President George W. Bush's spending record

President George W. Bush's spending record

In a blog post at the Wall Street Journal, James Freeman writes:

But George W. Bush is making a less credible claim, now that reducing federal spending is a top voter concern. Mr. Bush is currently portraying himself as a spending hawk, with a chart in his new memoir showing that federal spending averaged just 19.6% of GDP during his tenure. This appears to make Mr. Bush a more responsible spender than predecessors Bill Clinton, George H.W. Bush, and even Ronald Reagan.

Nowhere in Decision Points does President Bush refer to himself as a “spending hawk.” He does write:

Despite the costs of two recessions, the costliest natural disaster in history, and a two-front war, our fiscal record was strong.

I drew a different conclusion than Mr. Freeman did from the President’s book. Throughout Decision Points and this section in particular, I read President Bush as providing context to explain the decisions he made, rather than trying to make particular claims or classify himself.

Despite his post’s title, “George W. Bush’s Fuzzy Math,” Mr. Freeman does not dispute the math or the facts in President Bush’s book. He instead argues for a different way of measuring a President’s fiscal record.

The undisputed facts are:

  • Average federal spending was a smaller share of the economy during the George W. Bush administration than during each of the Clinton, George H.W. Bush, and Reagan administrations.
  • The same is true for taxes. Average federal taxes were a smaller share of the economy under our 43rd President than under our 40th, 41st, or 42nd.
  • Of the four, President Clinton’s deficits were smallest, almost entirely because his revenues were highest. President George W. Bush had the second-smallest deficits of the four.
  • The budget deficit during President Bush’s tenure averaged two percent, below the fifty-year average of three percent.

My conclusions: Relative to the economy, the federal government was smaller during the Bush Administration than under any of its three predecessors, and his deficits were small by historic standards.

Based on data provided by a frequent critic of the President’s, Mr. Freeman looks only at the change in the level of spending from the day the President took office to the day on which he left. He ignores baseline trends and the role of Congress and assigns full responsibility for the change between those two endpoints to the President. He uses these two points to compare President Bush unfavorably to Presidents Reagan and Clinton, because spending declined on their watches while it increased on President Bush’s.

Mr. Freeman applies President Obama’s “inherited” meme to federal spending, arguing that Presidents Reagan and Clinton deserve credit for reducing spending from even higher levels when they took office. He writes, “Even with a Democratic House, Mr. Reagan managed to cut spending as a percentage of GDP from 23 to 21.” Spending when President Reagan took office in 1981 was 21.7% of GDP. With a Democratic House and a Republican Senate, it grew to 23.5% in 1983, then declined to 21.2% in 1988. Mr. Freeman gives President Reagan credit for the decreases but no blame for the increases. Yes, spending declined over Reagan’s tenure, but by 0.5 percentage points, not by two points as Mr. Freeman suggests.

Yes, federal spending increased over President Bush’s tenure. The biggest increases were for defense and homeland security. While critics often focus on the $50 billion in increased Medicare spending for drugs in 2008, they ignore the much larger $350 billion in increased baseline Social Security and Medicare spending from 2000 to 2008. President Bush took political risks to propose specific changes to significantly slow the growth of both Social Security and Medicare spending. These proposals were largely ignored by Congress.

And yet even at its highest point during the Bush tenure, spending as a share of GDP was still lower than the lowest year of the Reagan Administration. Should we give Reagan credit for the slight decline and blame Bush for the increase, or should we say the Bush years were better because government was smaller?

Mr. Freeman’s approach broaches an interesting question: should we measure a President based only on the change between a President’s first and last days in office, or instead on the average levels over the full term, which incorporate both policy changes and the starting point for those changes, and which look at the full eight years rather than at just the endpoints? This debate should seem familiar: for 21 months President Obama has argued that his policies have made things better than they otherwise would have been, while the American people have rejected his policies because the results were inadequate. If President Obama leaves office in 2013 with unemployment at 8 percent, slightly lower than in his first full month of office, the endpoint logic suggests we should judge him an economic success because unemployment declined. I think we should instead compare the average unemployment over President Obama’s tenure with President Bush’s average of 5.3 percent and President Clinton’s average of 5.2 percent. I think that citizens care more about about average levels over time more than about the changes measured between arbitrary political endpoints.

