Published for, May 31, 2012

Nine days ago Mr. Rex Nutting of MarketWatch wrote a provocative column titled “Obama spending binge never happened.” Here is the key quote:

Over Obama’s four budget years, federal spending is on track to rise from $3.52 trillion to $3.58 trillion, an annualized increase of just 0.4%.

Referencing and relying on this article (rather than on the hundreds of talented OMB career staff who sit nearby), White House Press Secretary Jay Carney told reporters:

I simply make the point, as an editor might say, to check it out; do not buy into the BS that you hear about spending and fiscal constraint with regard to this administration. I think doing so is a sign of sloth and laziness.

President Obama then followed suit in a campaign speech in Iowa one week ago:

But what my opponent didn’t tell you was that federal spending since I took office has risen at the slowest pace of any President in almost 60 years.

President Obama and Mr. Carney are both relying on Mr. Nutting’s key quote above. Let’s examine the quote as Mr. Carney suggests we should do.

Problem #1: The President argues that his fiscal stimulus law, enacted in February 2009, had a big positive effect on the growth rate of the economy. We are now asked to believe that President Obama’s policies did not significantly increase spending but did significantly increase economic growth. This is, to say the least, an intellectually inconsistent argument. The whole Keynesian fiscal stimulus argument is premised on a significant increase in government spending.

Full post here

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