Yet more on federal spending

There have been a number of differing takes on Ray Nutting’s column on The Wall Street Journal‘s MarketWatch website mentioned previously here.

The Washington Post‘s Fact Checker column took issue with it, while Politifact found it largely correct in analyses published here and here.

As the last entry from Politifact points out, it comes down largely to what fraction of fiscal 2009’s increased spending (which started nearly four months before Obama took office) is attributed to Bush’s watch and which to Obama’s (though it’s again worth mentioning that massively large outlays were already projected by the Congressional Budget Office at the start of 2009, before Obama took office).

A couple of other points worthy of note that I don’t recall seeing mentioned in any of the links above: First, because of the worst economy since the Great Depression, state and local government tax revenues fell precipitously. As a result, significantly more the federal spending has been going to help states and localities keep basic services functioning. Do you count that as federal spending (since that’s the source of the money) or state and local spending (since that’s who’s actually spending it)? It costs the federal government more money, but there’s no resulting expansion of government. On the contrary, states and localities have still been laying people off, just not quite as many as they otherwise would have had to.

Second, as a number of economists have pointed out, Obama (and Congress) should not be praised for moderation in spending. The time for fiscal restraint is during an economic boom, as when Clinton presided over a transition from deep deficits to a massive surplus during the 1990s.

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