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Lots of heat (and some light) on Obama's spending

This column by Rex Nutting of MarketWatch was seized on by President Barack Obama and criticized by many of Obama's critics. This column by Rex Nutting of MarketWatch was seized on by President Barack Obama and criticized by many of Obama's critics.

This column by Rex Nutting of MarketWatch was seized on by President Barack Obama and criticized by many of Obama's critics.

Louis Jacobson
By Louis Jacobson May 25, 2012

A claim that President Barack Obama hasn’t been as big a spender as other presidents has drawn lots of discussion over the past few days.

The claim -- originating in a column by Rex Nutting in MarketWatch, an affiliate of the Wall Street Journal -- was trumpeted by liberal bloggers and by the Obama campaign, which circulated Nutting’s article and posted it on its website, ABC News reported. Eventually, Obama himself mentioned it at a fundraiser in Denver:

"I’m running to pay down our debt in a way that’s balanced and responsible. After inheriting a $1 trillion deficit, I signed $2 trillion of spending cuts into law," Obama told a crowd of donors at the Hyatt Regency, according to ABC News. "My opponent won’t admit it, but it’s starting to appear in places, like real liberal outlets, like the Wall Street Journal: Since I’ve been president, federal spending has risen at the lowest pace in nearly 60 years. Think about that."

Nutting’s column was adapted into a widely circulated Facebook post that rebutted a Mitt Romney quote that Obama has accelerated spending "at a pace without precedent in recent history" with Nutting’s conclusion that spending under Obama has actually risen "slower than at any time in nearly 60 years." We gave the combination of the two claims a Mostly True rating.

It didn’t take long for our ruling to become caught up in the political wars. Our assessment was tweeted by White House press secretary Jay Carney, while some critics assailed Nutting’s article and, in some cases, our analysis of it.

The most common criticism focuses on how to divvy up the responsibility for outlays made in fiscal year 2009. Should those outlays be counted on George W. Bush’s balance sheet or Obama’s?

Nutting’s method was to assign spending for the first fiscal year following a president’s inauguration to the preceding president. In his column, Nutting argued that "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. The president only begins to shape the budget in his second year. It takes time to develop a budget and steer it through Congress — especially in these days of congressional gridlock. The 2009 fiscal year, which Republicans count as part of Obama’s legacy, began four months before Obama moved into the White House. The major spending decisions in the 2009 fiscal year were made by George W. Bush and the previous Congress."

The critics countered that the transition between Bush and Obama, which came amid a severe economic downturn, did not fit the historical pattern. While Nutting tried to account for this by re-assigning $140 billion of fiscal 2009 spending from Bush to Obama -- specifically the stimulus bill, the expansion of a children’s health-care program and other appropriations bills passed in the spring of 2009 -- the critics say that that’s not enough.

And because spending spiked dramatically in the crucial period between 2008 and 2009, figuring out where exactly to draw the line between the two presidents has an enormous impact on the results of any analysis of federal spending.

The process of determining who has the responsibility for specific spending initiatives quickly becomes complicated, particularly given the need to compare what quirks may have happened not just during the Bush-Obama transition but also during the transitions between the presidents going to Eisenhower. (This historical comparison was crucial to the Facebook post we analyzed, but we aren’t aware of any critics going back to give similar scrutiny to any of the transitions prior to Bush-Obama.) Nutting’s methodlology is pretty straightfoward, but any number of adjustments could be made to fine tune it. Deciding which of these tweaks to make and which to ignore isn’t a scientific process. It involves judgment calls about which reasonable people can disagree.

Two final clarifications. One, contrary to what many e-mailers and Twitter and Facebook users appear to believe, neither Nutting’s column nor our analysis assigned the entire $787 billion stimulus to Bush.

First, the stimulus was not all spending; it was roughly one-third tax cuts, which wouldn't be attributed to either president in a spending chart. Second, the measurement we used was outlays, which refers to money actually spent during that fiscal year. Only a portion of the stimulus was spent in fiscal 2009. Finally, as we noted, Nutting did reassign $140 billion in 2009 spending from Bush to Obama.

Also, our item was not actually a fact-check of Nutting's entire column. Instead, we rated two elements of the Facebook post together -- one statement drawn from Nutting’s column, and the quote from Romney.

We haven't seen anything that justifies changing our rating of the Facebook post. But people can have legitimate differences about how to assign the spending, so we wanted to pass along some of the comments.


Here are excerpts from a blog post by Brian Darling of the Heritage Foundation, a conservative think tank. The full post is here.

"The reason why Nutting included FY 2009 is because it was ‘the last of George W. Bush’s presidency — federal spending rose by 17.9% from $2.98 trillion to $3.52 trillion.’ This assumption is incorrect and dishonest. This flaw in Nutting’s analysis is the reason why the Obama numbers are wrong and Nutting’s whole piece is based on flawed data.

"Nutting operates under the flawed assumption that President Obama is not responsible for FY 2009 spending. Under normal circumstances Nutting would be correct. If Congress were a functioning body that passed appropriations bills on time, then this analysis would be correct. The fact of the matter is that in recent history Congress has not done appropriations bills on time and in FY 2009, President Obama signed these spending bills into law that President Bush would have under different circumstances. …

"President Bush did sign some appropriations bills and a continuing resolution to keep the government running into President Obama’s first term, yet a Democrat controlled Congress purposely held off on the big spending portions of the appropriations bills until Obama took office. They did so for the purposes of jacking up spending. President Obama signed the final FY2009 spending bills on March 11, 2009. ...

