Paul Krugman Back Up To His Old Trick Of Using Math.
The GOP has long since given up on using facts and mathematics to decide their policies because the facts and the arithmetic show GOP policies to be fantasies.
Nobel economist Paul Krugman, who blogs in the New York Times and forms his opinions after studying the facts and the mathematics, has become possibly the most damaging thorn in the side of the GOP as a result. His most recent blog dismantles GOP charges that President Obama has somehow promoted more government spending and, as a result of that spending splurge, government spending has grown as a percentage of Gross Domestic Product (GDP).
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.
Beezer here. That darn Krugman! There he goes again using his arithmetricks.
Tags: GOP economic policies, Government spending as a percentage of GDP, Medicaid, Medicare, New York Times, Paul Krugman, President Obama, Recessionary effects on GDP, Recessionary effects on government spending, Safety net spending, Social Security