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  • [Updated] Yes, Paul Krugman, Spending Has Steeply Increased

    In his Monday “Hey Small Spender” column, New York Times columnist Paul Krugman bizarrely denied that federal spending has significantly expanded over the past two years. He asserted that “[t]here never was a big expansion of government spending” and “the big government expansion everyone talks about never happened.”

    Yet for his talk about a “fact-free” disinformation campaign, Krugman curiously provides no data on total federal spending. This may be because all official budget data reveals a different story. According to President Obama’s own Office of Management and Budget—the keepers of the official data on government spending—federal spending has just finished its largest two-year surge in nearly 60 years, leaping from 20.7 percent of the economy to 25.4 percent (see Table 1.2 here), the highest spending level in American history outside of World War II.

    Overall, Washington is spending 23 percent more today than it did two years ago. Quite a stunning increase given the concern about deficits and fiscal austerity other nations are embarking on. The Congressional Budget Office and Treasury Department show similar figures. So where are the facts, one wonders, to support Krugman’s claim that the federal government has not significantly expanded?

    Krugman’s argument starts by stating that most spending increases have been concentrated in social spending and financial bailouts, rather than government employment, direct government purchases, or the creation of many new government programs. This is a non-sequitur. The composition of a federal spending increase—whether it goes towards Medicaid, direct purchases of fighter jets, state bailouts, new federal employees, or new government programs—isn’t the same as how much federal spending has increased.

    The broader purpose of Krugman’s column is to rehabilitate the outdated myth that government can spend its way to job growth and prosperity. Washington’s massive spending spree has, by any objective standard, failed to create jobs. So Krugman simply denies that this spending ever happened, despite reams of official evidence to the contrary. Furthermore, the type of spending that Krugman concedes jumped—unemployment and social spending—is among the most stimulative according to his Keynesian economic theories, yet the unemployment has not even responded minimally. This spending’s complete failure to create jobs should provide one more nail in the Keynesian coffin.

    Krugman can argue that the historic surge of spending and deficits since 2008 is too small for his taste. But his claim that “[t]here never was a big expansion of government spending” just doesn’t add up.

    UPDATE: Here are a few points to address some of the more prevalent responses we’ve seen in the comments section:

    1) Some have stated declining GDP explains the entire rise in federal spending as a percent of GDP. Table 1.1 of the OMB Historical Tables says otherwise:

    2008 spending – $2,983 billion
    2010 spending – $3,720 billion.

    2) Others assert that federal spending hikes merely offset state & local spending cuts. However, *total* spending has leaped. OMB is the official scorekeeper, and Table 15.2 of the Historical Tables shows a 10% increase in 2009 alone. And indications are that it increased again in 2010. Perhaps a 10% increase isn’t enough for Paul Krugman, but its a healthy increase to most people.

    3) Some of Krugman’s defenders are using a bait and switch. He wrote “[there never was a big expansion of government spending” and “the big government expansion everyone talks about never happened.”

    Now his defenders say that Krugman merely said *stimulus* spending didn’t increase enough. While the body of his op-ed made some of those distinctions, his summary argument — again, quoted above — asserted that *total* government spending didn’t grow significantly. That is demonstrably false.

    Posted in Economics [slideshow_deploy]

    53 Responses to [Updated] Yes, Paul Krugman, Spending Has Steeply Increased

    1. @notpjorourke, Alexa says:

      Taking the 1950-1995 trend line you get to about the 25% we see today. The downward blip from 1995-2006/8 shows that for all the attention given to US Presidents on spending it's control of the congress that is the true bellweather. That makes sense to anyone who's read the contitutuion, which would of course rule out any member of the mainstream media.

    2. Jim, Newton MA says:

      It's obvious what Krugman was talking about (dollars, not % of GDP), and your assertion that he is lacking facts is as deceptive as you claim he is trying to be.

      I have no idea what level of government spending is 1) too much or 2) too little, but I do object to blatant misrepresentation of others' arguments. If you feel that raw dollars is not a useful metric for evaluating the rate of increase in government spending, then make the case! I'd love to read what you come up with.

