The notion that federal spending soared after President Obama took office is one of those “facts” that the political world just accepts implicitly. Republicans have repeated the claim so often (and so loudly) that it’s no longer even questioned. Indeed, Mitt Romney promises to “stop the excessive overspending” on a nearly daily basis.
But MarketWatch’s Rex Nutting took a closer look at the assumption that many assume is true, but isn’t. (The MarketWatch piece included this great chart, too.)
Government spending under Obama, including his signature stimulus bill, is rising at a 1.4% annualized pace – slower than at any time in nearly 60 years.
But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s…. There has been no huge increase in spending under the current president, despite what you hear.
It matters, of course, that a political myth is accepted as fact, especially when it’s likely to be one of the driving messages of the 2012 campaign.
But let’s also keep in mind that this has dramatic policy implications: the fact that the economic recovery is so weak and fragile has nothing to do with the debt and everything to do with not enough capital in the system, leading to too little demand.
In other words, the fact that spending growth under Obama has been so slow is practically a form of austerity, and it’s bad for the economy, not good.