Spending During the Obama Administration

I came across this The Fact Checker post today at the Washington Post website (okay, to be completely accurate, I came across the post first through this Politifact post addressing the same article, which then directed me to a list of Twitter posts about the Politifact rating on the subject matter, where at least one of the Tweets (oh I do hate talking about Twitter and Tweets) led me to the Washington Post article linked earlier) and I was intrigued enough that I decided to read all the way through the article.  I generally do not go to The Fact Checker, but I do go to Politifact on occasion.  I have posted before that I think that Politifact is a Clown Act, and my position in this regard has not changed.  But this has given me the opportunity to see whether I think the Washington Post's version of fact checking also qualifies as circus performance.  Let's get to it!

First of all, I think that it is important to note the title of the article: "The facts about the growth of spending under Obama."  The article then goes on to quote a statement made by White House Press Secretary Jay Carney on May 23rd:

I simply make the point, as an editor might say, to check it out; do not buy into the BS that you hear about spending and fiscal constraint with regard to this administration. I think doing so is a sign of sloth and laziness.

The Fact Checker then goes to work analyzing the numbers provided, but leads with the following right after providing the Carney quote:

The spokesman’s words caught our attention because here at The Fact Checker we try to root out “BS” wherever it occurs.

 Carney made his comments while berating reporters for not realizing that “the rate of spending — federal spending — increase is lower under President Obama than all of his predecessors since Dwight Eisenhower, including all of his Republican predecessors.” He cited as his source an article by Rex Nutting, of MarketWatch, titled, “Obama spending binge never happened,” which has been the subject of lots of buzz in the liberal blogosphere.

 But we are talking about the federal budget here. That means lots of numbers — numbers that are easily manipulated. Let’s take a look.

When I read Carney's first quote implying sloth and laziness on the part of reporters and then the second quote discussing the rate of increase of federal spending on the part of the Obama administration relative to previous administrations, I see two points that are being made that should be addressed.  First, are the reporters lazy and slothful, and second, is the rate of increase in spending during the Obama administration lower than that of all of Obama's predecessors since the Eisenhower administration?

I'm going to look at the second question/issue first because this is the only one that The Fact Checker bothered to address.  I'm going to present the numbers that first appeared in Rex Nutting's MarketWatch article.  Nutting starts counting spending during the Obama administration with Fiscal Year 2010 (beginning October 1, 2009) with the reasoning being that the budget for Fiscal Year 2009 (beginning October 1, 2008) was approved while George W. Bush was still president.  Nutting does make some adjustments whereby he attributes some of the 2009 spending to Obama, but the important point is that according to Nutting's method, Obama's major responsibility for the budget begins with Fiscal Year 2010.  With this as the starting point, we have the following spending numbers for the last few years: 2009 (Bush) - $3.52 trillion, 2010 (Obama) - $3.46 trillion, 2011 - $3.6 trillion, 2012 (from Congressional Budget Office's baseline projections of laws currently in effect) - $3.63 trillion, and 2013 (from Congressional Budget Office's baseline projections of laws currently in effect) - $3.58 trillion.  When you apply the compound annual growth rate (CAGR) formula to these numbers*, you get an annualized average growth rate of ((3.58/3.52)^(1/4)-1) 0.423%.  (Nutting just rounded it to 0.4%, but I like writing more numbers because they make my posts longer.)

The Fact Checker takes issue, however, with the method that Nutting used in placing Fiscal Year 2009 in Bush's column.  Instead, The Fact Checker decides it's more appropriate place that fiscal year under Obama's watch and instead (after some adjustments to the numbers in 2009) shows the years as follows: 2008 (Bush) - $2.98 trillion, 2009 (Obama) - $3.27 trillion, 2010 - $3.46 trillion, 2011 - $3.6 trillion, $3.65 trillion, and 2013 - $3.72 trillion.  There are a couple of notes to these data.  First of all, The Fact Checker uses Obama's actual proposed budget, as scored by the Congressional Budget Office, in projecting spending for both 2012 and 2013.  This is in contrast to what Nutting does in using the Congressional Budget Office's baseline score.  The Fact Checker is free of course to use this method, and in the end it may turn out to be the more accurate method (we shall not know until the final spending values are registered), but it is no more "correct," as they assert, than using the CBO baseline numbers.  And I can easily argue that The Fact Checker's use of Obama's budget number is less likely to be accurate in the end.  (I'll address this later.)  But let's just calculate The Fact Checker's annual growth rate from 2009-2012 - ((3.65/2.98)^(1/4)-1) 5.201%.  The Fact Checker then calculates the growth rate using their (or its) assumptions from 2010-2013, contrasting with Nutting's findings - ((3.72/3.27)^(1/4)-1) 3.276%.  The Fact Checker then states that Nutting calculated the annualized growth from 2010-2013 at 1.4%.  (Here they have gone to page two of Nutting's article, subtracted the $140 billion figure that Nutting mentions from the 2009 spending to get to $3.38 trillion, and then performed the same compound annual growth rate formula.  I get 1.448% when I apply the formula.)