    3. Boom says:

      You made the very argument Krugman decimated, using the ratio of spending per GDP to hide the fact that actual spending (the numerator of the ratio) didn't spike, but instead GDP (the denominator of the ratio) dropped.

      But lets assume your method is the right way to judge increases or decreases in federal spending. So, if total federal spending remains unchanged, and GDP increases, resulting in a crash of the ratio of fed spending per GDP, then would you call that cutting government?

      Or let's put it another way. If my salary takes a hit, but i spend the same amount that year, I don't conclude that the resultant debt was from massively raising my spending.

    4. Boom says:

      Then you follow with a classic strawman.

      Keynesiism was not followed these past 2 years. Keynes says we needed a national increase in spending of 1.5 to 2% of GDP, given the fundamentals. That would by $1.5 to $2 Trillion of increased spending nationwide. So what did we get? ~$800 Billion stimulus, ~half to taxes, so ~$400 Billion spending, on the FEDERAL level, which is not the same as nationwide, right? Well, what about the rest of the nation? That would mainly be the states, right? So, what happened with state spending? Did it increase too? Uh oh, it didn't. In fact, it dropped drastically, more than offsetting the federal increase. So, we never had close to a Keynesian response, unless Keynes said something about only the federal level matters, which i'm quite sure he didn't.

      To put it simply, no, we never did have an increase in government spending. We had an increase in federal spending, offset by decreases in other types of government spending.

      These facts probably upset you, since you routinely ignore them. That you ignore them says the most about which side has the right argument.

      Hmmm, will Heritage post my comment?

    5. bolleat says:

      Hey Boom,

      If your salary takes a hit you have to cut your spending or you will be living in the gutter. The point here is our GDP has taken a hit yet our spending has increased or remained the same. Either way we will all be living in the gutter. We need to cut spending and entitlements to recover not continue or increase spending as Krugman would like!

    6. Brian Riedl Brian Riedl says:

      Ok, you want to by dollars instead of %GDP, fine.

      Table 1.1 of the Budget Historical Tables http://www.whitehouse.gov/omb/budget/Historicals/

      2008 spending – $2,983 billion
      2010 spending – $3,720 billion.

      The numbers are right there, you just need to look them up.

      Brian Riedl
      The Heritage Foundation.

    7. JohnR22, Michigan says:

      I understand that tomorrow Krugman will have an editorial in the NYT explaining that unemployment is REALLY only about 4%…he'll provide all manner of statistics, as well as some quotes from experts like George Soros, proving it's true. Krugman, like all agitprop propagandists, understands the value of the BIG LIE. WHen times are tough, don't spread lots of little lies, it's better to come out with a few WHOPPERS. I promise you the 20% of voters who describe themselves as liberal will swallow everything Krugman puts out.

    8. Brad, Chicago says:

      The argument Krugman uses to "decimate" the point this article makes is disingenuous, itself. Krugman makes his point on the total of all government spending, including local and state government. I can only assume that he's including the budgets of those entities, because he uses the reduction in their employment numbers to account for a decrease in "government employment." The problem with that, is that when most of us refer to the growth of government, we aren't referring to state and local governments. We're referring to the federal government, which certainly is increasing its employment and expenditures. Krugman, himself, says the local and state governments made "drastic spending cuts," which is fine, with us. If those entities made cuts and the total stayed the same, the federal government must have increased (drastically, perhaps?).

      I also want to defend the use of the % of GDP measure, as I see it. Think about where the federal government's budget comes from. Tax revenue is proportional to GDP (not perfectly directly proportional, but generally). If a budget is based on revenue (which most businesses have to do to avoid going bankrupt), it should decrease if revenue (a.k.a. GDP) decreases. Instead of that, the federal government is in a position to borrow money to cover that decrease, instead of changing their behavior, which allows them to maintain or even (as in this example) increase spending. Small fluctuations in the % of GDP measure can be misleading, but a difference of nearly 5%, like we see in this situation, highlights the government's problematic response to the economic environment.

