*Sigh*. More cleaning up after the elephants. More American Enterprise Institute-quality research.
Tyler Cowen--who certainly knows better--and Daniel Drezner--who ought by now have learned better--links to a "study" from the American Enterprise Institute that says:
Ronald Reagan sought--and won--more spending cuts than any other modern president. He is the only president in the last forty years to cut inflation-adjusted nondefense outlays, which fell by 9.7 percent during his first term. George W. Bush, in contrast, increased real nondefense spending by at least 25.3 percent during his first term....
President Reagan believed that the federal government had usurped private, state, and local responsibilities and consequently thought the budgets of most departments and agencies should be cut. Following are comparisons of budget cuts during each presidential term going back to the Johnson administration:
President Reagan cut the budget of 8 agencies out of 15 during his first term and the budget of 10 out of 15 during his second term.
President Clinton cut the budget of 9 out of 15 agencies during his first term but cut none during his second term.
President George W. Bush has cut none of the agencies' budgets during his first term.
But there are some numbers that the American Enterprise Institute is very careful not to mention, and that Cowen and Drezner** ought to make sure to tell their readers. They are:
Federal Spending as a Share of GDP:
21.6%: Last Carter budget (FY 1981)
20.7%: Last Reagan budget (FY 1989)-0.9%: Change over Reagan terms
21.0%: Last Bush I budget (FY 1993)
18.3%: Last Clinton budget (FY 2001)-2.7%: Change over Clinton terms
20.4%: Forecast FY 2005 budget
+2.1%: Change over Bush term*
Why doesn't the AEI report these numbers? Because it doesn't want you thinking. It doesn't want you thinking that the axe Reagan took to the discretionary domestic side was largely offset by increases in defense spending that had relatively little effect on the strategic balance vis-a-vis the tottering Soviet Union (more submarines, anyone?) and by the explosion of interest payments on the debt produced by the Reagan deficits. It doesn't want you thinking that Clinton-era reductions in the size of the government were three times as big as Reagan-era reductions. And it doesn't want you to really focus on exactly how profligate the Bush budgets have been.
In short, this is AEI-quality research: hunt around for a vaguely plausible indicator that the underbriefed, gullible, and too hasty will take as a quantitative indicator, and make sure to keep the real data far from your audience's hands. Keep their eyes far away from "what did you spend" and focus them on "how many agencies budgets you cut." Feh.
Tyler should know better: when dealing with these people you don't trust, you verify, and then you think hard again about how they are trying to pull the wool over your eyes. Dan should have learned better by now.
*Note that less than 40% of the increase in the Bush share is due to increases in the defense spending share, and that much of that increase (SDI anyone?) is unrelated to the War on Terror.
**Drezner cites Virginia Postrel, who cites Milton Friedman. Friedman makes a better case. But there are two points that need to be made: First, defense spending is spending too: it doesn't vanish just because one omits it from one's spending totals. Second, I believe that the statistically most significant breakpoint in his series comes not where Friedman draws the break--in 1984--but back in 1975-1976, during the Ford administration.
(In fact, I can't figure out what Uncle Milton's non-defense spending series is. The 1981 non-defense spending share should be something like 17%--not 20%. Perhaps Uncle Milton has added offsetting receipts back in to spending--National Park entry fees, passport processing fees, et cetera. More likely, I think, the WSJ has drawn the figure wrong.
Posted by DeLong at June 16, 2004 12:39 AM | TrackBack | | Other weblogs commenting on this postTHE BUSH PRESIDENCY IS A NIGHTMARE FROM WHICH I AM TRYING TO AWAKE.
(In honor of the 100th anniversary of James Joyce’s Bloomsday, June 16, 2004)
RE: "Defense Spending is Spending too"
True, but only in "pure" economics terms. What is the productive capacity of a bomb, or a bomber? Almost Nill. What is the productive capacity of an Interstate Highway? Considerably more. What is the productive capacity of an education or food for a child? Considerable. Focussing on Spending in purely economic terms gives one view, but when considered as an investment, the current Bush Budget is a disaster. Or as I think of it, it has very little "leverage" in productivity terms (although A LOT in terms of debt).
I thought of this a while back when I saw a desert in far west Texas turned into a fertile valey by an aquaduct built by the CCC during the depression.
Posted by: Andy Machala on June 16, 2004 06:17 AMAndy,
Your point, I think, is a good one, but you and the people who make ex-defense spending comparisons are living on different planets. The ex-defense distinction is typically made because defense spending is being set apart as necessary, virtuous, not subject to question (calling it "defense" rather than "military" is part and parcel of this way of thinking). Both parties have had their periods of questioning defense spending, and the end of the Cold War did make military spending cuts easier to do, but lately, questioning military outlays has been a good way to have one's patriotism questioned.
Brad's point, that defense spending is spending, too, seems a sort of an intermediate position between yours and that held by the vast crowd of "ex-defense" budget thinkers. Military outlays surely need to be included when thinking about fiscal balances, since we do have to pay for them and they do take resources away from the private sector. Is it any wonder that the boom of the late 1990s followed the release of resources from the military sector?