It is also difficult to judge the “responsibility” of enacted changes objectively because observers differ on the appropriate counterfactual. The Medicare drug benefit President Bush campaigned on, proposed, and signed into law increased entitlement spending. To determine whether that is responsible or not, should we compare the increased spending to (a) no Medicare drug benefit, (b) the more expensive Democratic alternative, or (c) President Bush’s initial budget-neutral proposal, rejected privately at the time by House and Senate Republican leaders?

As we see from the ongoing debate on extending the Bush tax policies, the subjective choice of a baseline for comparison can lead to radically different conclusions about the budget effects of a proposed policy change. By choosing a helpful counterfactual, President Obama makes his proposal to extend $3.1 trillion of tax policies appear responsible and “cost free,” and argues the Republican proposal to extend $3.8 trillion of tax policies is an irresponsible “cost” of $700 billion. The numbers in Decision Points describe final levels rather than changes. President Bush thereby avoids entirely the subjective debate about counterfactuals.

I wish that we (in the Bush Administration) had been enable to convince multiple Congresses to enact more of the spending cuts proposed by President Bush. While President Bush’s critics frequently remind us of his decision to fulfill a campaign promise to add a drug benefit to Medicare, they forget or ignore his important fiscal policy moves in the other direction. President Bush vetoed the second farm bill; that veto was overridden. President Bush twice vetoed bills unnecessarily increasing spending for children’s health insurance. President Bush repeatedly proposed hundreds of billions of dollars of Medicare and Medicaid savings, only to find these proposals routinely ignored by Congress. President Bush proposed a long-term budget neutral drug benefit plus Medicare reform package to House and Senate Republican leaders in 2003. Those leaders supported the drug benefit but rejected the savings from the aggressive structural reforms. President Bush received little support for Social Security reform proposals that would have significantly addressed our long-term entitlement spending problem. If you don’t like the net spending increases during President Bush’s tenure, ask why Congress so often resisted the President’s proposals to cut spending.

Unlike each of his three predecessors, President Bush did not raise taxes.

George W. Bush, a wartime President, had a smaller federal government and lower taxes relative to the economy than each of his three predecessors, historically small deficits, no tax increases, and 5.3% average unemployment. He vetoed a farm bill and two health bills for spending too much. He proposed structural and incremental reforms to Social Security and Medicare that set up the current entitlement reform debate. Maybe the conventional wisdom should be revised a bit.

25 responses

      • "war" = Global War on Terror

        "two front" = simultaneous massive American military deployments in Iraq and Afghanistan

        Bush saw (and stills sees, I suppose) his two wars as related: both struggles against Muslim extremists and their potential to inflict massive, 9-11 style harm on the world (Iraq fit in because of its supposed WMD's).

        It is a fuzzy way of thinking about this, but then again, its GWBush we're talking about here…

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  2. I have seen in several places that non-defense discretionary spending increased twice as fast under W than under Clinton. I don't know the numbers, so I'm asking–is that true or not?

    My own take is that both the level and the growth rate are important, so I think it is important to look at end points but it is also important to look at the level.

    In other places I've seen you argue against looking at revenue as a % of GDP–you seem to embrace it here.

    As you well know a lot of folks, especially conservatives, were upset with the fact that W did not veto bills while the Republicans had control of both houses (that is true isn't it–again, just asking). From a conservative POV it became obvious to the R's in Congress that they could pass anything and he'd let it go through.

    A president with conservative principles would have vetoed a couple of those early bills to get their attention–at which point he would have had much more credibility and their attention. As regards the Medicare part D, it is a little late in the day to be saying the devil made me do it.