      The problem with the stimulus was, partly, that they didn't spend enough. The whole point was that there were "shovel ready jobs" that could employ people immediately. A year and a half later, billions of dollars aren't spent. That is the proof that the stimulus could not have been big enough to fix things. We couldn't spend the amount that was approved. Our government does not work quickly or efficiently enough to deal with a project of that magnitude. I don't know whether to admire the administration's faith that it would work or decry their naivete.

    9. sdemetri, South Port says:

      Krugman's blog still has posted the raw numbers from the Bureau of Economic Analysis and he states, correctly imho, "Spending hasn’t surged; in fact, it grew more slowly in the two years after Lehman collapsed than in the two previous years, despite a sharp rise in spending on safety-net programs." The raw numbers shown from the BEA supports this. Growth in spending increased more in 2006 to 2008 than in 2008 to the present.

    10. Boom says:

      You do realize there's a difference between government spending, and federal spending?

      Are you bait-and-switching on purpose? is there any econ theory reason why federal spending dollars are more economically important than government spending dollars? if so, i'd love to hear it, but if not, then i have to side with Krugman on this one.

      Here is the table on government spending:
      http://www.bea.gov/national/nipaweb/TableView.asp

      Note when W took office, ~3T in total government spending. at the start of his 2nd term, ~3.8T, about a 26% increase. at the end of his 2nd term, 4.7T, another 24% increase. in the 1.5 years since then, government spending has increase to 5.26T, an increase of 12%, or 8% per year, which is barely above W's average of a 6% per year increase.

      Since the end of the 1st quarter '09, we've seen a ~$200B increase in government spending. Greater than zero, true, but hardly a Keynesian response.

      The numbers are right there, you just need to look them up.

    11. Steve, Bellevue, WA says:

      The thing this blog entry missed was that Krugman's column oscillates between talking about "federal government" and "all government" including state and local governments.

      The part of his argument that is as bizarre as the part mentioned in this blog entry is Krugman's claim that government jobs overall have fallen under Obama, because, while federal government jobs have increased, government jobs at the state and local levels have decreased. It's as if Krugman is arguing somehow that Obama is responsible for both the increase in federal government jobs and the decrease in state and local government jobs, so we ought to hold him accountable for the aggregate effect rather than just the results at the federal level.

      Another interpretation of Krugman's observation is that power is being weakened at the state and local level and being concentrated at the federal level, which is part of what people are objecting to.

    12. Not Paul Krugman, Ch says:

      Why quibble over the base? Measuring federal spending as a percentage of GDP is clearly the most accurate way to gauge the effective federal tax burden on the economy, for the same reasons that businesses measure expenses as a percentage of net revenue.

    13. todd, chicago says:

      Okay, so you all have your favorite data to cling to. Here's the main thing missed by those pushing the BS about spending at absolute $$ levels. It doesn't matter. To extend your pithy example about your decreased pay–this argument about gov't spending is ALL about affordablity and prioritizing resources. If you spend like a drunken sailor after having your salary cut in half, your "flat" spending is going to kill you, right?!

    14. Eric B says:

      Also, for the Krugman fans:

      GDP (in Billions $) for 2005-2010 (that last number being estimated):

      12,445.7

      13,224.9

      13,896.0

      14,439.0

      14,237.2

      14,623.9 (estimated)

      From http://www.whitehouse.gov/omb/budget/Historicals/

      GDP barely dropped last year, and is looking like it will be up this year. So, again, spending has greatly increased, even while GDP has remained relatively stable.

    15. Jim Baird says:

      I just clicked through to your link that supposedly "demolishes the myth that government spending adds money to the economy". All due respect, you simply don't now how the monetary system works. You are talking nonsense.