Posted by: kharris on June 16, 2004 07:14 AMActually I was quite enjoying the Bush-Reagan contrasts of the past week (even if tortured as you so nimbly bring out).
One of them must be squirming and it sure aint Ronnie.
(Andy you may wanna check out and prod some life into the failed attempts to isolate out capital spending in a separate Federal budget. I can't recall from my days in UN development a single other government which has rolling strategic planning (the GPRA) and no investment contribution in its support clearly spelled out.)
A couple of things to keep in mind about Reagan spending cuts.
Nixon did "revenue sharing". These programs transferred federal tax dollars to fund state programs. Reagan did unfunded mandates. The funds for domestic programs were cut and states were expected to make the difference. The rampant inflation during the early Reagan years made cuts as a % of GDP more possible politically. The programs all got more money, just less as a % GDP and inflation adjusted $$.
Some of the cuts leave legacies today. For instance, unfunding HUD has left a shortage of housing for low income people in many areas. The void has been filled by homeless shelters and some state programs. Certainly, some of the HUD projects were failures, but there is a need.
The question to be answered is "How wise were those cuts?"
Posted by: bakho on June 16, 2004 08:11 AMAre you sure the Friedman graph is correct? If I subtract the defense spending (3% GDP) from total outlay (18.4% GDP) for the year 2000, I get 15.4% GDP for non-defense federal spending. The graph is nowhere near the 15% line.
Much of the non-defense growth is in non-discretionary spending such as Medic are/aid and SS prior to Reagan.
Posted by: bakho on June 16, 2004 08:35 AMSpeaking of being disingenuous, Reagan inherited a trend of increasing spending from Carter. The CBO figures are:
1979 20.1%
1980 21.6
1981 22.2
1982 23.1
1983 23.5
1984 22.1
1985 22.9
1986 22.5
1987 21.6
1988 21.2
1989 21.2
1990 21.8
1991 22.3
So, Reagan managed to weather a severe recession, increase defense spending, reverse the trend of increasing spending as a % of GDP, and bequeath an economy to his successor that was much improved (lower inflation and unemployment) over what he inherited.
And the comparison with the second Clinton Admin. is silly. Those low figures for spending are because of huge (and unexpected) increases in GDP, not of spending restraint.
Posted by: Patrick R. Sullivan on June 16, 2004 09:06 AM'Inherited a trend'. I like that.
Posted by: Barry on June 16, 2004 09:29 AMPatrick, What high and unexpected increase in GDP?
GDP
1980- 2732
1988- 5017
Increase 2285 80%
1992- 6222
2000- 9708
Increase- 3486 56%
"... the axe Reagan took to the discretionary domestic side was largely offset by increases in defense spending that had relatively little effect on the strategic balance vis-a-vis the tottering Soviet Union (more submarines, anyone?)..."
~~~
Gorbachev speaking to the Politburo in October 1986, explaining his coming offer to Reagan of a groundbreaking disarmament plan including a 50 percent reduction in nuclear arsenals. If he didn't propose these cuts...
"[W]e will be pulled into an arms race that is beyond our capabilities, and we will lose it because we are at the limit of our capabilities. … If the new round [of an arms race] begins, the pressures on our economy will be unbelievable."
http://politics.slate.msn.com/id/2102081/
~~~~~
"Patrick, What high and unexpected increase in GDP?"
The 4% for five years that Paul Krugman ridiculed in 1996 as being impossible before it happened.
BTW, when comparing growth in different periods it's best to use real dollars -- inflation, you know.
real GDP growth:
1980-1988 +31%
1992-2000 +34%
Great analysis.
Is it possible, however, that you aren't giving enough credit to George "the First" Bush? He seems to be the forgotten hero in all of this.
The Reganites, with their shibboleths about Regan and the cult of personality that developed around him, never seemed to trust or like GHWB.
To the Clintonite he was, of course, the enemy.
Without taking anything away from the Clinton economic gains, can we not pause to praise GHWB for his civic-minded politically suicidal budget deal?
To my admittedly feeble brain that deal had at least two positive outcomes:
1. Convinced Clinton that "balanced budget" was a phrase that would sell to both moderate republicans and democrats, allowing him to give us our first in my lifetime.
2. By decreasing deficits, the budget deal decreased the borrowings of the US gov't, which A) decreased the amount upon which interest payments were made and also B) worked to decrease the interest rate on those payments.
A quick review of: the proportion of the budget; the proportion of GDP; and, the nominal dollar amount going to debt service, would go toward supporting this point. Being a pinhead, I neither have, nor know where to find, those numbers. (I use nominal dollars, because I think inflation is related to the deficit,
The third result may have been less salutary. By deserting Bush in ’92 for "raising taxes", the radical right of the Republican Party may eventually chase the moderate wing of the party, those derisively referred to as RHINO's (Republicans in Name Only), into the arms of the democrats.
