Discretionary Authority and Discretionary Spending

Fiscal Responsibility and the Budget Authority for Discretionary Programs

I’m not really a macro guy –but there’s a lot of macro data out there, and a data guy like me likes to look around and see how it all runs.

As I understand the budget process, the President sends a proposed budget to Congress with lots of stuff for his campaign contributors. The budget goes to Congress, and comes back larded up with stuff for supporters of those who “serve us” in Congress. (Why am I suddenly reminded of Damon Knight?) Along the way there’s some back and forth, but basically, the budget reflects the President’s wishes supplemented by those of Congress. This is particularly true of discretionary spending; mandatory spending, after all, is mandatory, regardless of who is President.

Wandering through the bowels of the OMB website, I came upon Table 8.9 , entitled: “BUDGET AUTHORITY FOR DISCRETIONARY PROGRAMS”, and Table 8.7 , entitled “OUTLAYS FOR DISCRETIONARY PROGRAMS.”

Here’s the yearly % change in outlays as a share of GDP , and the yearly % change in authority as a share of GDP under President’s Reagan through GW. (Note… GW data goes through 2005 – the OMB had not updated their tables at the point I pulled the data, and probably won’t for a while.)

_________% ch in outlays___% ch in authority
Reagan_____-1.1_____________-2.6
GHW_______-1.9_____________-1.5
Clinton_____-3.2_____________-3.7
GW_________4.9______________6.6

Leaving out defense

_________% ch in outlays___% ch in authority
Reagan____-4.2_____________-5.9
GHW_______1.7______________4.0
Clinton____-1.4_____________-2.7
GW________3.5______________7.0

GW seems to be the clear winner in spending increases… in fact, he’s the only President in the sample who increased discretionary spending as a share of GDP, and did it by more quite a bit more than any of the previous Presidents decreased it. (Let me, at this point anticipate some of the comments to this post by being the first to note that clearly, by writing this I am biased, delusional and lying, and I clearly must have an irrational hatred toward GW.) Clinton seems to have done the best job at reducing discretionary budget bloat, and Reagan cut the most from the non-military portion of the discretionary budget. GHW decreased discretionary spending overall, but increased the non-military portion – this was the Peace Dividend.

(BTW – for those whose knee-jerk reaction is that Clinton’s relatively slow spending increases were Newt Gingrich’s doing… – the average % change in outlays and average % change in authority for the first two years of his term, before the Republican Revolution, were –4.5% and –6.8%; when defense spending is removed, the figures were 0.2% and -1.7%. We can conclude the Republican Revolution reduced Clinton’s ability to cut spending.)

But that leaves me with some questions… why would spending increase at a different rate than authority? Well, perhaps the President doesn’t spend everything he is authorized to spend on discretionary items. The table below shows the yearly average percentage change in the Budget Authority on discretionary items less outlays on discretionary items as a share of GDP.

_____average budget authority less spending on discretionary items as a pct of GDP
Reagan_______0.62
GHW_________-0.06
Clinton_______-0.32
GW___________0.12

If I understand this correctly, Reagan did the best job at keeping to his budget. GW is also keeping to his budget. (In GW’s case, as we see above, those were budgets that bloated very rapidly.) Both GHW and Clinton tended to overspend their budgets. (In both cases, each only came in under their authority in one year during their administrations.)

Am I understanding this correctly? It seems odd that the most fiscally irresponsible President in the sample managed to come in under budget. (Bear in mind – GW is running two wars on supplementals and appropriations, rather than budgeting for those wars.) Or that Clinton could get away with consistently spending above his authority, given that during his term there was an open-ended six year sixty million dollar fishing expedition into, well, pretty much everything he ever did, and everything anyone ever thought it was conceivable he might have done. So what is going on here?

Postscript. My spreadsheets are available to anyone who wants them.
Update. One correction… erroneous comment about Reagan’s budgets being bloated removed.