Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Lady Gaga, and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Friday, January 25, 2013

Another look at Spending and Revenues

How many times have you heard Boehner, McConnell, Ryan or one of the legion of right-wing talking heads say, "We don't have a revenue problem, we have a spending problem?"  I refuted that lie repeatedly in this AB post and at the included links.   But this is one of those zombie ideas that simply will not stay in the grave.  

Therefore, some prominent voices have found it necessary to sing out again against the lie. I will add my humble quavery baritone to the chorus.

Here in Graph 1 is Kevin Drum demonstrating how Real Government Expenditures per Capita have changed under the last three presidents.

What we have isn't a spending problem. That's under control. What we have is a problem with Republicans not wanting to pay the bills they themselves were largely responsible for running up.

 Graph 1, Real Government Expenditures per Capita

By using real [inflation adjusted] and per capita numbers, Drum has introduced a couple of denominators.  Real expenses per cap is a rational way to display the data, but not the only way. So lest someone cry out about that ol' devil denominator, let's have a different look.

Via Paul Krugman we get Graph 2 and Graph 3, from FRED, showing total Government expenditures and Federal Government expenditures, respectively, on log scales.

Graph 2. Government Total Expenditures

Graph 3, Federal Government Total Expenditures

Yes, you can argue that spending was growing too fast under Bush, although it’s funny how few deficit scolds saw fit to mention that at the time. Or you can say that you just want less spending, although as always people who say this tend to be short on specifics. But the narrative that says that spending has surged under Obama is just wrong – what we’ve actually seen is a slowdown at exactly the time when, for macroeconomic reasons, we should have been spending more.

Remember, a log scale represents constant growth as a straight line, and zero growth as a horizontal line.  So, in pure dollar numbers, spending hasn't quite declined, but it has stagnated to almost zero growth.  Hence Drum's decline in inflation adjusted, per capita terms.

In Graph 4, we get one more longer range look, using Krugman's data series, this time on a linear scale.  Also presented is the difference between the two, which is the amount of spending by state and local governments.

 Graph 4, Government Spending at Different Levels

 The red line is total spending at all levels of governemnt, the blue line is federal only, and the green line is the difference, state and local spending.  Note that the green line flattens early in the recession

To bring things full circle, Graph 5 shows Federal Government current receipts.  Look at this and tell me we don't have a revenue problem.

Graph 5, Federal Government Current Receipts

To drive this point home, Graph 6 shows Federal Receipts as a fraction of GDP.  The purpose of the ratio is to provide context, using GDP as a proxy for the size of the economy.

Graph 6, Federal Receipts as a fraction of GDP

As you can see, revenues/GDP are in a historically low range.

- Federal spending is flat in nominal dollar terms.
- Federal spending is declining when adjusted for inflation and population growth.
- Federal revenues are far below trend lines based on any historical reference you chose.
- Federal revenues as a fraction of GDP are historically low.
- The Republican claim that we have a spending problem not a revenue problem is simply a lie, on both counts.
- Disproportional spending growth has only occurred under two presidents: Republicans Ronald Reagan and George W. Bush. 

Why do Republicans lie?

The truth is hostile to their agenda.  PK Explains.


Jerry Critter said...

"Why do Republicans lie?"

Because they can't win by telling the truth. There aren't enough old, rich, white men left.

Jazzbumpa said...

Yep, that's pretty much the point.

JzB [coincidentally an old white man - whachagonnadue?]

Anonymous said...

why do lib's think all Republicans lie? Well because they are not smart enough to understand the truth. They determine truth by how they feel about it and all truth relative.

Jazzbumpa said...

Anon - thank you far making my point so perfectly.

You offer a typical right wing lie, in the form of denial, meanwhile demonstrating a total immunity to facts and data.

But, of course, the "lib's" [sic] are the ones not smart enough.

Really - it just doesn't get any better.