"Why doesn't the AEI report these numbers? Because it doesn't want you thinking ... it doesn't want you to really focus on exactly how profligate the Bush budgets have been."
Hello? Hello?? I look at it and read...
~~
President Reagan cut the budget of 8 agencies...
President Clinton cut the budget of 9...
President George W. Bush has cut none...
etc., etc.
~~~
The whole dang piece is bashing Dubya for his spending and for cutting less than Reagan *and* Clinton *and* four other presidents given by name too.
Can we try to criticize conservatives for what they *actually* say -- rather than for what we imagine they *must* have said with deceptive evil intent because they are so deceptive and evil?
The AEI needed some indicators because people had seen through the only actual number that was ever cited as evidence for Reagan's small government achievements. Holman Jenkins in the WSJ hasn't even gotten the memo and is still spinning like a top with the original indicator:
>>
Reagan's achievement was to turn our political destructiveness toward side issues as a way to immunize the private sector from perverted agendas that once gave us, say, 70% marginal tax rates.
>>
Notice the usage ", say," to imply that in fact there's a whole bunch of things he could have used and he just happened to pick on the infamous 70% marginal rate. Maybe next week's column will use some of the new indicators that Brad trashes.
Posted by: P O'Neill on June 16, 2004 11:35 AMBush spending is up, but where are the increases? Percentages can be misleading because a large % increase in a small budget is still a small number.
04 outlay will be about $2.3 Trillion up $500 Billion from $1.8 Trillion in 2000.
$160 Billion HHS
$120 Billion Defense
$80 Billion SS
$50 Billion HS
$40 Billion Labor
$30 Billion Ed
$20 Billion VA
Health Care costs are skyrocketing and increases are 1/3 of total. $180 Billion (VA+HHS)
Defense/HS is $170 Billion Another 1/3
Labor costs are due to unemployment, less than 1/10 of increase
SS spending has nothing to do with Bush 1/6 of increase
Education is where additional money is spent, 1/17 of increase
The rest is chump change.
It is clear. To decrease the rate of spending, military procurement needs to be controlled and rising health care costs must be addressed. Lowering unemployment would help both labor and health care numbers.
The program spending that most inflames the passions contributes the least to the budget and spending increases.
Posted by: bakho on June 16, 2004 01:06 PMBrad wrote:
"[The AEI] doesn't want you thinking that the axe Reagan took to the discretionary domestic side was largely offset by increases in defense spending that had relatively little effect on the strategic balance vis-a-vis the tottering Soviet Union (more submarines, anyone?) and by the explosion of interest payments on the debt produced by the Reagan deficits."
Not inflation-adjusted, not a pct of GDP, and doesn't show deficit, but this plot
does show the time path of discretionary defense and non-defense spending:
http://anonymous.coward.free.fr/temp/spending_components.png
Can we include the total interest on Reagan's debt in Reagan's balance sheet? It seems a bit unfair to charge interest to the poor sucker in office when it comes due.
Posted by: mac on June 16, 2004 11:14 PMDiscretionary defense and non-defense spending as percent of GDP:
http://anonymous.coward.free.fr/temp/spending-gdp.png
Mac-
If you subtract the interest payments on debt due to Reagan and Bush from the 8 Clinton budgets, you find that Clinton ran a net surplus. Debt service payments from 1993 to 2000 were $1.8 Trillion. National debt increased by about $1.4 trillion between 1993 and 2001.
National debt has increased by about $1.6 Trillion since Mr. Bush took office.
Posted by: bakho on June 17, 2004 06:55 AMgiles hunt wrote, "Without taking anything away from the Clinton economic gains, can we not pause to praise GHWB for his civic-minded politically suicidal budget deal?"
It *is* true that a sound foundation for Clinton's surpluses (aside from the economic boom in the latter part of his era) was the 1990 Budget Enforcement Act, which was essentially a compromise between GHWB and Democrats in Congress.
The Act expired in 2002. Guess which party isn't enthusiastic about reinstating it in its original form?
http://www.truthandpolitics.org/budget-basics.php#detailed-5
Posted by: liberal on June 17, 2004 12:25 PMThanks to Jim Glass for demolishing bakho's non-inflation adjusted comparison. But, truthfully, bakho, didn't it pain you to give so much credit to Reagan?
Posted by: Patrick R. Sullivan on June 17, 2004 01:31 PMPatrick,
In re, "Those low figures for spending are because of huge (and unexpected) increases in GDP, not of spending restraint."
1) Why doesn't it therefore count? We are talking realtives here.
2) It's not as if GDP growth of 31% is meagre.
3) Annual average real GDP growth over Reagan's second terms compares well with Clinton's-- 4.28% (1984-1988) vs. 4.104% (1996-2000) (from NIPA Percent Change From Preceding Period in Real Gross Domestic Product)
The conclusion "And the comparison with the second Clinton Admin. is silly" doesn't follow since the 2nd Regean terms seems to have done better, slightly. The question of comparative fiscal restraint doesn't seem as silly as you suggest.
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