    • R emember that W increased our debt by 65% as our misguided leader..and decreased our quality of life and made this world more dangerous…and do not forget he gave us Karl Rove…thanks W

  3. Pingback: President George W. Bush’s spending record [Keith Hennessey] | DreamInn

  4. I think we should instead compare the average unemployment over President Obama’s tenure with President Bush’s average of 5.3 percent and President Clinton’s average of 5.2 percent

    Fair enough. But the annual unemployment rate in 1992 was 7.5% and in 2000 it was 4.0%. Call it the baseline rate. So the average rate was 2.3 percentage points lower under Clinton and 1.3 percentage points higher under Bush relative to the baseline rate. On that basis, the Clinton era was superior to the Bush era.

    On the household survey employment front, the Clinton era saw 18.4 million jobs and the Bush era saw 3 million jobs created. On that basis, the Clinton era was superior to the Bush era.

  5. Mr. Hennessey makes some effective arguments defending the administration of George W. Bush on spending and the deficit. In this case, though, I think he glosses over the fact that the most fundamental measure by which we judge the effectiveness of a President is by what he was able to acheive, not by what could have been. In a couple of places in this column Mr. Hennessey defends W's record on spending by arguing that if only Congress, including members of W's own party, had gone along with him things would have been better. Perhaps that is true. But, failure to get W's agenda through Congress is not completely the fault of Congress. Part of the fault lies with a President who failed to convince, cajole or use whatever other means are available to our Chief Executive to get Congress to play along. Perhaps that standard is unfair, but being judged by results is pretty much the standard everyone is held to, whether you are the President or just another Peon.

  6. Since we're on the subject of spending and responsiblity for the deficit, I think It is interesting to compare this post with the following comment, supposedly factual, made recently by David Leonhardt in the New York Times in his article "How to Fix the Budget":

    “As a starting point, it is worth thinking about the deficit as being two different deficits. The first is the medium-term deficit, which was created by the Iraq and Afghanistan wars, the 2003 Medicare drug plan, the Bush tax cuts, the recession and the government’s responses, like the stimulus.”
    http://www.nytimes.com/2010/11/14/weekinreview/14

    Looks as though in Mr. Leonhardt's world view, the "medium term deficit" is solely the responsibility of the Bush Administration. In particular, I like the part about Medicare D, which to my knowledge was a permanent change. Also, the Bush tax cuts expire in about 40 days—is that what we call "medium term"? I guess when you function as the administration's resident NYT spokesman, you throw in everything but the kitchen sink.

  7. Keith: I really respect you as a budget expert and analyst, especially in the health care field.

    And I can't carry your jockstrap when it comes to budget stuff.

    But I did sleep at a Holiday Inn last night so here's my best 'budget wonk' effort to put the Bush record into perspective, at least for me as a small government Jeffersonian/Madisonian type:

    He did NOT veto one single appropriations bill in 8 years at the White House.

    Not one.

    Gerald Ford vetoed 66 in 2.75 years as President. Granted, he was able to veto all of the crazy Democratic spending bills that came out of Congress since, as he said, "I was Minority Leader in the House so I know just how much junk was in each bill.'

    Point of personal privilege here: when I went back up on the Hill to be Senator Elizabeth Dole's first chief of staff, I went to 3 Senate GOP Chiefs of Staff weekly meetings and at each one, asked the following blockheaded budgeteer question:

    'When are we going to introduce a spending reduction package a la the $500 billion 'Cutting Spending First' budget package we did on the House side under Kasich and former Congressman Alex McMillan of NC for whom I worked.

    That was over 5 years, not over 10 as is typical nowadays.

    Each comment was greeted with silence. You shoulda heard the crickets chirping in that room.

    Finally, after the third and failed attempt to garner any comment about forming a budget reduction package, one friend whom I had worked with in the House took me aside and said: 'Frank, you have to shut the hell up about cutting spending! We Republicans JUST DON'T TALK ABOUT THAT ANYMORE!'

    This was Jan/Feb 2003, Keith. Not the later years when things really got out-a-hand.