But now we start to come to the really fun part about The Fact Checker's post!  "Of course it takes two to tangle - a president and a Congress(,)" The Fact Checker says.  Ha!  Pun humor!  The Fact Checker then goes on to say, "Obama's numbers get even higher if you look at what he proposed to spend(.)"  So of course they show actual spending figures from years 2010-2012 versus what the Obama administration requested.  (2010 - $3.46 trillion enacted versus $3.67 trillion requested, 2011 - $3.60 trillion enacted versus $3.80 trillion requested, and 2012 - $3.65 trillion enacted versus $3.71 trillion requested.)  And then The Fact Checker follows up with this paragraph:

So in every case, the president wanted to spend more money than he ended up getting. Nutting suggests that federal spending flattened under Obama, but another way to look at it is that it flattened at a much higher, post-emergency level — thanks in part to the efforts of lawmakers, not Obama.

So in effect, The Fact Checker chooses to give all the credit to lawmakers for the decreased rate of spending increases and not the Obama administration.  The logic behind this conclusion, of course, is necessarily that had Obama received all of the funds that he requested in exactly the areas in which he and the administration envisioned using them, then the administration definitely would have spent it all.  So The Fact Checker is using in building their case against Obama in part not what the administration actually did spend, but what he requested, since it was a higher value.  The natural thing to wonder is, if the Obama administration had requested a lower amount of money than what was actually enacted, would The Fact Checker choose to bring this up or consider it irrelevant since it was not actually what was spent?

Okay, so then we get to a paragraph where The Fact Checker says that the growth in federal spending would fall somewhere between the average annual growths during Clinton's (lower) and Bush's (43) terms in office, which is true according The Fact Checker's method of calculation.  But also in this paragraph, The Fact Checker says a number of things that are truly bewildering, for which it provides no link for the information.  Here is the passage in the paragraph:

At 5.2 percent growth, Obama’s increase in spending would be nearly three times the rate of inflation. Meanwhile, Nutting pegs Ronald Reagan with 8.7 percent growth in his first term — we get 12.5 percent CAGR — but inflation then was running at 6.5 percent.

So the claim is that the growth of spending under Obama is nearly three times the rate of inflation...  Well, when I go to the Bureau of Labor Statistics site and look for the consumer price index (CPI), there appear a number of different options to use to calculate the current inflation rate.  If I choose to use the change from April 2011 - April 2012 (224.906 - 230.085), I calculate an inflation rate of 2.303%.  If I choose to use the change from December 2010 - December 2011 (219.179 - 225.672), I calculate an inflation rate of 2.962%.  If I choose to use the change from October 2010 - October 2011 (to mirror the fiscal year) (218.711 - 226.421), I calculate an inflation rate of 3.525%.  Finally, if I choose to use the change to date this year an extrapolate that rate to the full year I would get ((230.085/225.672)^(1/4))^12-1) 5.982%.  Okay, so I have values of 2.303%, 2.962%, 3.525%, and 5.982% and as best as I can tell (you know, trying to work the complicated math), 5.2% is not close to three times the value of any of them.  There is the chance that The Fact Checker used different values to calculate the inflation to use as the basis for that claim, and it would have been helpful if it indicated where it received this information.

From there, The Fact Checker points out a discrepancy in what Nutting claims to be the growth rate in spending during Reagan's first term and what The Fact Checker calculates it to be itself.  Nutting claims 8.7% for the CAGR while The Fact Checker calculates 12.5%.  If one examines historical data provided in Table 1.1 on the White House Office of Management and Budget website, one can see that for Fiscal Year 1981, federal spending was $678,241 million while in Fiscal Year 1985, federal spending was $946,344 million.  So if you use these numbers to calculate the CAGR you get ((946,344/678,241)^(1/4)-1) 8.684%, a number surprisingly close to Nutting's value and not at all close to The Fact Checker's.  If, however, we choose to calculate the value the way The Fact Checker did earlier, we would use the years 1980 and 1984 to calculate the change for Reagan's first term and we would get ((851,805/590,941)^(1/4)-1) 9.572%.  And of course, this is also not really that close to The Fact Checker's value of 12.5%.  Of course, if The Fact Checker provided the numbers and source that used to calculate this number we could see the method used to arrive at the number, but I cannot imagine that The Fact Checker could actually find numbers that differed from the historical values used by the Office of Management and Budget.

