Sunday, August 10, 2003

The Big Government, Runaway Spending Party: The Republicans

Welcome to my blog. I've established this blog to puncture as many political and economic myths as I can. Listening to what passes as the national discourse these days gives me the feeling that we have all fallen down Alice in Wonderland's rabbit hole. That's a good analogy I think, especially since I've gotten The Matrix out to watch again. Maybe when I publish this blog publicly I'll rename it 'the Red Pill' (though that one's probably long since has been snatched up).

Let's start with one of the most basic myths of political discourse: that Republicans are more frugal than Democrats. It's long been a truism that Democrats are supposed to be big spenders who will spend America into bankruptcy. Once you look at the actual record, you will be surprised at the ease that this myth has been allowed to take hold. The fact of the matter is, if you measure 'runaway spending' as a willingness to spend the US budget into red ink, then Republicans are clearly the big spenders, not the Democrats.

To get a broad enough look, let's take every administration since 1904 through 2000. In those 96 years Democrats ruled the White House 48 years and Republicans sat in the oval office for 48. During that time, these administrations added $3,380,570,000,000.00 to the publicly held national debt. (That's 3.38 trillion, for the comma impaired.) Your taxes pay the interest on this debt today (among other things.)

Now Democrats had to contend with paying for the three cataclysmic events of the 20th century: World War I (Wilson), the Great Depression (Roosevelt) and World War II (Roosevelt & Truman). So naturally one would expect that the Democrats, even if by accident, should have added the most red ink to our tax bill. And one would be wrong. Turns out that over 73% of the whole publicly held debt added in the 20th century came from Republican administrations. That's right, 3 out of 4 dollars that we are paying interest on with our tax money is due to Republicans.

Now this is big for a couple of reasons. First off, it shows that political conventional wisdom is lying to you when the assumption is presented that Republicans are more fiscally responsible. Second, it gives you a target for why your taxes are so high and your services so low. For, if the Republicans had managed just to be no better than the Democrats at keeping overspending down, we'd be paying less than half the interest cost on the national debt than we are paying. That's about $115 billion per year, or about $875 per American citizen tax return filed. (So far my source for all of this is the Office of Management & Budget's Historical Tables of the US Budget, presented to Congress in conjunction with President Bush's FY2003 Budget. You can get these tables in Adobe Acrobat or Microsoft Excel format at OMB's Budget website.)

Democrats are also accused of building "Big Government" as much as they can. To hear some of our friends on the right tell it, Democrats will only be satisfied when "Big Government" owns every section of the American economic pie. Let's test this theory out too. President Bush's OMB report also gives us budget figures expressed as a percent of GDP back to 1940. This is the best way to test this proposition, because GDP, gross domestic product, is the overall economic pie. The percent spent by government in any given year represents the size of the pie slice demanded by "Big Government". If Democrats are really "Big Government" fans, we would see this pie slice get bigger and bigger during Democratic administrations and smaller and smaller during Republican administrations.

Once again, what you expect to see isn't what really happened. The average growth rate of the Federal budget as a % of GDP was 0.3% per year under Republicans since WWII. So while Republicans have been in office (for the last fifty years anyway), the Federal government's share of the economy grew and grew. Under Democratic years, the average growth rate of the Federal pie slice was -1.66% per year. That's right, the aggregate performance of Democrats in the White House since WWII (Truman, Kennedy, Johnson, Carter and Clinton) has been a reduction in the Federal government's share of the whole economy. This is not some isolated year skewing the results. Under 27 years of post-WWII Democratic Presidential budgets, 18 saw a reduction in the size of the Federal government relative to the economy. Under 30 years of Republican rule, the Federal government claimed an ever larger piece of the pie in 18 of those years.

So there you have it. Conventional Wisdom Lie #1: The Democrats are by a century's worth of actual experience decidedly NOT the party of runaway spending or big government. Republicans can lay claim to both titles, at least according to Bush administration figures.

Part of the reason Democrats shrunk government relative to GDP is their much better record of generating economic growth. But that's a myth to be busted another day.

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