On May 24, 2012, Rick Ungar told the readers at Forbes.com that President Barack Obama “is the smallest government spender since Eisenhower.” “[O]ur president has actually been tighter with a buck than any United States president since Dwight D. Eisenhower,” Ungar insisted.
But Ungar actually reveals the error in the underlying analysis, saying, “The first year of any incoming president term is saddled – for better of for worse – with the budget set by the president whom immediately precedes the new occupant in the White House. Indeed, not only was the 2009 budget the property of George W. Bush – and passed by the 2008 Congress – it was in effect four months before Barack Obama took the oath of office.”
This is factually incorrect.
The previous president proposes a budget, in February of the prior year. But the previous Congress approves, enacts and implements the budget. And what Congress approves, enacts, and implements can be radically different from what the president proposes.
President Bush did not have a good record on spending. From the start of his first term, he and the Republican Congress began a spending spree that increased government spending by one seventh as a percent of GDP, virtually exactly erasing the gains achieved by the Congress led by former House Speaker Newt Gingrich, in conjunction with President Bill Clinton.
But for fiscal year 2009, President Bush in February, 2008 proposed a budget with just a 3% spending increase over the prior year. Recall, however, that in 2008 Congress was controlled by Democrat majorities, with Nancy Pelosi as Speaker of the House, and the restless Senator Obama in his fourth year in the Senate. As Hans Bader reported on May 26 for the Washington Examiner, the budget approved, enacted and implemented by Pelosi, Obama and the rest of the Congressional Democrat majorities provided for a 17.9 percent increasein spending for fiscal 2009!
Actually, President 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 the runaway fiscal 2009 spending explosion.
Note as well that President Reagan didn’t just go along with the wild spending binge of the previous Democrat Congress for fiscal year 1981 when he came into office on January 20 of that year. Almost no one remembers now the much vilified at the time 1981 Reagan budget cuts, his first major legislative initiative. Then Democrat Rep. Phil Gramm joined with Ohio Republican Rep. Del Latta to push through the Democrat House $31 billion in Reagan proposed budget cuts to the fiscal year 1981 budget, which totaled $681 billion, resulting in a cut of nearly 5 percent in that budget. Obama could have done the exact same thing when he entered office in January, 2009, even more so with the Congress totally controlled by his own party at the time.
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 (in Margaret Thatcher’s famous phrase), total federal spending as a percent 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, a huge achievement.