The imaginary ‘spending binge’

THE IMAGINARY ‘SPENDING BINGE’…. When Mitt Romney yesterday described 2011 as “peacetime” — despite, you know, the ongoing wars — it was a pretty embarrassing mistake. But let’s not brush past the context: Romney was condemning President Obama for engaging in “one of the biggest peacetime spending binges in American history.”

If we put “peacetime” aside, we’re left with a Republican argument so routine, it barely registers — the GOP is convinced the president has overseen a vast expansion of government spending.

But this didn’t actually happen. It’s been debunked before, but since ignorance is resilient, Paul Krugman took another shot at this yesterday.

One way to address this claim is to ask, where are the huge new federal programs? The Affordable Care Act has not yet kicked in; the stimulus, such as it was, is fading out; where is this big government surge?

In answer, the peddlers of this myth point to the fact — which is true — that federal spending as a share of GDP has risen, from 19.6 percent in fiscal 2007 to 23.6 percent in fiscal 2010. (I use 2007 here as the last pre-Great Recession year). But what’s behind that rise?

A large part of it is a slowdown in GDP rather than an accelerated rise in government spending. Nominal GDP rose at an annual rate of 5.1 percent from 2000 to 2007; it only rose at a 1.7 percent rate from 2007 to 2010.

Krugman posted some worthwhile charts on this, but there’s basically two key elements to keep in mind. The first is that spending rose as a percentage of GDP, not because of a spending binge, but because GDP went down so sharply during the Great Recession.

But what about the rest? There are safety-net programs — unemployment insurance, food stamps, SSI, refundable tax credits — that respond to help families in need during down times. When the economy gets worse, these programs spend more automatically because there are more people qualifying for the benefits.

“What we’re seeing isn’t some drastic expansion of Big Government; we’re seeing the government we already had, responding to a terrible economic slump,” Krugman explained.

The standard GOP talking points, in other words, are pointing to a myth. It’s one of those things “everyone knows,” but which happens to be wrong.