      All government spending draws upon the Treasuries Fed account. When the Fed makes the transfer, it is directly adding new reserves to the banking system. Those reserves don't "come from" anywhere – they are simply marked up in the bank's Fed account. The bonds that the Treasury sells to "finance" the spending are, necessarily after the fact; they serve (in normal times at least) to drain the excess reserves from the system to prevent the overnight interest rate from dropping to 0. (Under the current ZIRP, the excess reserves just build up in the system, but the Treasury still has to sell them by law to "balance it's books")

      Let's take an example: say the Treasury buys an aircraft carrier for $1 Billion. It writes a check to the manufacturer, which deposits it in it's bank. The bank in turn presents it to the Fed, which credits the bank's reserve account. At some point (either before or after – the exact timing is not really relevant) the treasury sells an extra $1 Billion in t-bills, notes, or bonds. When the securities are paid for, the reserves are debited from the banking system (and promptly disappear, at least as far as the private sector is concerned; the Treasury gets its Fed account credited, but thats just internal accounting) and replaced with the securities. End result: the private sector is richer by $1 Billion. Until the Government taxes it away (which reverses the process and destroys the money) it remains in the private sector.

      This is not some esoteric theory – this is simply how the modern monetary system works. If you or your readers want to learn more, check financier Warren Mosler's site at http://moslereconomics.com.

    16. Sigivald, Oregon says:

      boom: Did you miss "Overall, Washington is spending 23 percent more today than it did two years ago."?

      Given that the %GDP change was 4.7%, that 23% would have to be… not percentage of GDP, but dollars, as Mr. Riedl's reply already showed.

      Sure looks like spending in plain dollars is up, and by… 23 percent.

      (24.7 by my math using the numbers given, but I'll chock the difference up to rounding and very slightly different sources.)

      Lastly, according to BEA, GDP is up (though very slightly) since 2008, not down.

    17. Robert Carruthers, S says:

      Was Krugman talking all government i.e Federal, State and Local? I know he has done this before. Don't misunderstand me, I think Krugman is a shrill for the Democrats and a disgrace to the economics profession.

      Putting off the adjustment at the price of making it worse is the stuff revolutions are made of. The US is trashing the cultural heritage – rule of law, property rights …etc that enabled it to become wealthy. The cost of re-establishing trust will be immense and may take years, from when the effort is commenced.

      It is terribly sad for America and all people that what was once a shinning light on a hill is instead Dante's inferno, with mortgage fraud representingt the eighth circle of hell.

    18. Spendthrift, America says:

      @Boom – "if my salary takes but i spend the same amount that year, and I spend the same amount that year" (and the year after that and the year after that….) I will eventually run out of money. That is where the US government is now. The debt will be monetized, it is inevitable.

    19. Robert Carruthers, S says:

      Was Krugman talking all government i.e Federal, State and Local? I know he has done this before. Don't misunderstand me, I think Krugman is a shrill for the Democrats and a disgrace to the economics profession.

      Putting off the adjustment at the price of making it worse is the stuff revolutions are made of. The US is trashing the cultural heritage – rule of law, property rights …etc that enabled it to become wealthy. The cost of re-establishing trust will be immense and may take years, from when the effort is commenced.

      It is terribly sad for America and all people that what was once a shinning light on a hill is instead Dante's inferno, with mortgage fraud representing the eighth circle of hell.

    20. richard40 says:

      Jim and Boom. You challenge the authors conclusions, and claim he is lying and deceptive, because he used the wrong measure of spending, and he immediately comes back with the figures that YOU demanded were the better measure, and they still show a huge spending increase under Obama. Before you challenge somebodies figures, shouldn't you at least actually look up the alternate measure you propose, and verify it actually supports your case.

      God, I knew these leftie trolls were pretty stupid, but I didn't think they would be quite this obviously stupid.

      But then again, we are talking about people who support a president who rails against the chamber of commerce for violating the law by spending foreign money on their adds when:
      1. They provide absolutely zero proof (even a leftie paper like the NY Times admitted that).
      2. His own campaign had no controls on foreign money it took in 2008.

      If they can swallow drivel like the foreign money charge, they will beleive anything that move-on or daily kos or Obama tells them. Its pretty sad that idiots like these actually participate in choosing our leaders.

      Thanks Brian for setting the facts straight.