    So, if there is an Achilles' Heel for the Bush presidency, it is that he never wielded the veto pen, even to tame the spending proclivities of his fellow GOP legislators.

    Heck, if I were a presidential aide now, I would advocate that the President hit the 'veto' button much like that guy on the commercial for Staples hits the red button and makes copy paper pop up magically everywhere in his office.

    We could use about 5 years of funding government at the FY 2010 (or better yet, roll back to the pre-crisis FY 2008 levels and start there) and just veto everything and run the guvmint on the CR bandwagon.

    That won't cure the entitlement dilemma…but it will flatten out growth in spending overall and in discretionary spending pretty darned fast…almost like the 2% annual overall growth that occurred from 1995-2000 under a GOP Congress and Clinton.

  8. Hi Mr. Hennessey,
    I enjoy your blog and really like the insights into both how laws are actually passed and policy actually formulated but you have lived too long in that town if you believe that the argument you just made would convince any but the most partisan individual. You think that someone should be judge on the average rate of unemployment? That means a President is equally responsible for the unemployment rate on the day he takes office, when he has had no power, as the day he leaves after he has been the most powerful man on the planet for four or eight years. Let me put it another way. If you had taken office in Jan 2009 with unemployment at 7.7% and by Jan 2013 had reduced it to 4.4% in a straight line function then the average unemployment level for the period would still be over 6%. Does anyone believe you would grade your performance beneath Clinton and Bush. No you would judge yourself by what had happened during your time in tenure just like history will do to Bush and Obama. And regarding George Bush’s desire to reduce Congress’ spending, if wishes were fishes, beggars would fly. You claiming Congress made the Bush administration do it is almost as pathetic as Obama crying its George Bush fault. Same thing goes for having to fight two wars, you don’t get to say you didn’t plan on it so you shouldn’t have to reduce other spending to pay for it anymore than I don’t get to continue eating out at nice restaurants after I get laid off because, you know, I didn’t plan on that happening and it wasn’t my fault it was the recession.

    • John,
      Very well said. It is indeed pathetic to now say that Congress made W spend all that money. That would hold a lot more weight if he had vetoed a bunch of bills and Congress overroad them–but that wasn't the case.
      We currently have a tea party because of W–which is fine with me. Maybe there will be a big positive coming out of his presidency (a bit late), if the tea party reforms the Republican party.

      A similar point to yours (which I thought of after posting mine earlier), is two presidents could have similar average unemployment rates, but if it increased under one and increased under the other, that needs to be considered. On that Obama is probably going to come out looking better in the long run because, while his average rate will be high, it almost surely will trend downward. At least I hope it trends downward.

      Again, well said.

      Ed Wolfe

      • Correction–in talking about the change in the unemployment rate I said increased twice. Should have said :increased under one, and decreased under the other."

        Ed Wolfe

  9. Let me apologize in advance for veering so far off topic. It is amazing that many of the commenters have held Bush responsible for the Congress' lack of action on his agenda. Apparently they have the Andrew Jackson view that the POTUS is supposed to be the supreme ruler of the republic and the congress is only a tool to be utilized by him. Maybe y'all should read a little more "critical period" history. We have three seperate branches of government in our constitutional republic for a reason. The founders designed it that way because they were very well versed in the history of governments… much more so than many Americans today. Congress does not exist to facilitate the president's agenda. Presidents would do better to not have an agenda., but rather a governing philosophy. Let congress act on the peoples' and the states' agendas. We'd have a better republic. IMHO.

    • Rick,
      You make some excellent points, especially that a president should have a governing philosophy, not an agenda. And yes, the founders saw three equal brances of government, but the modern presidency looks nothing like what they envisioned (if I can be so bold as to talk for the founders).

      The argument for W would be a lot stronger had he vetoed some bills and Congress subsequently overroad them–but that's not what happened. There was almost no sense that W was upset with the spending levels during his presidency when the R's controlled Congress. If he did feel that way, he sure did a good job of keeping it under wraps.

