Monday, October 11, 2010

Obama-Small Spender?

In fiscal year 2008, the last fiscal year that Obama had no influence over, core federal spending (excluding interest payments and financial market bailouts) was $2,723 billion. In fiscal year 2010, core federal spending was $3,292 billion.

This means that there has been a 2 year increase of 20.9% in core federal spending.

Yet Paul Krugman still claims that Obama is a "small spender". His arguments for it is pretty strange. The first argument is that aid to people with little or no income, such as unemployment benefits, food stamps and Medicaid isn't really spending-a quite odd and indeed false view of what constitutes government spending.

His second argument is that state and local governments have recently begun to reduce their spending. This is largely true, yet it is not relevant for analyzing the economic policy of Obama and the Congressional Democrats as they don't make these decisions. They can influence them through aid to the states-and that has in fact increased.

So in order to reach the conclusion that Obama is a "small spender" Krugman has arbitrarily excluded the spending that has increased the most and included spending that Obama doesn't decide on. That says more about Krugman than about Obama.