    21. Drtaxsacto, Fair Oak says:

      Right on the button – the WSJ used CBO numbers on Monday but came to the same conclusion. I covered it at http://drtaxsacto.blogspot.com/2010/10/in-column-

      I wonder whether Krugman has been sampling the produce in California, assuming Proposition 19 passes.

    22. Gordon, Cayman Islan says:

      Treasury Dept.'s FMS reports outlays for first 11 months of FY 2010 at $3.176t here:
      http://www.fms.treas.gov/mts/mts0810.txt

      Which is 15.4% higher than the same period for FY 2008, not accounting for inflation.

    23. Marty says:

      Thank you, Brian.

      Of course, in the short term the recession only decreased GDP by a couple of percent and would have a negligible effect on the shape of the curve in the chart.

      Over the multi-decadal time frame, you have to correct at least for inflation, and correcting for GDP does that, plus (roughly) the ability of the economy to sustain a level of spending. If you're going to uise one chart, it is the most appropriate.

      What no one has mentioned is that the entire soending rise 2008-now is additional debt, which we and our children and their children will be servicing– a drag on growth for the next century, because we squandered the vast bulk of that additional spending on current consumption (and don't tell me that bailing out the teachers unions is an "investment," it insults my intelligence).

    24. Alan says:

      I guess Jim and Boom are wishing they could retract their comments right about now. Wishes don't change facts.

      For their thinking to have held water, our gdp would have had to have dropped 20%+ when the largest year over year contraction was around 6.8% (Dec 2008) and probably averaging a 3-4% drop for the year (If *my* thinking is correct)

    25. Josh says:

      Thanks Brian,

      I was just getting ready to look that up before you did.

      I am surprised on a near daily basis the people who don't think there has been a a massive spending increase over the last 2 years. I am adding your chart and favoriting your post to the ones I keep just to counter the same argument.

      Jim/Boom,

      I do not see how anybody can look at the GDP/real cash/whichever metric budget and not say there has been a large spending increase, especially during a time of a decrease in take in from taxing and tariffs. This is really bad management, whomever your political stripe.

    26. anon, anonopolis says:

      Krugman was pretty clearly making the claim that spending hasn't gone up since Obama took office, not since 2008.

      To make a precise refudiation of Krugman, how about putting a nice vertical line on that graph right at the Jan 20, 2009 mark and see where it cuts into that red line? From a non-partisan perspective, its a distinction without a difference: spending is out of control, especially since around 2000, period.

      But if you're concerned about whether the latest splurge got under way under president red or president blue, it makes apparently a difference, at least to Krugman (and Heritage).

    27. Tim says:

      Brian,

      I'm not sure Krugman is arguing that "spending hasn't gone up"; rather, it seems to me that he's taking issue with the conventional wisdom that spending has "surged." Even when you look at raw numbers, like in your response to Jim, that data is still contextual. Look at the trend of Government spending over the past 5 years and it's pretty obvious that Obama hasn't done anything out of the ordinary.

      I also think Boom has a good point: since GDP is the denominator in the "as a percentage of GDP" data, the fact that it plunged seems like an a priori case for considering that maybe the recession itself has more to do with the deficit than "runaway Government spending."

    28. mr burns says:

      But $2,983 billion can't be less than $3,720 billion. Paul Krugman says so and he is a genius .

    29. Mark G says:

      To be fair to Krugman, he was talking about combined federal, state, and local spending. You only showed federal. On the other hand, Krugman did not present any figures. He just *knows* that local spending went down by amounts equivalent to the stimulus.

      There is also the matter of the tax cuts. Krugman dismisses them but the cuts were structured so that people would only have a few extra dollars at the end of a pay period. The hope was that this would be too small to bother saving so it would be spent. This means that there must have been *some* stimulus effect from the tax cuts so they should be included along with the other government spending.

    30. Mark G says:

      Since Krugman was talking about total spending instead of federal spending. Here is a web site that shows spending at all levels.
      http://www.usgovernmentspending.com/

      This disproves Krugman's thesis that federal spending was offset by state and local spending. Actually, spending went up at all levels with an unusually large jump between 2008 and 2010.

