The latest digression in the presidential campaign between Mitt Romney and Barack Obama is a fresh argument about government spending that took place in 2008 and 2009. Should it count as Obama's spending? Or that of his predecessor, George W. Bush? The answer, apparently, will determine whether Obama is an "old-school liberal" addicted to spending, as Romney insists, or a more thrifty leader carefully husbanding taxpayer dollars.
The Obama campaign has latched onto a recent analysis by the financial-news site MarketWatch, which claims that federal spending under Obama has been rising at the slowest pace since the Eisenhower administration. Get used to hearing that phrase, because it's probably going to surface repeatedly in Obama ads and utterances.
The surprising-sounding claim hinges on the fact that the 2009 fiscal budget, plus the bank bailouts that contributed to 2009 spending, had already been approved by George W. Bush by the time Obama took office. So the numbers for that year shouldn't be attributed to him, Marketwatch says. And the numbers for 2010—Obama's first budget--actually fell compared with 2009 levels.
The Associated Press corrected some of this math by pointing out that the bank bailouts and the rescues of Fannie Mae and Freddie Mac made the 2008 and 2009 spending numbers unusually large, which made subsequent years' budgets look like reductions when they weren't. Others have pointed out that Obama was the champion of the $831 billion stimulus act passed in 2009, and that he actually pushed for more spending than Congress allowed.
Are you bored yet? You should be, because this tiff is based on a false premise and tells us little about how Obama or Romney would govern in the future, if elected.
Parsing spending in this way suggests that a more frugal president might have spent less on bailouts and stimulus plans, which, theoretically, would have left us in better shape today, with less debt that needs to be paid off in the future.
This is a bogus assumption. I can't prove it, but my contention is that any president, of any party, would have approved the bank and housing-agency bailouts and other stimulus measures that Bush approved, and even Obama's $800 billion stimulus plan, which passed in 2009. It's easy to forget, but the economy was on the verge of free-falling into a depression back then, and there was intense pressure on the government to prevent that. Politicians get elected to do what the voters want, and voters wanted somebody to stop the bleeding and save the economy.
A couple of data points. On Sept. 29, 2008, Congress voted down the first version of the bank-bailout bill, and the stock market fell by nearly 9 percent in one day. There was genuine fear of a financial contagion that might take down some or all of the nation's big banks. So a few days later, Congress passed a lightly revised version of the bill, which President Bush promptly signed. Would any president have stood pat as the markets plunged, citing fiscal rectitude as his justification for tolerating a vast loss of wealth and a nationwide bank run? There might be an economic case for doing so, but there isn't a political one.
The stimulus act that became law in February 2009 was a harder sell, but it's worth recalling that up till then, stimulus spending was a standard government response to an economic downturn. A year earlier, George W. Bush had signed a $150 billion stimulus bill, at a time when none of the Wall Street banks had yet foundered and it wasn't even clear there was a recession. So again, it's highly likely that any president would have signed a stimulus bill similar to Obama's.
I'd go as far as to say that any president would have approved the 2009 auto bailouts, too. Mitt Romney argued against the bailouts at the time, but I'd wager that his view would have been different had he actually been president. Nobody liked the auto bailouts, but had General Motors and Chrysler failed without the government guarantees that kept them alive, it could have been a gut blow to the economy, undoubtedly making unemployment far worse. It's hard to imagine any president stepping aside to let that happen, when he had the power to do otherwise.
In my view, Obama's true spending habits should be judged from the middle of 2009 onward. That would obviously include his signature healthcare-reform law, a series of temporary tax cuts and subsidies for the unemployed, plus a bunch of other stimulus measures that Obama proposed but Congress denied. Obama is clearly a man who prefers government solutions to many problems, but so did a lot of others during the financial crisis, when there didn't appear to be any other solutions. Voters shouldn't punish the president for helping save the economy when it needed saving.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.