It’s time to puncture the myth that libertarians are congenitally dour and pessimistic.
We’re going to look at some fiscal data that must be very depressing for President Obama and other advocates of big government.
But that means this information must be very good news for American taxpayers!
Here’s a chart looking at annual federal spending since 2000. You’ll notice that spending skyrocketed from 2000-2009 (a time when libertarians were justifiably glum), but look at how the growth of government came to a screeching halt after 2009.
Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.
In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.
When I’ve argued in favor of an overall cap on government outlays in the past, my leftist friends always said this would produce catastrophic consequences. They had lots of rhetoric about “unmet needs” and “human costs,” so let’s contemplate societal outcomes since 2009:
Did children starve? Nope.
Did widows die in the snow? Nope.
Did planes fall from the sky? Nope.
Did poisoned food plague the country? Nope.
Did sick people get turned away from hospitals? Nope.
Did the North Koreans take over the world? Nope.
Gee, it appears that spending restraint doesn’t result in chaos. Not that we should be surprised, based on research on “public sector efficiency” from the European Central Bank.
So we can logically conclude that spending restraint doesn’t lead to societal disarray. Now let’s look at what does happen when government is put on a diet.
I’ve periodically discussed my Golden Rule, which says that good fiscal policy takes place when government spending grows slower than the private sector.
And even though we haven’t had impressive growth during the Obama years, there have been modest increases in both nominal GDP as well as inflation-adjusted (real) GDP.
In other words, the Golden Rule has been in effect since 2009. As a result, the burden of government spending, relative to the economy’s productive sector, has been declining.
Here’s another chart that will be very depressing for the President and other statists.
What’s really remarkable is that we’ve seen the biggest drop in the burden of government spending since the end of World War II.
Heck, the fiscal restraint over the past five years has resulted in a bigger drop in the relative size of government in America than what Switzerland achieved over the past ten years thanks to the “debt brake.”
At this point, some readers may be wondering who or what deserves credit for this positive development. I’ll offer a couple of explanations.
The first two points are about why we shouldn’t overstate what’s actually happened.
1. The good news is somewhat exaggerated because we had a huge spike in federal spending in 2009. To use an analogy, it’s easy to lose some weight if you first go on a big eating binge for a couple of years.
2. Some of the fiscal discipline is illusory because certain revenues that flow to the Treasury, such as TARP repayments from banks, actually count as negative spending. I explained this phenomenon when measuring which Presidents have been the biggest spenders.
But there also are some real reasons why we’ve seen genuine spending restraint.
3. The “Tea Party” election of 2010 resulted in a GOP-controlled House that was somewhat sincere about controlling federal outlays.
4. The spending caps adopted as part of the debt limit fight in 2011 have curtailed spending increases as part of the appropriations process.
5. In the biggest fiscal loss President Obama has suffered, we got a sequester that reduced the growth of federal spending.
6. Many states have refused to expand Medicaid, notwithstanding the lure of temporary free money from Uncle Sam.
7. Government shutdown fights may be messy, but they tend to produce a greater amount of fiscal restraint.
And there are surely other reasons to list, including the long-overdue end of seemingly permanent unemployment benefits and falling defense outlays as forces are withdrawn from Iraq and Afghanistan.
The bottom line is that the past five years have been a victory for advocates of limited government.
But now for the bad news. All this progress will be wiped out very quickly if there’s not genuine entitlement reform.
The long-run fiscal forecasts, whether from the Congressional Budget Office or from international bureaucracies such as the IMF, BIS, and OECD, show that America will become a European-style welfare state over the next couple of decades in the absence of reform.
So let’s enjoy our temporary victory but work even harder to avert a future fiscal crisis.