    31. sa in chicagoland says:

      Defined: "Large Increase in Spending"

      A large increase in spending occurs when a trend-line is not sustainable. Furthermore, a large decrease in spending occurs when a trend-line would rapidly take you to zero.

      Hilariously, listening to liberal economists, they whine and moan about fractional cuts to a program's budget (1% reduction in highway funding? Oh, the humanity!), but don't bat an eye at 20% *yearly* increases.

      Imaging proposing a 20% reduction in funding to, say, Social Security. Or, for that matter, farm subsidies. Any program, really.

      You know; dropping funding down to Clinton levels.

      In fact, here is an article where he (Krugman) compares '05 spending & revenues to 1950s revenues.

      http://news.google.com/newspapers?id=i1UeAAAAIBAJ

      The degree to which revenue "plunged"?? From 18% to 15%. About a 17% decrease. Over 50 years!

      Krugman is an intellectually dishonest clown. He lost all credibility when he switched from berating Bush for 'driving us into record debt', to blaming Obama for dramatically underspending.

      To Krugman, no tax cut has any merit, and no spending initiative is merit-less. He'd argue for 100% confiscatory taxes, with the resulting revenue used to bury Gold in Keynesian money pits. It's shocking that the man won a Nobel prize; it gives him too much credibility. He's no different than the crew at MSNBC; slightly more astute, but with as little integrity.

    32. DavidT says:

      Krugman's point was that the increase in federal spending was largely offset by state and local cuts. You keep on saying "federal spending has too increased a lot" but you completely ignore his point that *total* government spending hasn't. (It has increased as a percentage of GDP but that is another matter, and is due to the decline in GDP, not to any supposed large increase in total government spending.)

    33. Pingback: Instapundit » Blog Archive » REALLY? Yes, Paul Krugman, Spending Has Steeply Increased. Well, duh….

    34. Patrick, Syracuse, N says:

      Brian,

      Weak arguments only lend more credibility to Paul. There are more layers to government than the Federal level, and they too account for spending. This is reflected in his numbers and a quick gloss over prior blog posts. For example, if you honestly believe he is speaking about federal spending alone, wouldn't his outlay numbers reflecting >$5 trillion be a quicker way to discredit him? It's obvious Paul isn't saying what you're saying he is. And yes, it does matter where the money is spent… I suggest glancing at table 4.1. The outlays that increased most sharply are the same ones that increased because of the recession, and will certainly recede with recovery. And that is relevant, no matter what you say.

    35. James Conran says:

      Brian,

      I don't know if you aren't bothering to read Krugman with care or are hoping your readers won't but the point he has repeatedly made, including in the column you refer to, is that Federal spending increases have been counterbalanced by local and state-level cutbacks. So to isolate federal spending misses the point, deliberately or otherwise.

    36. Erik, Colchester says:

      Krugman's statement “[t]here never was a big expansion of government spending” is referring to TOTAL government spending not just federal spending. His whole point is that increased federal spending has been offset by cuts in spending at the state and local level.

    37. Corn Flake says:

      The Krugman article you are bashing said no such things and made no such claims. If is always frustrating to listen to conservatives attack straw man arguments they they create themselves.

      Maybe it would help you to go back and read the article again. Krugman did not deny that there was spending going on…he specifically (and you can't miss it if you can read at a 3rd grade level) rebuked the conservative straw man argument about JOBS STIMULUS… he said there were no jobs programs and conservatives were complaining about all the money being spend for JOBS programs and being called stimulus… There are baffoons on both side of American politics because no one cares what anything really means anymore. you could at least debate what Krugman was talking about. That would be interesting… but this article is just nonsense… and i won't eve go into your inability to separate the previous administrations spending from this one….I already think it would be impossible to explain to the average conservative.

