Obama’s Budget: Spending Too High, But Bush Was Worse

President Barack Obama’s new budget proposes to spend $3.78 trillion in 2014, which would be 27 percent higher than spending in 2008. President Obama believes in expansive government, and he is proposing a range of new programs, including subsidies for infrastructure, preschool, and mental health care.

However, total federal outlays increased substantially faster under President George W. Bush than they have under Obama so far. It is true that Obama’s spending ambitions have been restrained by House Republicans. But looking at the raw data, it appears that the last Republican president was more profligate than the current Democratic one.

The figure shows total federal outlays, but the data is adjusted to exclude the TARP bailout amounts for all years. The Congressional Budget Office now says (page 15) that TARP will end up costing taxpayers just $22 billion overall. Yet the official federal outlay figure for 2009 included $151 billion in estimated TARP costs. That number has since been re-estimated and mainly reversed out of later-year spending totals. Therefore, TARP must be removed from federal spending totals to avoid a distorted picture of budget growth.

The figure indicates that spending jumped from $1.86 trillion in 2001 to $2.98 trillion in 2008. That’s a 60 percent jump in seven years under Bush, which works out to an annual average growth rate of 7.0 percent. (All data cited here are for fiscal years).

Then comes 2009. Usually this year would be assigned to the outgoing president because the new president comes in part way during the year and typically does not make substantial changes to the current-year budget. But Obama took steps to immediately boost spending in 2009, including pushing through the giant stimulus bill. The CBO has reported that stimulus outlays were $114 billion in 2009.

In Bush’s last budget, he proposed that 2009 spending be $177 billion above the 2008 level, but the actual increase ended up being a massive $386 billion. So you can see that Obama and Congress were mainly responsible for the huge spending leap in 2009, not Bush.

So let’s assign 2009 to Obama and measure his spending from a base in 2008 ($2.98 trillion) to his newly proposed spending for 2014 of $3.78 trillion. Spending increased 27 percent over those six years, or 4.0 percent annually. That’s far too much, but still substantially less than the 7.0 percent growth rate under Bush.

Here is another comparison:

  • Spending growth in Bush’s first seven years: 8%, 7%, 6%, 8%, 7%, 3%, 9%.
  • Spending growth in Obama’s six years: 13%, 6%, 2%, -3%, 5%, 2%.

Partisan Republicans are probably tired of fiscal conservatives and libertarians complaining about Bush’s big spending, especially when Obama has done so much damage to limited government. But Republicans are fooling themselves if they think that the overspending problem has been confined just to the other party. The sooner people understand that overspending it is a deep and chronic disease with bipartisan roots, the sooner we can start finding a lasting cure.

Yesterday the New York Times profiled a conservative group that is embracing higher federal infrastructure spending, apparently at the behest of pro-spending lobby groups. And here is another conservative group in favor of more federal spending on infrastructure, and indeed, more central planning of it. But there is nothing the slightest bit “conservative” about nationalizing spending activities that can be done—and would be done better—by state governments and the private sector.

In sum:

  • Obama’s new federal budget—spends way too much.
  • Bush’s budgets—spent way too much and created a precedent for Obama.
  • Some conservative groups—not conservative on spending.
  • Believers in a small federal government—facing a huge challenge.
  • Federal spending—reduces freedom, damages growth, harms the environment, destroys federalism and diversity, misallocates resources, undermines individual responsibility, and is often wasteful and bureaucratic.
  • The Republic—threatened by a non-stop bipartisan spending spree.
  • Solutions to all this—can be found at www.DownsizingGovernment.org.