And finally, in that paragraph (I am spending a long time on that one paragraph, I tell you), The Fact Checker states that inflation was at 6.5% during Reagan's first term.  Hmmm...  When I look at the December to December changes from December 1980 (just before Reagan took office) to December 1984 (just before Reagan's first term concluded), I calculate inflation values of 8.922% for 1981, 3.830% for 1982, 3.791% for 1983, and 3.949% for 1984.  And when you calculate the CAGR, you get 5.100% for the time making the majority of this first term.  (All of these values are calculated using data from the Bureau of Labor Statistics.) This is certainly a high value, but it is certainly not 6.5%, nor is it close to that value.  In fact, for the vast majority of that first term, the value was significantly lower than what The Fact Checker claims.  Again, if The Fact Checker can provide the source and equations used in calculating this value, it would be very helpful.

After this, The Fact Checker shows the spending under Obama as a percentage of GDP.  These numbers appear accurate, and it is true that since Obama has been in office, spending as a percentage of GDP has been higher than it has been at points since World War II.  But I do notice that though The Fact Checker had no problem using the numbers Obama had requested to challenge the notion that he has not radically raised spending, they do not show the GDP projections that the administration claimed would have resulted had they actually received everything requested.

And at last we get to The Fact Checker's Pinocchio Test (Oh Goodie!)...

Carney suggested the media were guilty of “sloth and laziness,” but he might do better next time than cite an article he plucked off the Web, no matter how much it might advance his political interests. The data in the article are flawed, and the analysis lacks context — context that could easily could be found in the budget documents released by the White House.

The White House might have a case that some of the rhetoric concerning Obama’s spending patterns has been overblown, but the spokesman should do a better job of checking his facts before accusing reporters of failing to do so. The picture is not as rosy as he portrayed it when accurate numbers, taken in context, are used.

And three Pinocchios are awarded in the end.  And that is apparently a lot of Pinocchios.  I won't go so far as to say that this analysis is lazy, because it does look like The Fact Checker wrote a lot of words, but it is certainly sloppy and borders on shoddy.  It presents questionable numbers, as I highlighted earlier, without providing sources for those numbers, and I strongly contend that it's analysis is terribly flawed when it comes to estimating what the spending level will be at the end of Fiscal Year 2012 and Fiscal Year 2013.  The Fact Checker criticizes Nutting for using the CBO baseline numbers when estimating Fiscal Year 2012 and Fiscal Year 2013 spending and criticizes Carney and the White House for not keeping the spending within context.  However, a very important context that The Fact Checker seems to ignore completely is that the likelihood of President Obama getting the money from Congress that he requested is virtually zero.  If I had the chance to ask The Fact Checker a question I would ask it - what that has transpired over the last year and a half or so leads you to believe that the president will get from this Congress the budget that he requests?  And why is it not more likely that the automatic budget cuts that are in the CBO baseline will kick in?  (Okay, that's two questions.)  (And here's a third.)  When is the next time that "Supercommittee" is going to meet to come to a compromise on debt reduction?  You, The Fact Checker, have provided absolutely no compelling reason for why Obama's requested budget should be used to project what actual spending will be.  As you have even pointed out, Obama has always been given less than requested.

To sum up, it seems pretty clear that if you use The Fact Checker's method for calculating spending increases and if you look at the spending increases relative to GDP and account for inflation, the Obama administration's increases in spending are not the slowest since the Eisenhower administrations.  However, this does not mean that the reporters are not lazy and slothful when it comes to covering this.  The numbers show that the rate of spending increases during the Obama administration are on average lower than those in the Bush (43) administration, even in his first term before the financial crisis.  The data suggest that if Bush (43) had remained in office, spending would have increased further than under Obama.  But this is not why the media are lazy and slothful.  They are lazy and slothful because very few of them have apparently bothered to investigate this notion that the Obama administration has increased spending radically.  They just seemed to take it at face value, and this sloppy and borderline shoddy The Fact Checker piece appears to be an attempt to provide cover for the reporters.

So, while the methodology used by Nutting, which Carney seemed to accept can certainly be debated, it is absolutely absurd for The Fact Checker to claim that its methodology is correct and not subject to debate.  And it would also be nice if The Fact Checker actually, you know, checked it's numbers and values and provided some more sources, lest it be accused of "sloth and laziness."