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The Mythical Obama Spending Binge

The notion that the Obama administration has presided over a massive spending binge has been repeated so often that the administration doesn’t even bother denying it anymore. Spending has shot up as a percentage of GDP. But, as Paul Krugman explains, virtually the entire phenomenon is an automatic response to the recession rather than any policy change. First, about half the increase in the percentage of GDP going to government spending is simply reflects the economic crisis, which has shrunk the denominator:

Now, this chart implies that the other half of the increase reflects actually higher spending. That increase consists almost entirely of automatic stabilizers -- programs that benefit the needy and increase their budgets automatically when the number of needy increase. Krugman breaks down the annual rate of growth by category, comparing it with the annual rate of growth under President Bush:

So there you have it. The “Obama spending binge” was almost entirely mythical.