[…] To elaborate on the second point, there have been three periods of spending restraint in my lifetime: 1) the Reagan years, 2) the Clinton years, and 3) the Tea Party years. […]
[…] To elaborate on the second point, there have been three periods of spending restraint in my lifetime: 1) the Reagan years, 2) the Clinton years, and 3) the Tea Party years. […]
[…] you want more recent evidence, we also had a five-year spending freeze after the so-called Tea Party Republicans took power in […]
[…] you want more recent evidence, we also had a five-year spending freeze after the so-called Tea Party Republicans took power in […]
[…] would be happy with a hard freeze (like we had for a few years after the Tea Party […]
[…] Republicans were able to impose some fiscal discipline on Obama after the Tea Party landslide of […]
[…] Republicans were able to impose some fiscal discipline on Obama after the Tea Party landslide of […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] good job. Too bad Republicans in Washington don’t push for similar policies (to be fair, they did restrain spending during the Tea Party […]
[…] good job. Too bad Republicans in Washington don’t push for similar policies (to be fair, they did restrain spending during the Tea Party […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] to convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] convince politicians to support spending restraint, it’s worth noting that the nation enjoyed a five-year spending freeze between […]
[…] did win the House at the end of 2010 and were somewhat successful in controlling spending for the next few years. And that’s when the economy did […]
[…] did win the House at the end of 2010 and were somewhat successful in controlling spending for the next few years. And that’s when the economy did […]
[…] It’s worth noting that there was a five-year nominal spending freeze between 2009 and 2014 (back when the Tea Party was influential), so it is possible to achieve […]
[…] can see the how government exploded because of TARP and Obama’s faux stimulus and then was briefly constrained during the Tea Party era (and is now climbing rapidly under […]
[…] have enjoyed periods of spending restraint, including a five-year spending freeze under Obama, as well as some fiscal discipline under both Reagan and […]
[…] the way, the chart also shows that Bush was a big spender and that we actually had a bit of spending restraint after the Tea Party-themed 2010 mid-term […]
[…] even had such an experience in the United States (back when Republicans pretended to care about […]
[…] bipartisan waste and corruption of Washington. And I think they even had a positive – albeit only temporary – […]
[…] grew too fast under Bush. It grew too fast under Obama (except for a few years when the “Tea Party” was in the ascendancy). And it’s growing too fast under […]
[…] cause lots of squealing in Washington. But we saw during the Reagan and Carter years, as well as more recently, that spending discipline is […]
[…] government spending – Ever since the brief period of fiscal discipline that occurred when the Tea Party had some influence, the budget news has been bad. Trump is totally unserious […]
[…] My biggest sin of omission in the interview is that I didn’t mention the de facto five-year spending freeze between 2009-2014, an achievement that largely overlapped with Ryan’s tenure as Chairman of […]
[…] the exception of 2010-2014, when the Tea Party briefly had a grip on the Republican Party, the burden of government spending […]
[…] the exception of 2010-2014, when the Tea Party briefly had a grip on the Republican Party, the burden of government spending […]
[…] and behold, we find that the deficit was falling rapidly when there was a de facto spending freeze between 2009 and 2014. But ever since 2014, spending has been growing more than twice the rate of […]
[…] (when we got mistakes such as the fake stimulus, Obamacare, and Dodd-Frank). Indeed, we even got some good policy later in Obama’s tenure, though the overall effect of his policies was negative. […]
[…] Thinking about whether to create a collection of “enjoyable charts,” the obvious choice would be the one from 2014 that showed how effectively the Tea Party-influenced GOP stymied Obama’s spending plans (that […]
[…] those who think modest spending restraint is impossible, don’t forget that we actually had a de facto five-year nominal spending freeze during the Obama […]
[…] freedom increased during the Reagan–Clinton years? And what about the fact that we achieved a five-year nominal spending freeze even with Obama in the White […]
[…] of 1 percent per year. Does that sound impossibly radical? Well, it’s what Republicans managed to achieve during the heyday of the Tea Party revolution, when they actually produced a five-year nominal […]
[…] the Obama years, we benefited from a five-year de facto spending freeze. Deficits dropped dramatically and the nation experienced the biggest drop in the relative burden […]
[…] I need to update the table because both the United States (between 2009-2014) and the United Kingdom (between 2010-2016) enjoyed dramatic improvements in fiscal outcomes in […]
[…] P.S. I’ll make a prediction right now (and I’ll even make a wager with any interested parties) that inflation-adjusted domestic spending will climb faster under Trump than it did under Obama. […]
[…] P.S. I’ll make a prediction right now (and I’ll even make a wager with any interested parties) that inflation-adjusted domestic spending will climb faster under Trump than it did under Obama. […]
[…] the way, if you want an example of successful multi-year spending restraint, we had a five-year de facto spending freeze from 2009-2014 — yes, those fights over debt limits, sequestration, and government […]
