By ANDREW TAYLOR, Associated Press
WASHINGTON (AP) — The White House is aggressively pushing the idea that, contrary to widespread belief, President Barack Obama is tightfisted with taxpayer dollars. To back it up, the administration cites a media report that claims federal spending is rising at the slowest pace since the Eisenhower years.
"Federal spending since I took office has risen at the slowest pace of any president in almost 60 years," Obama said at a campaign rally Thursday in Des Moines, Iowa.
The problem with that rosy claim is that the Wall Street bailout is part of the calculation. The bailout ballooned the 2009 budget just before Obama took office, making Obama's 2010 results look smaller in comparison. And as almost $150 billion of the bailout was paid back during Obama's watch, the analysis counted them as government spending cuts.
It also assumes Obama had less of a role setting the budget for 2009 than he really did.
Obama rests his claim on an analysis by MarketWatch, a financial information and news service owned by Dow Jones & Co. The analysis simply looks at the year-to-year topline spending number for the government but doesn't account for distortions baked into the figures by the Wall Street bailout and government takeover of the mortgage lending giants Fannie Mae and Freddie Mac.
The MarketWatch study claims that spending is grown only 1.4 percent over 2010-2013, or annual increases averaging 0.4 percent over that period. Those are stunningly low figures considering that Obama rammed through Congress an $831 billion stimulus measure in early 2009 and presided over significant increases in annual spending by domestic agencies at the same time the cost of benefit programs like Social Security, Medicare and the Medicaid were ticking steadily higher.
A fairer calculation would give Obama much of the responsibility for an almost 10 percent budget boost in 2009, then a 13 percent increase over 2010-2013, or average annual growth of spending of just more than 3 percent over that period.
So, how does the administration arrive at its rosy claim?
First, there's the Troubled Assets Relief Program, the official name for the Wall Street bailout. First, companies got a net $151 billion from TARP in 2009, making 2010 spending look smaller. Then, because banks and Wall Street firms repaid a net $110 billion in TARP funds in 2010, Obama is claiming credit for cutting spending by that much.
The combination of TARP lending in one year and much of that money being paid back in the next makes Obama's spending record for 2010 look $261 billion thriftier than it really was. Only by that measure does Obama "cut" spending by 1.8 percent in 2010 as the analysis claims.
The federal takeover of Fannie Mae and Freddie Mac also makes Obama's record on spending look better than it was. The government spent $96 billion on the Fannie-Freddie takeovers in 2009 but only $40 billion on them in 2010. By the administration's reckoning, the $56 billion difference was a spending cut by Obama.
Taken together, TARP and the takeover of Fannie and Freddie combine to give Obama an undeserved $317 billion swing in the 2010 figures and the resulting 1.8 percent cut from 2009. A fairer reading is an almost 8 percent increase.
Those two bailouts account for $72 billion more in cuts in 2011. Obama supported the bailouts.
There's also the question of how to treat the 2009 fiscal year, which actually began Oct. 1, 2008, almost four months before Obama took office. Typically, the remaining eight months get counted as part of the prior president's spending since the incoming president usually doesn't change it much until the following October. The MarketWatch analysis assigned 2009 to former President George W. Bush, though it gave Obama responsibility that year for a $140 million chunk of the 2009 stimulus bill.
But Obama's role in 2009 spending was much bigger than that. For starters, he signed nine spending bills funding every Cabinet agency except Defense, Veterans Affairs and Homeland Security. While the numbers don't jibe exactly, Obama bears the chief responsibility for an 11 percent, $59 billion increase in non-defense spending in 2009. Then there's a 9 percent, $109 billion increase in combined defense and non-defense appropriated outlays in 2010, a year for which Obama is wholly responsible.