About Our “Spending Problem” (Revisited)

@TBPInvictus here

It’s a well established fact that the Obama administration has been spending like a drunken sailor since the day he was inaugurated. I first wrote about his spendthrift ways here, toward the end of 2010 (has it already been three years?).

Some time has now passed, so how’s it going? Let’s take another look at Federal government spending – including and excluding defense – for the last five administrations, indexed to 100 in the first quarter of each administration.

First the overall picture:

Now, let’s strip out the defense portion:

Please think of these two charts the next time you hear someone say, “We don’t have a revenue problem, we have a spending problem.” Present these charts and ask precisely where that spending problem is.

What goes on at the state and local level also obviously impacts the trajectory of our economy, including GDP and our employment picture. While the Federal government does not have direct control of state and local economics, it is certainly a meaningful indirect influence, as Federal policies ripple through state capitals and subsequently through local town halls.

Here’s what that picture looks like over the past five administrations:

[NOTE: Gotta say, the degree of state and local austerity surprised even me.]

Put it all together, and this is what government at all levels has added to (or subtracted from) GDP for the past five years:

Finally, and sadly, the NY Times ran an article last week about the deleterious effects already being felt by the recent cut in the Supplemental Nutritional Assistance Program (SNAP, otherwise known as food stamps). The damage being done to those who can least afford it cannot be overstated. Beyond the pain it is inflicting on the poor, the adverse “trickle up” effect is already taking hold:

The cuts are also hurting stores in poor neighborhoods. The average food stamps household receives $272 a month, which then passes into the local economy.

At a Food Lion in Charleston where as many as 75 percent of the shoppers use food stamps, managers were bracing for lower receipts as the month wore on.

At a Met Foodmarket in the Bronx, where 80 percent of the 7,000 weekly customers use food stamps, overall food sales have already dropped by as much as 10 percent.

“I wasn’t expecting it to be that fast,” said Abraham Gomez, the manager. Losing that much revenue could mean cutting back hours for employees, he said.

For some perspective on the SNAP program, here’s how it stacks up versus our spending on defense:

Source: BEA Table 3.12 Government Social Benefits and BEA Table 3.11.5. National Defense Consumption Expenditures and Gross Investment by Type