Obama, Bush, and Mankiw: A Look Taxes, Spending, and Bull#@% in the Great Recession
This post serves as a quick follow-up to my previous post on real GDP per capita growth and the tax burden. Let’s start with a few facts…. not random opinion, but facts.
1. The “Great Recession” began in December of 07 – that is, Q4 07.
2. If you look at Current Federal Gov’t receipts (line 1 of the BEA’s NIPA Table 3.2) divided by personal incomes and (line 1 of the BEA’s NIPA Table 2.1) you get this:
I dunno about you, but to me this looks an awful lot like a game of “Meet the new boss, same as the old boss.” Because both bosses seem to be cutting gov’t revenues, that is to say, taxes.
In fact, Obama seems to be a bit more prolific…. (Gubmint Revenues / Personal Income) = 0.22 in Q3 of 2007, and .2000 in Q4 of 2008, GW’s last quarter in office. That is to say, a change of 0.02 over 5 quarters, or about 0.004 a quarter.
But in Q3 of 2009, the last quarter for which we have data, (Gubmint Revenues / Personal Income) = 0.183, which distributed over the three quarters of Obama’s term so far, comes to about 0.005 a quarter. That is to say, the percentage of your income the gubmint takes away went down faster during the time Obama was in office than during the recession months when GW ran the show. Sure, a lot of that was stuff that started under GW, but it is silly to say anything along the lines that taxes have gone up since Obama took office and that’s what’s wrong with the economy right now.
3. The next graph looks at how gubmint revenues and gubmint spending (line 20 of the above mentioned NIPA table 3.2) have changed since Q3 of 2007, the last quarter before the recession. (I’ve adjusted for inflation using the CPI from the middle month of the quarter – data from FRED.)
I’m doing this at speed (deadlines!!!!) but if I didn’t screw up, it looks like this:
All of which is to say, the stimulus, such as it is, is (slightly) more of a reduction in gov’t revenues than an increase in gov’t spending. I had a series of posts last year about how the stimulus was badly designed, and indicating that I was afraid Obama was going to simply continue following the failed policies of the old administration. So far, Obama has disappointed me by doing just that. And we’re all paying a price.