[…] the way, if you want an example of successful multi-year spending restraint, we had a five-year de facto spending freeze from 2009-2014 (yes, those fights over debt limits, sequestration, and government shutdowns […]
[…] on Capitol Hill have done much to hit even that lax target (which is especially disappointing since they actually did a good job of restraining spending when Obama was in the White House). So the federal budget instead is […]
[…] Indeed, the United States enjoyed a de facto spending freeze between 2009 and 2014, leading to the biggest five-year reduction in the burden of federal spending since the end of World War II. And it’s unclear that Obama deserves any of the credit since […]
[…] have achieved very good results with multi-year periods of spending restraint. She points out that the U.S. made a lot of fiscal progress when GOPers aggressively fought Obama. And she shares the details about the very successful […]
[…] have achieved very good results with multi-year periods of spending restraint. She points out that the U.S. made a lot of fiscal progress when GOPers aggressively fought Obama. And she shares the details about the very successful […]
[…] The U.S. numbers improved significantly between 2009 and 2014 because of a de facto spending freeze. If we did the same thing again today, the budget would be balanced in […]
[…] The U.S. numbers improved significantly between 2009 and 2014 because of a de facto spending freeze. If we did the same thing again today, the budget would be balanced in […]
[…] folks think that might be impossible, but I’ll simply point out that the five-year de facto spending freeze that we achieved from 2009-2014 actually reduced the burden of government spending by a greater amount. In other words, the payoff […]
[…] folks think that might be impossible, but I’ll simply point out that the five-year de facto spending freeze that we achieved from 2009-2014 actually reduced the burden of government spending by a greater amount. In other words, the payoff […]
[…] The United States got great results thanks to spending restraint between 2009-2014. It will be interesting to see whether Republicans […]
[…] The United States got great results thanks to spending restraint between 2009-2014. It will be interesting to see whether Republicans […]
[…] pointed out that this wouldn’t require unprecedented fiscal discipline. After all, we had a de facto spending freeze (zero percent spending growth) from […]
[…] shouldn’t be too difficult. After all, even with Obama in the White House, there was a de facto spending freeze between 2009-2014. In other words, all the fights over debt limits, sequesters, and shutdowns actually yielded good […]
[…] shouldn’t be too difficult. After all, even with Obama in the White House, there was a de facto spending freeze between 2009-2014. In other words, all the fights over debt limits, sequesters, and shutdowns actually yielded good […]
[…] been advising the Trump people that he needs some genuine spending restraint (or even some semi-serious spending restraint) if he actually wants to enact his big tax cut and […]
[…] freedom increased during the Reagan–Clinton years? And what about the fact that we achieved a five-year nominal spending freeze even with Obama in the White […]
[…] and sequestration actually produced a meaningful victory for advocates of spending restraint. The net result of those budget battles was a five-year nominal spending […]
[…] other words, the progress that was achieved between 2010 and 2014 is evaporating and America is on the path to becoming a Greek-style welfare […]
[…] other words, the progress that was achieved between 2010 and 2014 is evaporating and America is on the path to becoming a Greek-style welfare […]
[…] other words, the progress that was achieved between 2010 and 2014 is evaporating and America is on the path to becoming a Greek-style welfare […]
[…] other words, the progress that was achieved between 2010 and 2014 is evaporating and America is on the path to becoming a Greek-style welfare […]
[…] other words, the progress that was achieved between 2010 and 2014 is evaporating and America is on the path to becoming a Greek-style welfare […]
[…] not sure why the United States isn’t on the list. After all, we actually had some very good changes in 2012-2014 period (though we’ve recently […]
[…] the fiscal discipline that started in 2010 was the result of the Tea Party and other fiscal conservatives who spent years fighting bailouts […]
[…] to say, there’s also a lesson here for Washington (one that actually was heeded between 2009-2014, but the real key is permanent, structural spending […]
[…] right. I’ve shared similar numbers showing how Obama’s spending binge was […]
[…] Perhaps the least recognized and least appreciated triumph of the GOP Congress is the de facto spending freeze between 2009 and 2014. […]
[…] the least recognized and least appreciated triumph of the GOP Congress is the de facto spending freeze between 2009 and 2014. Fights over debt limits, sequestration,spending caps, and government shutdowns were messy and […]
[…] Perhaps the least recognized and least appreciated triumph of the GOP Congress is the de facto spending freeze between 2009 and 2014. […]
[…] Perhaps the least recognized and least appreciated triumph of the GOP Congress is the de facto spending freeze between 2009 and 2014. […]
[…] but also sequester battles and debt limit conflicts) also led to better fiscal outcomes. There was a de facto spending freeze starting in 2010 and ending in 2014, and the burden of government spending fell during those years, dropping from more than 24 percent […]
[…] my biases from my posts, you can understand why I have been attracted to his website. He has just posted on some very interesting developments on federal expenditures, namely that they have stopped […]
[…] we made a lot of fiscal progress between 2009 and 2014 because various battles over debt limits, shutdowns, and sequestration […]
