four years of the Obama Administration to come in at 24.4 percent in just a few months. That is an enormous, postwar record, undeniable spending binge. These are facts, not opinions over which reasonable people can differ.
President Obama’s 2013 budget actually proposes to spend $47 trillion over the next 10 years. That Obama budget itself shows federal spending increasing from $2.983 trillion in 2008 to $3.796 trillion in 2012, an increase of 27.3 percent. Obama has already increased the federal government indefinitely by roughly one-fourth in just one term, with more, much more, to come. But Nutting puts his spectacles on, looks into his microscope, peers out through his telescope, and just can’t find Obama’s spending binge anywhere.
To even compare this spending record to President Eisenhower is disgracefully dishonest, and everyone parroting this theme in the media is just self-identifying themselves as the party controlled press. When he came into office in 1953, Eisenhower cut federal spending that year of $76.1 billion, already just 2 percent of Obama’s spending this year, to $70.9 billion in 1954, and again to $68.4 billion in 1955. Federal spending did not really climb above the 1953 level until 1958. During his first term, Eisenhower slashed federal spending from 20.4 percent of GDP when he came into office in 1953 to 16.5 percent of GDP in 1956, when he was so rightly rewarded with reelection. In sharp contrast, President Obama as noted above did just the opposite in increasing federal spending by roughly the same amount as a percent of GDP in his one term.
But for liberal socialists like Nutting, Ed Schultz, Rachel Maddow, and David Cay Johnston to even talk about federal budget numbers is like small children playing with matches.
Moreover, before Obama there had never been a deficit anywhere near $1 trillion. The highest previously was $458 billion, or less than half a trillion, in 2008. The federal deficit for the last budget adopted by a Republican-controlled Congress was $161 billion. But the budget deficits for Obama’s four years were reported in Obama’s own 2013 budget as $1.413 trillion for 2009, $1.293 trillion for 2010, $1.3 trillion for 2011, and $1.327 trillion for 2012, four years in a row of deficits of $1.3 trillion or more. This is why Rep. Jeb Hensarling (R-TX) told Obama to his face that the annual deficits under the Republicans have become the monthly deficits under the Democrats.
President Obama’s own budget released in February shows that as a result federal debt held by the public will double during Obama’s four years as President. That means in just one term President Obama has increased the national debt as much as all prior Presidents, from George Washington to George Bush, combined.
Moreover, as Bader also carefully reported in the Examiner, “If Obama had his way, spending would be even bigger than it is, since the Congress has not approved as much spending as Obama sought in his budget proposals, as Nutting himself conceded. As [CBO] noted, ‘The President’s proposals would add $4.8 trillion to the national debt,’ increasing the cumulative deficit from 2010 to 2019 to $9.3 trillion.”
Nutting tries to credit Obama with the slight spending restraint enacted in “the budget that was agreed to last August.” But agreed to with whom? That would be the Republican House majority, which was elected in November 2010 in a New Deal size landslide, precisely to shut down Obama. But as theJournal editorial page also explained last weekend, “Every time House Republicans have tried to cut more spending since 2010, Mr. Obama has fought them tooth and claw.” Indeed, Obama has spent the past year denouncing the House Republicans for the modest spending cuts they imposed on him as part of that 2011 debt limit deal. As too many have not noticed, that House Republican majority has passed spending cut after spending cut, all to be bitterly opposed by Obama and the Senate Democrats, who have refused to even consider any of them.
But that Republican House majority has succeeded at least in slowing the Obama spending binge, as the American people elected them to do over the hysterical objections of Obama. That modest spending growth slowdown consequently cannot be credited to Obama, Nutting to the contrary notwithstanding.
This is all what Romney meant when he talked about President Obama’s “debt and spending inferno,” which Nutting devotes his short story to ridiculing. But Nutting’s analysis is so confused and disoriented that he cannot even comment on the federal spending, deficit and debt issue intelligently.
It’s All About Ryan v. Obama
The difference between the parties on federal spending, deficits and debt is defined for the 2012 election by the difference between the Ryan budget and the Obama budget proposed this year. Ryan’s budget effectively repeals the Obama Administration, restoring federal spending and taxes to their long term, post World War II levels, which were fairly stable over 60 plus years, consistent with booming, world leading American prosperity, until Obama. Ryan’s budget consistently reduces federal debt as a percent of GDP to manageable, modest levels, solving the looming debt crisis. Ultimately, in fact, under Ryan’s reforms to be enacted today, not future spending cuts, the federal debt eventually goes to zero.
Under Obama’s budget, by contrast, all of this spins wildly out of control, ultimately crashing America. On our current course, as projected by CBO, under Obama budget policies federal spending explodes to 30 percent of GDP by 2027, 40 percent by 2040, 50 percent by 2060, and 80 percent by 2080. With state and local spending, total government spending approaches the Communist Party nirvana of near 100 percent. Moreover, under those policies, federal debt held by the public rockets to 140 percent of GDP by 2030, 220 percent by 2040, and 320 percent by 2050, on its way to over 700 percent by 2080. That would undoubtedly create a Grecian style sovereign debt crisis for America before that point.
Reality will be much worse. On our current course, with Obama budget policies, when the top federal tax rates soar next year, on top of exploding Obama regulatory costs, the result will be another recession, and the above numbers will all be much worse much sooner.
Don’t try to deny it. The Democrats have revealed they already know these truths. That is why when the Obama budget was put to a vote in the House, it got exactly zero votes. Not one Democrat as well as not one Republican would vote for it. And the exact same thing happened in the Senate. The Obama budget there got the Big Sombrero too, with not even one Democrat vote. Obama has created bipartisan unity at last. In sharp contrast, the Ryan budget was passed by the House.
The real point of Nutting’s article was to confuse the public about these truths, for that is the only hope for Obama’s reelection. Nutting’s nonsense is old-fashioned, Soviet-style disinformation, the kind of gross distortion of the truth the Communist Party used to dish out to its captive population through its party controlled press. True to that form, as should be expected, Obama quickly began citing and echoing Nutting on the campaign trail, with Obama spokesman Jay Carney, an expatriate from party-controlled Time magazine, denouncing anyone in the media who will not echo this party disinformation as guilty of sloth and laziness.
This is not American behavior. It is reminiscent of a 20th century Third World country threatened with a socialist party takeover, like Argentina suffered with Juan Peron and his party. But the American people will not fall for this hapless stupidity, as the Democrat Party will be learned real good this fall. That is why the course for America was so different than the course for Argentina during the 20th century.
Presumably, Nutting was able to infiltrate MarketWatch when it was owned by party-controlled CBS. But now that the Wall Street Journal has taken over, it needs to clean house if it wants to remain an independent journalistic voice. The Journal editorial page, of course, is the leading independent media voice in the country on economic policy issues. But the Journal news division reflects much of the same Democrat Party control as other media institutions.
America faces a threat to its continued, prosperous existence like it has not since 1860. What the Democrat party does not yet realize is that it faces such an existential threat this fall as well.