A Fact Check Assessment

 George Burns

Leading up to the November elections I will, on occasion, explore charges and counter-charges made by the major presidential candidates.  The primary source will be the findings of the Annenberg Public Policy Center (APPC) of the University of Pennsylvania.  It is a non-partisan organization which does not accept funding directly or indirectly from corporations, unions, partisan organizations or advocacy groups.  My purpose is to share with you a synopsis of their well documented findings. 

This edition deals with Mr. Romney's charge that President Obama is spending an "inferno" while Obama claims the binge "never happened."  Romney charges that the President is an out of control spender of American tax dollars.  Obama's argument is based on Rex Nutting's 22  May 2012 posting on the Wall Street Journal’s MarketWatch website in which he claimed that “federal spending is rising at the slowest pace since Dwight Eisenhower.”  Nutting's claim has been widely rebutted by Romney supporters.  APPC conducted an extensive fact check into both positions. 

All quotes are from the APPC's document indentified at the end of this paper. 

In 2002, the first year of President Bush's term, total federal spending was $2,011 billion.  In 2008, his last full year in office, it was $2,983 billion.  Spending went up every year Bush was in office.  Obama assumed office in January 2009 and took responsibility for massive federal spending set in place for that year by Bush.  The total spending for 2009 was $3,518 billion.  Obama, according to APPC, was responsible for at most $203 billion of that total an amount "well under half the huge increase that year".  APPC adds that "if current spending is an “inferno,” it’s one that Bush (and Congress) is mostly responsible for starting.  But it’s also true that Obama has done little to put it out."  Indeed, under Obama spending has continued to rise and is projected to reach $3,627 billion for 2012.

By historical standards Obama's spending is quite high.  APPC found that "Measured as a percentage of the nation’s economic production, it reached the highest level since World War II in fiscal 2009, and has declined only slightly since."  They add that more spending is to come.  They cite, for example, Obamacare which will introduce a new wave of spending starting in 2014 to subsidize coverage for the millions of people currently uninsured.  That will increase federal spending by an estimated $110 billion starting in 2015 with increases expected each year thereafter.  Exacerbating this rise in spending is that federal receipts are "running at levels that are well below historical averages. It is the combination of historically high spending and low revenues that is producing the current string of trillion-dollar annual deficits, and piling up debt. Those who blame deficits solely on spending ignore the other side of the ledger."

APPC asked the question "who is really reponsible" for the huge spending jump in 2009 and produced these indisputed facts. "Fiscal 2009 began Oct. 1, 2008. That was before Obama was elected, and nearly four months before he took office on Jan. 20, 2009."  It was a budget, as noted by the Associated Press, that combined “a record Pentagon budget with aid for automakers and natural disaster victims, and increased health care funding for veterans returning from Iraq and Afghanistan.”  Four more facts the APPC cite:

• Bush also signed, on Oct. 3, 2008, a bank bailout bill that authorized another $700 billion to avert a looming financial collapse (though not all of that would end up being spent in fiscal 2009, and Obama later signed a measure reducing total authorized bailout spending to $475 billion).
• On Jan. 7, 2009 — two weeks before Obama took office — the nonpartisan Congressional Budget Office issued its regular budget outlook, stating: “CBO projects that the deficit this year will total $1.2 trillion.”
• CBO attributed the rapid rise in spending to the bank bailout and the federal takeover of Fannie Mae and Freddie Mac – plus rising costs for unemployment insurance and other factors driven by the collapsing economy (which shed 818,000 jobs in January alone).
• Another factor beyond Obama’s control was an automatic 5.8 percent cost of living increase announced in October 2008 and given to Social Security beneficiaries in January 2009. It was the largest since 1982. Social Security spending alone rose $66 billion in fiscal 2009, and Medicare spending, driven by rising medical costs, rose $39 billion.

APPC continues by noting that "Ordinarily, an incoming president has little or no influence over spending that was approved under his predecessor...But in Obama’s case, he quickly pushed through Congress and signed a large economic stimulus measure containing a combination of tax cuts and new spending in fiscal 2009. And while Bush had signed full-year appropriations for the Pentagon, the Department of Homeland Security and veterans programs, he had left the remainder of government agencies that need annual appropriations funded only through March 2009."   AAPC found that Obama added $203 billion to the amount that Bush had already put in place.  He added:

• $2 billion for children’s health insurance.
• $114 billion in stimulus spending. Obama signed the stimulus bill Feb. 17. While headlines proclaimed a $787 billion price tag, about 27 percent of the total was actually for tax cuts, not spending. And most of the spending didn’t take place until after fiscal 2009. CBO initially put the total spent in fiscal 2009 at $107.8 billion, but the following year it revised the figure upward to $114 billion.
• $32 billion of the “omnibus” spending bill.  Obama signed on March 11, 2009, to keep the agencies that Bush had not fully funded running through the remainder of the fiscal year.  But it was Obama who signed the bill, so we assign responsibility for the full annual increase to him, not Bush.
• $2 billion for deposit insurance. The “Helping Families Save Their Homes Act” that Obama signed May 20 had among its many provisions some changes to the federal program that insures bank deposits.
• $31 billion in “supplemental” spending for the military and other purposes.
• $2 billion in additional “Cash for Clunkers” funding. Obama signed this measure Aug. 7, providing “emergency supplemental” funding for a stimulus program that offered $3,500 to $4,500 to car owners who traded in an old car for a new one with higher fuel economy. Nearly all was spent in fiscal 2009. 
• $20 billion for GM and Chrysler bailouts. At one point the government had paid out nearly $80 billion to support the automakers. But some of this was Bush’s doing, and much has been repaid and will be in the future.

APPC analysis found that Obama deserves responsibility for somewhat more fiscal 2009 spending than either Nutting or Romney supporters assign to him. "Spending in that year shot up an incredible $535 billion" over the previous year. Nutting claims that Obama was "responsible for only 26 percent of that increase".  But, APPC concludes that Obama can fairly be assigned responsibility for as much as 38 percent.  APPC also disagrees with "Nutting’s conclusion that Obama’s increases are the lowest since Eisenhower. Not only should Nutting have measured Obama’s increases from a lower base, in our judgment, he also fails to take account of inflation, which has been extraordinarily low during Obama’s term."

The TARP effect.  It has been claimed that the 2009 spike in spending as a result of TARP would be followed by a substantial drop in 2010.  That did not happen.  APPC notes that the TARP effect has been rather modest because TARP spending was much less than $700 billion because Congress reduced the authorization to $475 billion.  TARP spending in 2009 amounted to $154 billion.  The totals not spent in 2009  ($108 billion) and 2010 ($39 billion) are "recorded as negative spending rather than as increased revenues".   According to the CBO "Those artificial reductions brought down federal spending by just 3 percent in fiscal 2010, and 1 percent in fiscal 2011. Even without those reductions, Obama’s spending increases wouldn’t come close to equaling the average annual increase under Bush."

APPC adds that "the spending Obama inherited was so high that his rather modest increases keep it at a level that is extraordinarily lofty by historical standards."  Consequently, spending levels started by Bush coupled with Obama's increases caused "spending in fiscal 2009 [to] hit 25.2 percent of GDP — the highest since 1945.  Since then they have only minimally declined. "It was 24.1 percent of GDP in both fiscal 2010 and 2011. Spending for each of the last three fiscal years was higher than any since 1946...Obama has also committed the government to some big spending in future years" so these current percentages will not decrease.  We can expect them to increase.  According to the CBO insurance provisions of Obamacare "will cost $58 billion in fiscal 2014 and reach $110 billion in 2015, rising each year thereafter. Those costs will total nearly $1.3 trillion through the year 2022."

Regardless of who wins the presidential election another spending showdown is looming. "The government’s borrowing will soon force Congress to consider raising the legal debt ceiling once again, probably early next year" resulting in a clash over "spending levels and government revenues".

APPC concludes its analysis by pointing out that "while spending as a percentage of GDP is running at the highest level since the 1940s, tax revenues are also low by historical standards. For fiscal 2009 and 2010, receipts were just 15.1 percent of GDP, and last year they inched up to 15.4 percent. They haven’t been that low since 1950. And prior to 2009, the average since the end of World War II was 17.8 percent."

So, we can conclude that Romney was a bit disingenuous in his charge that Obama has overseen a spending inferno.  It is fair to say, however, that while Bush (and both his predecessors and congresses over the past 100 years) spawned the current extraordinary spending levels, Obama has done nothing to deal with the problem of excessive government spending.  Rather, he has increased spending levels, albeit modestly, in his three-plus years in office.  What should now concern us all is that he has set the stage for ever increasing spending at a time when tax revenues cannot possibly keep pace.  That means more borrowing and more borrowing is a recipe for disaster.  We must decide this November who will lead the charge to fix the problem of decreasing federal revenues and out of control government spending - Romney or Obama.   This is not a Republican, Democrat, Independent or Libertarian issue, it is an American issue.

Source:  http://factcheck.org/2012/06/obamas-spending-inferno-or-not/