      Enjoyed your post.

      Ed Wolfe

      • Ed,
        I agree with all your points. I don't believe W was a fiscal conservative either. Many of us in paleocon land were quietly embarrased. We should have been louder.

        Thanks for your reply.

        Rick

    • Certainly the President isn't responsible for what he can't control. But we DO need to distinguish between items he makes a priority and invests real capital in, and those that just get a passing wave. Too many times in my view, President Bush would say the right things, but not put much force into them. Particularly in the first 6 years in office with a Republican Congress, President Bush can be expected to have been highly influential. In those areas where he DID exert himself, he triumphed, e.g. No Child, Medicare Part D, Patriot Act, etc. When he failed, for example, to uphold a veto of the farm bill (requiring he only convince 1/3 of Congress), we're entitled to ask whether he made the same efforts. Controlling spending simply wasn't a priority. You can justify that, of course, but it's really revisionist spin to deny that IMHO.

    • You seem to forget that Bush did create the most powerful administration in history. It's not just the POTUS, it's the administration which compromises all of his many appointments( in all branches) and it was his own party that controlled congress the majority of time.

      It was Bush who pushed the tax cuts.
      It was Bush who go us into Iraq with no plans.
      It was Bush who pushed the prescription plan.
      It was Bush who rose gse's quotas to meet his policy of getting 7 million poor/minorities into homes.
      It was Bush who increased the budget by over 40%.

      Congress went along with all of those except the gse quota which was not their concern.

      • GTH,
        You are implying that W. illegally empowered his administration to operate outside of constitutional limits more so than other past administrations. If that were true, the Democrat congressional majority beginning Jan '07 would have immediately investigated. No such thing happened.
        It was hardly Bush's mudus operandi to expand the power of the POTUS. While W. did spend political capital supporting the initiatives you noted, it was congress that appoved the taxe rates, war funding, wire taps, Patiot Act , federal budgets, No Child Left Behind, Medicare Part D, etc….

        Most historians and presidencial scholars generally agree that Lincoln was the most powerful
        POTUS in our naton's history. In 75 years the historians won't even consider W. in the rankings of the top 15 or 20 out of the first 43.

  10. Federal government spending can be divided into 3 broad categories. Disaggregated they are:

    1. Consumption and expenditures;
    2. Interest on the debt; and
    3. Transfers to persons, state and local governments.

    Government consumption and expenditures as a percentage of GDP declined under Clinton and rose under Bush. It was primarily the wars (the defence bucket). See chart.

    Nominal interest payments on the debt as a percentage of total government spending (and GDP) was higher in the Clinton era than during the Bush era. In other words, Clinton had a head wind and Bush had a tail wind. See Treasury Direct.

    Transfers are more difficult to assess. Perhaps Hennessey can take a crack at the delta during the last 4 administrations.

    The alleged undisputed facts on government spending during the Bush administration are now in dispute.

    • Another way of stating that was that "Government consumption and expenditures as a percentage of GDP declined when we had a GOP Congress skeptical of the administration" and rose when the GOP Congress was less skeptical of the administration. People forget that for the last 6 years in office, Clinton worked with a Republican Congress. There's no way his fiscal record looks the same had he had a Democratic Congress to work with.

  11. There's no way [Clinton] fiscal record looks the same had he had a Democratic Congress to work with.

    Mere supposition without an evidentiary basis. Spending under Clinton declined from 22.1% to 18.3% of GDP, a 3.8% improvement. The bulk of that decline (2.4%) was a reduction in discretionary defence consumption and expenditures. See CBO Table F-8.

    Spending under Bush rose from 18.2% to 20.7% of GDP, a 2.5% deterioration. Nearly half of that increase (1.2%) was in the defence bucket.

  12. "Unlike each of his three predecessors, President Bush did not raise taxes."

    No, instead he increased the national debt by about $5 trillion. You think this is admirable? Responsible?

    Well, it's not like you have any economics training.

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