    38. Peter Creech, Lou9is says:

      In defense of Krugmann (my lips are burning as I say this), he may be accurate in what he is saying while your argument may be a little misleading. I don't know the answer myself. However, your column showing a huge leap in spending a a % of GDP is a poor way to promote your title's premise. That jump can occur with either a flat gdp with increased spending or a falling gdp with flat spending. If you are trying to inform us conservatives so we can push the agenda, using fuzzy graphs is a poor way to proceed. Is your background in political science or math/economics. Your post has the level of commentary I would expect of a high schooler's insight, or Krugmann. Honesty and facts will move us forward, not dissembling.

    39. Larry Signor, Fort V says:

      Whether federal spending increased is not Krugmans issue. He points out, quite correctly, that cumulative government spending, i.e. state local and federal, has been flat Research does not support that proposition. Government spending as a percentage of GDP has surged.

      http://www.usgovernmentspending.com/downchart_gs….

      There is more than one straw man in this argument.

    40. Surellin, Columbus O says:

      I distinctly recall, back when the stimulus bill was first being debated, that Dr. Krugman's "back of the envelope" estimate was that $660 billion would be just about right. So, now $787b was not sufficient, the good doctor has been arguing for yet more for the last several months, and now he says essentially that, hey, all that debt is an illusion anyway. The man is spiralling headfirst down the toilet of delusion.

    41. Brian Riedl Brian Riedl says:

      A few responses

      1) Yes, *total* spending has leaped. OMB is the official scorekeeper, and Table 15.2 at http://www.whitehouse.gov/omb/budget/Historicals/ shows a 10% increase in 2009 alone. And indications are that it increased again in 2010. Perhaps a 10% increase isn't enough for Paul Krugman, but its a healthy increase to most people.

      2) The true bait & switch here is by Krugman and his defenders. He wrote “[there never was a big expansion of government spending” and “the big government expansion everyone talks about never happened.”

      Now his defenders say that Krugman merely said *stimulus* spending didn't increase enough. While the body of his op-ed made some of those distinctions, his summary argument — again, quoted above — asserted that *total* government spending didn't grow significantly. That is demonstrably false.

      3) The issue of whether the spending hikes were from a stimulus bill or other areas shouldn't matter. According to Krugman's (failed) Keynesian theory, *all* deficit spending stimulates regardless of how its spent, because it all represents new money into injected into the economy. Remember Keynes believed government could stimulate by paying one group to dig ditches and another group to refill them. So Krugman's attempt to rehabilitate Keynes fails.

      Brian Riedl

      Heritage Foundation

    42. Joe Zimmer, Mosinee says:

      Where is the spending totals from both the tax cuts and the two wars. If I remember correctly, the GOP never included the war costs in their reporting. They also did not account for the tax cuts in any way therefore increasing the debt. Now however the Obama administration is accounting for war costs. Gee, some one honest, some one dishonest. Whom do I believe?

    43. JOHN PAUL JONES, LAN says:

      I have plotted FEDERAL SPENDING minus REVENUE vs. YEAR. It demonstrates that the past few years have been a disaster. Also the projected numbers from the CBO are dismal. All of the government's increased taxes will make it worse. We are on the wrong side of the LAFFER curve.

    44. Boom says:

      As others have pointed out, yes GDP has not decreased significantly, and federal spending mainly acounts for the increase in the ratio of federal spending to GDP. I graciously concede that, as I am always happy to learn something. It's still an important distinction, as GDP has stalled while fed spending has not. For Brian's point, we want to know how much fed spending has increased over the trend. Including the trend in the increase is misleading, as communities expand and require more spending, etc., and this increase should not be pegged as Obama's.

      Unfortunately, Brain was not so gracious as to concede where he was wrong.

      It's been pointed out to him that government spending is not the same as federal spending. Yes, government spending has increased by 10%, as Brian noted in 1. However, he fails to notice that government spending has increased by nearly that amount historically. And also he cherry-picks 2009, ignoring the whole other year of Obama's tenure. As I already showed, under Obama total spending has increased 8% per year, while under W it increased 6% per year. Where's the beef?

