David Fahrenthold’s Washington Post “reporting” on the impact of recent budget fights over the size and scope of government demonstrates a remarkable misunderstanding of the federal budget, data presentation, economics, and demographics. Even more disturbing, the Post presents Fahrenthold’s drivel as political reporting, rather than the (biased and misleading) editorializing it really is.
Fahrenthold’s narrative candy-coats Congressional Republicans’ dangerously reckless and unprecedented act of ransoming off a necessary increase in the statutory debt ceiling in exchange for substantial spending cuts, and wrongly suggests the budget fights looming this fall and winter should produce more immediate spending cuts.
For starters, the presumption that the federal government is a leviathan in need of slaying is entirely inconsistent with anything like objective journalism. Fahrenthold implies that shrinking government is a bipartisan policy objective routinely foiled by Washington culture (an implication that gets some help from Steve Bell of the Bipartisan Policy Center). In these budget fights, members of Congress supposedly “could not shake many of the old habits that made government big in the first place.”
This premise, of course, is nonsense.
Tax and budget policy priorities run the gamut in this highly polarized Congress. Consider, for example:
- House Budget Committee Chairman Paul Ryan’s (R-Wisc) budget proposes a draconian meat cleaver (predominantly to healthcare and programs for low- to- moderate income households)
- President Obama’s budget essentially proposes modestly reorienting outlays toward various priorities (e.g., early childhood education, infrastructure, and some job creation measures)
- The Congressional Progressive Caucus proposes a big increase in federal spending (considerable public investment and jobs programs well in excess of reductions in spending by the department of defense).
And anyone thinking pork-barreled appropriations or duplicative programs are the chief drivers of the size of government has no grasp on the composition of the federal budget or relativity amongst big numbers with lots of zeros.
In backing his contention that the federal budget is a leviathan in need of additional taming, Fahrenthold offers four metrics on the size of the federal government:
- Nominal federal spending (i.e., spending figures that aren’t adjusted for inflation)
- The number of federal employees,
- The size of the Code of Federal Regulations, and
- Federal real estate.
While all four are deeply problematic, I’d like to focus on the first.
Fahrenthold is concerned that Congress is on track to spend $3.455 trillion in fiscal 2013 as projected by the Congressional Budget Office (CBO), down only slightly from $3.457 trillion in fiscal 2010, according to the Office of Management and Budget. Simultaneously alluding to these numbers, Fahrenthold claims
The reduction in federal spending since 2010 is still something historic. Any reduction in spending would have been, after a decades-long spending binge that peaked in the first years of President Obama’s term.
Costs of goods and services purchased by the government rise with inflation and many government benefits are formulaically adjusted for cost-of-living increases (e.g., Social Security). So even if we held everything else equal, we would still expect nominal spending to increase every year. But not everything else is equal; the U.S. population is both increasing and aging (more on that later), and as population grows, federal spending will also grow. Fahrenthold acknowledges the inflation half of this point in passing, but he immediately moves on to an entirely unqualified claim that “even now, the government still spends a vast amount of money.”
Any denomination of money frequently used in federal budgeting— millions, billions, or trillions—will seem like “a vast amount of money” to most people; and taken out of context, all are totally meaningless. That’s why most economists discuss the size of the federal budget relative to the size of the overall U.S. economy. Placing a $3.455 trillion budget in the context of an economy of $16.5 trillion in the first three quarters of this fiscal year gives the needed context that federal outlays are roughly 20.9% of U.S. gross domestic product (GDP). When measured in the way economists prefer, federal outlays have fallen rather sharply from 23.4% of GDP in fiscal 2010 and further from 24.4% of GDP in fiscal 2009. And at 20.9% of GDP, federal outlays are only slightly above the 20.4% that spending has averaged over the last 40 years.
But even this usually useful metric is missing a big chunk of the story, namely the worst economic downturn since the Great Depression. If GDP is shrinking (as in fiscal 2009) or is deeply depressed (as in fiscal 2010), spending as a share of GDP will be pushed up, everything else being equal. As a share of potential GDP—CBO’s estimate of non-inflationary output at their estimate of full employment, essentially stripping the recession out from the denominator—federal outlays have fallen from 22.5% in fiscal 2010 to 20.2% in fiscal 2013.
But not everything else was equal: A deep recession and rising poverty and unemployment automatically raised spending of food stamps, unemployment benefits, Medicaid, and other eligibility-based safety net programs. (Budget wonks refer to these kinds of benefits as “automatic stabilizers.” These programs are designed to increase spending during recessions.)
Additionally, federal outlays were also rising as a result of discretionary fiscal stimulus—most notably the Recovery Act—which, combined with Federal Reserve policy, ended the Great Recession. In other words, the “spending binge” during President Obama’s first term helped to prevent an economic crisis worse than the Great Depression. That’s a far cry from the pork-barreled largess Fahrenthold decries.
By either of these qualified measures, federal spending has shrunk quite dramatically.
The article accurately notes that spending cuts through this fiscal year have imprudently taken a disproportionate toll on the discretionary budget (annual appropriations). But Fahrenthold then bizarrely complains that mandatory spending has fallen only 1% over the last three fiscal years. The U.S. population is aging. As a result, spending is up on Social Security, Medicare, Medicaid, and other eligibility-based social insurance programs (programs which collectively constitute the lion’s share of mandatory spending). We’ve known for years that mandatory spending would increase as the baby-boomers begin retiring. That Fahrenthold would somehow find this fact surprising beggars belief.
More broadly, the idea that the impact of recent budget fights should be evaluated over the last three years is preposterous. A lot of deficit reduction was enacted in the 112th Congress— roughly $3.6 trillion over a decade—but only the tip of the iceberg has taken effect through fiscal 2013. Of $2.5 trillion in non-interest spending cuts scheduled over fiscal 2011-2022, only about only about 8% will have materialized in the first three of these years. This is quite the omission for a piece suggesting that recent budget fights have been rather feckless.
Ahead of another looming fight over the statutory debt ceiling, this vein of hack political journalism is dangerous: It suggests to Republican lawmakers and their constituents that the GOP didn’t go far enough is slashing government when they last ransomed off the nation’s credit rating for economically damaging austerity.
Fahrenthold’s article doesn’t come close to meriting the credibility and cover that come with political reporting in the Washington Post. This sort of overt and misleading anti-government sentiment is better suited to the pages of the National Review.