(CNSNews.com) – President Barack Obama on Wednesday staked his claim to being the most effective fiscal conservative to serve in the White House in more than half a century.
“Since I’ve been president, federal spending has risen at the lowest pace in nearly 60 years,” Obama said at a campaign event in Denver, Colorado.
“Yes, we’re going to streamline government,” Obama said. “There’s more waste to be cut.”
Inaugurated on Jan. 20, 2009, Obama has now presided over the start of three fiscal years—2010, 2011, and 2012. According to the historical tables published by his own Office of Management and Budget, these are three of the only four fiscal years since the Japanese surrendered on Sept. 2, 1945, that the federal government has spent more than 24 percent of GDP.
The fourth fiscal year since the end of World War II in which the federal government spent more than 24 percent of GDP was 2009. That fiscal year started when George W. Bush was president and ended when Obama was president.
On the first day of fiscal 2009–which was Oct. 1, 2008–then-Sen. Obama voted for the $700-billion Troubled Asset Relief Program. On Feb. 17 2009, after he became president and while his party controlled both houses of Congress, Obama signed a stimulus bill that the Congressional Budget Office has determined had a 10-year price tag of $831-billion.
In fiscal 2008, the federal government had spent 20.8 percent of GDP. But in fiscal 2009, buoyed in part by the TARP Obama voted for and the stimulus he signed, the federal government spent 25.2 percent of GDP–an increase of 21.2 percent from the year before.
In the years after fiscal 2009, during the Obama presidency, annual federal spending has not dropped below 24 percent of GDP.
Before 1842, the federal fiscal year was the same as the calendar year. Since then, fiscal years have straddled calendar years and have been numbered by the year in which they end. From 1842 to 1976, they began on July 1 and ended on June 30. Since 1977, they have begun on Oct. 1 and ended on Sept. 30.
When measured by the net change in annual federal spending as a percentage of GDP during their presidencies, President Bill Clinton currently holds the record as the as the post-World War II president who restrained spending teh most. In fiscal 1993, which started under President George H.W. Bush, the federal government spent 21.4 percent of GDP. In fiscal 2001, the last fiscal year that started under Clinton, the federal government spent 18.2 percent of GDP–or about 15 percent less than it had in fiscal 1993.
After the 1994 election, Clinton had to work with a Republican majority Congress.
Ronald Reagan is the post-World War II president with the second-best record on restraining spending. In fiscal 1981, which started under President Jimmy Carter, the federal government spent 22.2 percent of GDP. In fiscal 1989, the last fiscal year that started under Reagan, the federal government spent 21.2 percent of GDP—or 4.5 percent less than it had in fiscal 1981.
While Clinton worked with a Republican Congress for much of his term, Reagan worked with a Democrat-controlled House during his entire time in office.
President Dwight D. Eisenhower cut federal spending as a percentage of GDP by 2.13 percent. In the first fiscal year that started during his presidency (1954), the federal government spent 18.8 percent of GDP. In the last fiscal year that started during his presidency (1961), the federal government spent 18.4 percent of GDP.
Even with the massive increase in federal spending as a percentage of GDP in fiscal 2009 (the last fiscal year to start under President George W. Bush), federal spending as a percentage of GDP has only dropped 3.7 percent since then, during the Obama presidency. Specifically, it has dropped from the 25.2 percent in fiscal 2009 to what Obama’s OMB estimates will be 24.3 percent in this fiscal year (2012).
Obama’s OMB is now estimating that federal spending will be 23.3 percent of GDP in fiscal 2013–a year for which appropriations have not yet been enacted.
Assuming this White House estimate proves correct, Obama will have cut spending as a percentage of GDP by 7.5 percent in the four fiscal years that started during his term. That would put him ahead of Reagan in terms of how much he would have cut federal spending measured as percentage of GDP. But it would still leave federal spending at 23.3 percent of GDP–or about 5 percent higher than the 22.2 percent of GDP the government spent in Reagan’s last fiscal year.
Assuming the White House estimates for spending as percentage of GDP for this fiscal year and next fiscal year prove correct, federal spending during the four fiscal years that started during the Obama presidency will average 23.95 percent of GDP. After fiscal 1946 and before 2009, there was not a single fiscal year in which federal spending went that high. On average, no other post-World War II president spent money at the rate Obama is spending money.