"President Bush signed only three of the twelve appropriations bills for FY 2009: Defense; Military Construction/Veterans Affairs; and, Homeland Security. President Bush also signed a continuing resolution that kept the government running until March 6, 2009 that level of funding the remaining nine appropriations bills at FY 2008 levels. President Bush and his spending should only be judged on these three appropriations bills and FY 2008 levels of funding for the remaining nine appropriations bills. Bush never consented to the dramatic increase in spending for FY 2009 and he should not be blamed for that spending spree. ...

"How can Nutting attribute spending to President Bush that he expressly vowed to veto? Also, some of the mandatory spending has been wrongly attributed to President Bush in Nutting’s analysis. Finally, TARP spending under Bush and the recovery of TARP money under Obama further distorts these numbers.

"This is unethical and fuzzy math. The Truth-O-Meter may want to consider these facts when further analyzing the complications and distortions in analysis used by Nutting to argue that Obama is more fiscally responsible than his predecessors."


Alan Suderman of Reason, a libertarian magazine, offered this critique in a blog post.

"Nutting has a half a point: Federal spending did rise considerably during the 2009 fiscal year: Between 2001 and 2008, federal outlays (spending) rose from $1.8 trillion to $2.9 trillion, according to the Congressional Budget Office’s historical spending data. That’s a steep enough rise. But it’s nothing compared to what happened during the next year: In 2009, outlays spiked, rising from the $2.9 trillion spent in 2008 to $3.5 trillion.

"But what Obama did in subsequent budgets was stick to that newly inflated level of spending. Outlays in 2010 were just a hair short of $3.5 trillion. In 2011, they rose further, approaching $3.6 trillion.

"So even if you absolve Obama of responsibility for the initial growth spike, he still presided over unprecedented spending that was out of line with the existing growth trend. Obama’s average spending is far higher than under Bush or Clinton on both adjusted dollar levels and as a percentage of the economy. ...

"Make no mistake: George W. Bush was a tremendous spender, and he deserves some of the non-credit for making Obama’s federal budget binge possible, especially during Obama’s first year. But Obama and his fellow Democrats share the responsibility for allowing a spending spike to continue on at newly high levels, for posting record outlays and running record deficits — and for taking few if any effective steps to get the nation’s economic and fiscal houses in order.


Daniel Mitchell, an economist with the libertarian Cato Institute, offered a measured assessment in Forbes.

Let’s "take interest payments out of the budget and focus on inflation-adjusted ‘primary spending.’ After all, Presidents shouldn’t be held responsible for the national debt that existed before they took office.

"Looking at these numbers, it turns out that Obama does win the prize for being the most fiscally conservative president in recent memory. Reagan jumps to second place. Clinton is in third place, which won’t surprise people who watched this video, while (George W. Bush) and LBJ again are in last place.

"But I don’t want my Republican friends to get too angry with me, so let’s expand our analysis. Just as we don’t want to blame presidents for net interest payments on debt that was accrued before their tenure, perhaps we should make sure they don’t get credit or blame for defense outlays that often are dictated by external events.

"There’s obviously room for disagreement, but most people will agree that the Cold War and 9/11 meant higher defense spending, regardless of which party controlled the White House. Similarly, the collapse of the Soviet Empire inevitably meant lower military expenditures, regardless of whether Republicans or Democrats were in charge.

"So let’s now look at primary spending after subtracting defense outlays (still adjusting for inflation, of course). All of a sudden, Reagan jumps to the top of the list by a comfortable margin. LBJ and W continue to score poorly, but Nixon takes over last place.

"But it’s also worth noting that Obama still scores relatively well, beating Clinton for second place. Inflation-adjusted domestic spending (which is mostly what we’re measuring) has grown by 2.0 percent annually during his three years in office.

"So let’s take the preceding set of numbers and subtract out the long-run numbers for deposit insurance, as well as the TARP outlays since 2009. And keep in mind that repayments of TARP monies (as well as deposit insurance premiums) show up in the budget as ‘negative spending.’

"As you can see, this produces a remarkable result. All of a sudden, Obama drops from second to second-to-last. This is because there was a lot of TARP spending in Bush’s last fiscal year (FY2009), which created an artificially high benchmark. And then repayments by banks during Obama’s fiscal years counted as negative spending.

"When you subtract out the big TARP spending surge, as well as the repayments, then Bush 43 doesn’t look quite as bad (though still worse than Carter and Clinton), while Obama takes a big fall.

"In other words, Obama’s track record does show that he favors an expanding social welfare state. Outlays on those programs have jumped by 7.0 percent annually. And that’s after adjusting for inflation! Not as bad as Nixon, but that’s not saying much since he was one of America’s most statist presidents.

"Allow me to conclude with some caveats. None of the tables perfectly captures what any president’s fiscal record. ... And there certainly are strong arguments that bailout spending and defense spending are affected by presidential policies rather than external events.

"And keep in mind that presidents don’t have full power over fiscal policy. The folks on Capitol Hill are the ones who actually enact the bills and appropriate the money."


Finally, here’s a comment a reader emailed to PolitiFact.

"You carefully point out that Congress should be partially credited for any decreases in spending. However, you claim the decrease in revenues is simply due to the bad economy, completely forgetting to mention that the decrease in revenues is also largely the result of Bush era tax-cuts for millionaires and tax-breaks for corporations. If it weren’t for the regressive taxation practices of the Bush administration, the budget deficit would be much smaller than it is. Also, let’s not forget to mention the cost of two wars, resulting in tremendously increased spending on contractual obligations to defense contractors like Haliburton."

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Lots of heat (and some light) on Obama's spending