Gov’t Spending In Recessions and Recoveries

March 8th, 2012 at 11:02 pm

We used to quip that “a Keynesian is a Republican in a recession.”  (I know, I know…where do I get such hilarious material!?)

Some of Paul K’s recent work comparing gov’t spending under Presidents Reagan and Obama got me thinking, just how do these gov’t expenditure patterns stack up in recent years, drilling down a bit more into categories?

The results are below, and they actually kinda show that R’s really do get their Keynes on in recession—and they keep it on relative to D’s.

I just averaged real growth rates of gov’t spending, both federal and state/local for four years out from a cyclical trough (i.e., the quarter when a recession started).  The 80’s/now comparisons are plotted below and the table compares the last four recessions/recoveries.

Source: NIPA

President Reagan’s military Keynesianism shows up clearly in the early 1980s, with marginal fiscal drag from the states.  In the Great Recession (GR), both President’s GW Bush and Obama kicked up the non-defense federal spending, but what really stands out here is the state/local fiscal drag.

The table shows just how limited total gov’t spending has been over the past four years when you combine the feds with the states.  And while the dates don’t line up that neatly, you certainly can’t make the case that it’s D’s Presidents who are the big, fat Keynesians.  If anything, they look kind of tepid.

John Lennon once said something to the effect of “everything you think you know is wrong.”  He was right.

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3 comments in reply to "Gov’t Spending In Recessions and Recoveries"

  1. readerOfTeaLeaves says:

    To my eye the truly most alarming category is the drop in state revenues in the top bar chart, because I assume that represents education (and state-level medical care) costs. And my state has to balance its budget under state law, so there is no option for spending in excess of revenues.


  2. TheArmoTrader says:

    Hey Jared,
    Just a suggestion: It would be nice if you can add a “Tweet” button on the page, which would tweet out the Article link + Title. Comes in handy.


  3. Ricardo Campelo de Magalhaes says:

    This graph is a joke.
    Does it take in consideration items like Bailouts, Earmarks, Social Security, Medicare, Medicaid, …?
    Let me give a wild guess: no…


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