Monday, August 13, 2012

Federal Budgets By President

Based on a recent Facebook conversation about the federal budget where conservatives and I seemed to be talking passed each other, I generated a graph that helps explain our different languages. My earlier data analysis indicated that "government" has been getting dramatically smaller since WWII, as well as tax revenues. My conservative friends describe the exploding growth of government. Our language impasse seems to have been resolved by recognizing that my conservative friends were using budget "federal outlays" to talk about the growth of government, while I was using "federal consumption + investment" to talk about size of government. We are both a little bit right. Outlays represent every dollar that passed through federal hands, while consumption + investment represents just federal "spending." So, for example, federal consumption + investment money pays for the government workers, school programs, building roads, the buildings that house government, the military, etc. Outlays include other kinds of monetary transfers, like social security payments and interest on the federal debt. The government never sees that money other than to transfer it to the recipients. My conservative friends are correct, that these transfers have dramatically risen. However, these are projects that have been a long-time in the making. On the other hand, I am correct that the size of government, as well as tax revenues (see my earlier posting on that topic, represented by the dotted line) have shrunk. Both of which are at historically low rates, even under Obama, despite the rhetoric to the contrary. On the graph below, you will find the federal outlays (blue), the federal consumption + investment (red), and separated by presidential budget term. The vertical lines do not represent the year the president took office, but the year that his budget would have been enacted. So, for example, while Obama was elected in 2008, he doesn't generate his budget and submit it to Congress until the following year, and it doesn't get instituted until the end of that year. So I show his budget as being fully "enacted" as of 2010.

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