Bush, the Not So Big Spender
Color me shocked.
We’ve heard over and over again that the Bush administration’s spending is out of control. But according to Investor’s Business Daily, that isn’t necessarily true if measured against the "most important" yardstick of all — spending as a share of GDP:
Spending as a share of GDP is the most important measure of the size of government, since it measures what government actually takes from the national economy. . . .
So rather than a "record" spender, as some claim, Bush is actually below average. . . .
Many on the right have criticized Bush for too much spending, at times rightly so. But this has been picked up by Democrats, who now style themselves as fiscal conservatives. They’re not. . . .
Money quote:
For the record, Bush came into office in January 2001, a time of unique challenges both to our nation’s economy and to its security. They included a stock collapse that erased $8 trillion in national wealth in the space of a few months, a first-ever terrorist attack on U.S. soil that killed 3,000, and a recession that Bush inherited but didn’t cause.
If Bush had pushed to cut the budget in 2001, he might well have been impeached for economic incompetence. A decline in spending would have hurt the economy in the short run, extending the recession and making the recovery in jobs even tougher.
The relevant facts are that, over the past three years, federal spending as a share of GDP has been remarkably stable: 20.2% in 2005, 20.3% in 2006 and 20.2% in 2007. And over the same period, the deficit has been cut in half as a share of GDP.
Well, even so, in dollar terms federal expenditures are higher than ever. That gives Bush’s opponents ample material with which to attack his Administration for profligacy.
I don’t think we’ll have a widely agreed-upon gauge for federal expenditures, the GDP, or average material well-being until we agree to measure these things with a yardstick that doesn’t ITSELF change size or shape. The dollar has been continuously devalued for nearly a century. Yes, each of us has lots more dollars than our grandparents did — and inarguably, more and better goods to spend those dollars on — but the relentless devaluations have destroyed our ability to make meaningful comparisons and measurements of progress.
For example: My father bought a new 1962 Buick Special for $2200. How much better a car is the 2008 Buick LaCrosse, whose strippo list price on CarsDirect is $22,910? Is it ten times as good a car? Apart from dividing the first price into the second and ignoring the decline in the value of the dollar between those years, how would you decide?
Today, it takes $790 to buy one ounce of gold; therefore, the LaCrosse’s price in gold is about 29 ounces. In 1962, gold traded in Europe for about $37 per ounce; therefore, Dad’s Special cost about 59.5 ounces: TWICE AS MUCH as the LaCrosse today. Now, it’s at least possible that gold was substantially under-valued then and is over-valued today, but the precious metals, especially gold, have always been the most stable measures of value. So what about those two Buicks? Is the LaCrosse only HALF the car the Special was? Or is it as good or better, and is the price in ounces of gold less than that of the Special because of capital and technological improvements?
Thus also with every other sort of measure whose unit is the unbacked, infinitely inflatable dollar.