The Obama Hockey Stick

Last night for the first time in history U.S debt was downgraded. The Left still denies that President Obama has a lot of responsibility for this situation, instead laying blame on Republican refusal to raise taxes on the rich.

As I have written previously, it is dishonest to give voters the impression that tax increases on the rich is a solution to the deficit. In the latest projection by the Congressional Budget Office, the ten year deficit is estimated at 13 trillion dollars. By contrast, Obama’s various tax increases on the rich will only bring in 1 trillion in the same period.

The 13 trillion dollar deficit which the President helped create and long terms entitlement deficits are the main reason why S&P downgraded U.S debt, not the 1 trillion in tax increases which Republicans prevented.

As a response to the economic crises and based on ideological conviction, President Obama decided to expand federal non-defense spending more than any President in recent history. This unprecedented expansion of government can perhaps be justified by orthodox Keynesianism. But we should not allow the left to deny the magnitude of expansion itself, which they are trying to do.

Let me illustrate how much of a departure from history the Obama Presidency represents in terms of spending. I will graph non-defense federal spending as a share of GDP since 1975.

What emerges is what I refer to as the Obama Hockey Stick, parallel to the IPCC global warming Hockey Stick. While federal Non-defense spending was quite constant previous to Obama, it has risen rapidly under his administration.

The 2008 crisis was used to justify the expansion of government. But if the expansion was merely temporary, it would not have caused the U.S debt to be downgraded. As the Presidents chief of staff said: “Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.” Using the crises as a pretext, the plan was to expand the size and score of government permanently.

Thus according to the latest CBO long term budget outlook, and using the Whitehouse own estimate for defense spending, non-defense federal spending is projected to be 19.6% in 2016, when the recession is projected to be long over. Spending in 2016 is projected to be 4 percentage points higher than the historic average, with deficits of 6% of GDP.

Bruce Bartlett, a former libertarian Reagan advisor who in recent years converted to hard core liberalism, has described President Obama as a “moderate conservative”. Most of Bruce Bartlett’s recent writing is about promoting Social Democratic European policies as a role model for the U.S. He writes:

“an honest examination of his [Obama’s] presidency must conclude that he has in fact been moderately conservative”

Paul Krugman makes the same argument here. (Unlike Bartlett, Krugman is at least honest enough to call himself a liberal, though he doesn’t consider the President one.)

Bruce Bartlett innumerate argument ignores actual spending data. Instead his hilarious evidence for conservatism is that just like famously conservative Massachusetts Democrats and Mitt Romney, Obama-care was enacted instead of fully socializing health (not a joke, Bartlett actually writes this). Bartlett’s other equally hilarious evidence is that Obama’s advisors wanted a stimulus twice as large, i.e. 2 trillion dollars.

Taking over the U.S health care industry and the biggest fiscal stimulus in human history is the evidence for Obama being a “moderate conservative”. Bartlett incidentally also does not appear to understand that Obama did not have the votes and popular support to go much further in either case. This reminds me of an old communist joke (just a joke, don’t interpret it otherwise):

“Lenin’s widow, Krupskaya, is telling a group of young Pioneers:
-Lenin was so kind to children! One morning, he was shaving near an open window. And then a little boy walked past. And Vladimir Ilyich looked at him as he was passing by… and then the boy went away.
-So where is the kindness here, Nadezhda Konstantinovna?” one of the kids asked.
-Don’t you see!? With his razor, he could easily slit the boy’s throat! But he didn’t! That’s how kind Lenin was”

Well Bruce, perhaps in today’s’ Cuba or 1968 Paris President Obama would be considered a “moderate conservative” and you as a “libertarian”. But in America expanding government by more than a quarter and doubling the long term deficit deficits is rarely what we mean by fiscal conservatives.

Why don’t you guys on the left stop pretending to be “conservatives” and “libertarians”, and just defend the left-wing policies you are advocating and the deficits your policies are causing?


Interestingly, some readers do not accept my uncontroversial claim that President Obama raised spending. Instead, they seem to accept the excuse that everything is due to the 2008 crises and therefore temporary.

Let me expand by showing you some data from the 2011 Congressional Budget Office Long-Term Budget outlook. (GDP numbers are not identical, in part since the BEA recently updated historic GDP). I also added a proper inflation adjustment to defense spending. 2016 projected Non-Defense expenditure is even higher than I first wrote.

The CBO anticipates that the economy will have recovered by 2016, with unemployment at 5.3%. If the expansion of government we observe is only because of the crises, surely Non-Defense spending will go back to its historic rates of about 16%. Right?
Wrong. Non-Defense spending is projected to be 20.0% in 2016.

I added the projected years to a new graph.

What makes this a Hockey Stick is not only the fact that spending goes up in 2009, it’s that spending stays at those elevated levels.

In 2008, the CBO projection for Non-Defense spending in 2016 was 16.3% of GDP.

In 2011, after the crises and President Obama’s policy changes, the CBO projection of Non-Defense spending in 2016, when they predicts the economy has fully recovered, is 20.0% of GDP.

A small part of this is the crises itself; depressing GDP, though it appears the CBO projection of real GDP in 2016 (still assumed to be a recovered economy) has not changed much from 2008. I don’t know if they have re-estimated the cost of entitlements.

A significant component of the increase represents active policy choices by the President, such as expansion of education and social programs in his budgets, the Stimulus, the Health Care plan, and interest for the deficits that are financing current spending.

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