By contrast, for example, federal spending averaged only 20.5 percent of GDP during the eight fiscal years that started in George W. Bush’s presidency—even when you give Bush full and undivided credit for the federal spending of 25.2 percent of GDP that occurred in fiscal 2009.
As a percentage of GDP, assuming the estimates by Obama’s OMB are correct, average spending as a percentage of GDP under Obama will be 16.8 percent higher than it was under George W. Bush.
The OMB publishes historical data on federal spending as a percentage of GDP going back to fiscal 1930, which started on July 1, 1929. That year, federal spending was 3.4 percent of GDP. By fiscal 1941, which ended on June 30, 1941, about five months before the attack on Pearl Harbor, federal spending had increased to 12.0 percent of GDP.
In fiscal 1942, which began on July 1, 1941 and included the first seven months of World War II, federal spending as a percentage of GDP more than doubled to 24.3 percent.
This fiscal year—2012—according to Obama’s OMB, federal spending will again hit 24.3 percent of GDP, the same percentage it hit seven decades ago, in fiscal 1942, when the Japanese attacked Pearl Harbor and America went to war in Europe as well as in the Pacific.
In the four fiscal years following 1942, during which the nation fought and won World War II—n.b. fiscal years 1943, 1944, 1945 and 1946 (which started on July 1, 1945)—federal spending equaled 43.6 percent, 43.6 percent, 41.9 percent and 24.8 percent of GDP.
In fiscal 1947, the first full fiscal year after World War II ended, federal spending dropped dramatically to 14.8 percent of GDP and would not breach 24 percent again until fiscal 2009, which started on Oct. 1, 2009. That year, with the nation in a deep recession and facing a banking crisis, Sen. Barack Obama voted for the $700-billion Troubled Asset Relief Program that President Bush signed into law, and, when he became president, signed his own $831-billion stimulus plan.
Federal spending rose from 20.8 percent of GDP in fiscal 2008 to 25.2 percent in fiscal 2009.
But in fiscal 2010, 2011 and 2012, spending as a percentage of GDP did not drop down to anywhere near the 20.8 percent level of fiscal 2008. Instead, it hit 24.1 percent in 2010, 24.1 percent in 2011, and, according to OMB, it will hit 24.3 percent this year—the same percentage the government spent in fiscal 1942 as it entered World War II.
In the historic period reported by Obama’s OMB (since 1930), federal spending as a percentage of GDP in fiscal 2012 will be higher than it has ever been when the nation was not in a world war (as it was in fiscal 1942 and fiscal 1946) or in a deep recession (as it was in fiscal 2009.).
According to the National Bureau of Economic Resarch, the last recession began in December 2007 and ended in June 2009. It has now been over for almost three years.
“I’m running to pay down our debt in a way that is balanced and responsible,” Obama said at his Denver campaign event on Wednesday.
“After inheriting a $1 trillion deficit, I signed $2 trillion of spending cuts into law,” said Obama. “My opponent won’t admit it, but it’s been starting to appear in places–real liberal outlets like the Wall Street Journal. Since I’ve been President, federal spending has risen at the lowest pace in nearly 60 years. Think about that. Think about that.
“I’d just point out that it always goes up least under Democratic Presidents,” said Obama. “This other side, I don’t know how they’ve been bamboozling folks into thinking that they are the responsible, fiscally disciplined party. They run up these wild debts and then, when we take over we’ve got to clean it up. And they point and say, look how irresponsible they are. Look at the facts. Look at the numbers.
“And now, I want to finish the job,” said Obama. “I want to finish the job in a balanced way. Yes, we’re going to streamline government. There’s more waste to be cut.”
In inflation-adjusted constant 2005 dollars, according to Obama’s OMB, there are only four years since 1940 when the federal deficit exceeded $1 trillion. Those four fiscal years were 2009, 2010, 2011 and 2012.
In 1943, 1944, and 1945, the fiscal years at the height of World War II, the federal deficits were 531.7 billion, 501.1 billion, and 525.4 billion in inflation-adjusted constant 2005 dollars, according to OMB. In fiscal 2010 and 2011 which were non-recession years that started during Obama’s presidency, the deficits were $1.1530 trillion and $1,127.6 trillion in 2005 dollars. This fiscal year, OMB says the deficit will be $1,123.1 trillion in constant 2005 dollars.
[CORRECTION: This story initially said that President Reagan had the best record of restraining federal spending as a percentage of GDP during his presidency. In fact, as the story now notes, President Clinton has that distinction.]