      Contrary to what Brian implies in 2, Krugman's point has nothing to do with whatever some random person might classify as "significant' increases in spending, but rather on what level would be stimultive according to Keynes. Christina Romer's early 2009 paper, widely quoted by both sides, pegs this number at $1.2T. As shown, government spending only increased by $0.2T.

      So Brian, how has Keynes been proven to have failed, when spending only increased by one sixth of a Keynesian response?

    45. Brad, Detroit, MI says:

      You simply cannot use Krugman and facts in the same sentence. He needs to stop smoking his left-handed cigarettes and being an Obama cheerleader. I wonder if he still gets "chills" up his leg like that clown on MSNBC.

    46. ThomNJ says:

      It's obvious to me that krugman has decided to become a writer of fiction.

    47. MrUniteUs says:

      Ah yes the numbers game. What Heritage doesn't tell you is that it's spending numbers includes tax cuts. The 787 stimulus bill included over 300 billion dollars in tax cuts, Heritage also ommits the FY 2009 numbers which started in October 2008 while Bush was President.

      What Heritiage doesn't tell you was what was the return on the investments

      Acutully Government return on invest was over 100% and brought in over an extra 100 billion to the Treasury department

      Net result the budget deficit shrank 125 billion!.

      Down from the record 1.4 trillion dollar defict Bush left us to 1.29 trillion.

      It took spending to stop the free fall of jobs and the stock market.

    48. Blue Dog Michigan says:

      Krugman's assertions remind me of an old aphorism: Figures don't lie but, liars sure do figure!

    49. Steve S. California says:

      Sometimes, folks, the "truth" is just a lie that you've chosen to believe. What bothers me is that so many "experts" can't agree on what's what, and worse, we have politicians who don't understand what they're playing with manipulating our financial system with no regard for consequences. That's like giving a baby a grenade to play with. Sooner or later someones gonna get hurt.

      There's so little wisdom evident anywhere, including in the general population anymore, and we've done such a poor job when it comes to attracting persons with a public service mentality to our government, that we are out of control. Lying has become the preferred method of communication, as the ends justify the means (according to many). Venting spleen and ignoring anything which doesn't support ones own point of view is a recipe for disaster, which is now where we live. If we cannot refocus our attention and discuss the really important issues without judgement and venom, we are lost. The economy is also not the only critical item faceing us that has do-or-die implications for this nation.

    50. Peter, New York says:

      No matter how we got where we are the real issue is whether the federal government is now taking too great a share of GDP–up by 6% of so since Obama entered the WH–and using too much deficit spending to ensure economic growth and sustainability. More and more people accept that we have reached a point at which we must reconsider what the federal government should spend and what programs it should continue to support at current levels.

      As a conservative I am open to tax increases to address our structural fiscal problems, but not if it just means putting off difficult decisions that will put us on a more sustainable path to economic growth and prosperity. Liberals don't really seem to understand that we are in a place that if we continue without major entitlement reforms and reductions in both spending and the rate of spending growth, our nation is really and truly doomed.

      So whether Krugman is partly right or completely wrong no longer matters. We have to face up to the reality that we can't afford to continue doing what we have been doing. Liberals have to accept that taxing and spending won't provide relief anymore than the policy of borrow and spend Republicans adopted in recent years.

    51. Boom says:

      Pointing out Brian's propagandistic misdirections has become a bit of beating a dead horse, but let's have one more:

      Brian points out that in 2009, Obama's first year, spending increased 10%. Actually, the number is 10.1%, from Brian's table. But how much did spending increase in 2008, under George W Bush, from Brian's own table? 8.8%.

      Funny how Brian didn't mention that.

    52. Boom says:

      Oh OK, just one more:

      You know, it would be great if someone took total government spending from the Bush years and the Obama years, and put them in a graph, so we could all clearly see if there's been an "Obama Spike" in spending.

      Oh wait, that's exactly what Krugman did in his original post!

    53. Bobbie says:

      Can't believe the ignorance of democrat voters. MANY I'm sure, BEHIND OBAMA'S AGENDA… spinning all facts, distorting all truths. Just like the leaders they've elected and will elect again.

      UNBELIEVABLE WEAKNESS!

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