[…] we made a lot of fiscal progress between 2009 and 2014 because various battles over debt limits, shutdowns, and sequestration […]
[…] we made a lot of fiscal progress between 2009 and 2014 because various battles over debt limits, shutdowns, and sequestration […]
[…] that the BCA ultimately resulted in the sequester, which was a huge victory that contributed to much better fiscal numbers between […]
[…] size and scope of government has increased in the past six years, we’ve actually enjoyed a small bit of progress in terms of reducing government spending relative to the economy’s productive […]
[…] is that the BCA ultimately resulted in the sequester, which was a huge victory that contributed to much better fiscal numbers between […]
[…] is that the BCA ultimately resulted in the sequester, which was a huge victory that contributed to much better fiscal numbers between […]
[…] we’ve also had a few years of spending reductions in the United States since 2008, yet it would be silly to argue we’ve had […]
[…] The sequester unquestionably was Obama’s biggest defeat, and that policy helped contribute (along with debt limit fights and shutdown battles) to a much-needed five-year slowdown in federal spending between 2009 and 2014. […]
[…] you want real-world evidence, we made huge progress with a spending freeze between 2009 and 2014 and also enjoyed big gains because of spending restraint between 1994 and […]
[…] even pointed out that we actually had an unintentional – but very successful – spending freeze in Washington between 2009 and […]
[…] 2009 and 2014, a de facto spending freeze at the federal level dramatically reduced burden of spending in the United […]
[…] 2009 and 2014, a de facto spending freeze at the federal level dramatically reduced burden of spending in the United […]
[…] When I’m in a good mood (or being naively optimistic, some might argue), I applaud them for blocking Obama’s spending agenda. The fights over sequestration, debt limits, and government shutdowns have made a real difference. The burden of government spending has dropped significantly since 2009. […]
[…] By the way, if you want to know why deficit numbers have been lower in recent years, it’s because we actually have been following my Golden Rule for a few years. […]
[…] of “net neutrality” regulations on the Internet) but also losing a few (such as spending restraint caused by policies like the […]
[…] been doing a great job. The tax code seems to get worse every year, and even though we’ve made some progress in recent years on spending, the long-run outlook is still very grim because there’s hasn’t been genuine entitlement […]
[…] been doing a great job. The tax code seems to get worse every year, and even though we’ve made some progress in recent years on spending, the long-run outlook is still very grim because there’s hasn’t been genuine […]
[…] been doing a great job. The tax code seems to get worse every year, and even though we’ve made some progress in recent years on spending, the long-run outlook is still very grim because there’s hasn’t been genuine […]
[…] Congress waged important fiscal battles over debt limits, shutdowns, and sequestration, there was a de facto spending freeze between 2009 and 2014. Unfortunately, spending is climbing by at least twice the rate of inflation in 2015, and Obama […]
[…] things have improved in the past couple of years, in part because there’s been progress in restraining the burden of government […]
[…] things have improved in the past couple of years, in part because there’s been progress in restraining the burden of government […]
[…] things have improved in the past couple of years, in part because there’s been progress in restraining the burden of government […]
[…] being said, we’ve actually made progress over the past five years thanks to a nominal spending freeze.** And as outlined above, we can make more progress in the near […]
[…] a $400 billion-plus deficit is anything to brag about), but red ink has only declined because of policies that the president opposed, such as […]
[…] a $400 billion-plus deficit is anything to brag about), but red ink has only declined because of policies that the president opposed, such as […]
[…] Allow me to cite one of my favorite people. […]
[…] If you define “austerity” as spending restraint, Krugman is right. Overall government spending has barely increased in recent years. […]
[…] as I explained a few weeks ago, that’s been happening. There’s been zero growth in nominal levels of federal […]
[…] of this is spot on. Once the stimulus was replaced by spending restraint, the economy did better. And job creation picked up when subsidies for unemployment were limited, […]
[…] of this is spot on. Once the stimulus was replaced by spending restraint, the economy did better. And job creation picked up when subsidies for unemployment were limited, […]
I’ll have to say that I was surprise at this data. I knew that the sequester was good for the country when Obama tried so hard to get rid of it, and now I know why. If we as a country would just slow down government spending, a balanced budget would seem to be possible.
Finally I understand how the economy is surviving at all. The Fed is manipulating the markets, which give the illusion of progress. Whatever real progress (though skimpy) is due to this decline in government share of the economy. Yeah Obama! (sic)
2009 and 2010 budgets were 2008 congress’ responsibility, 2010 congress’ role did not start until 2011!
American economy has done better than rest of developing world because we did not buy into austerity and fear of inflation!
Mr.Mitchell..this-your article/with graphs included is fun,accurate-somewhat*stentorian*and precisely what America and the world needs.Thank you..in this dark ,seditious troubled hour of America s descent into absolutely unesecery decline.