Surgin’ USA

Paul Krugman offers the following graph as evidence that “spending hasn’t surged”:

Now, what I’m seeing here is something like a 25% increase in spending under the Bush/Obama policies of the past four years. Which makes me wonder exactly what it would take to count as a surge in Krugman-land.

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On separate notes:

1) Yesterday’s post on rationality generated several comments that deserve responses. For the most part, I am reserving those responses for a separate blog post a few days down the line.

2) I just now hit a wrong button and deleted about 100 comments that my software had classified as spam, without first skimming through them. There is therefore a small but non-zero chance that I deleted a legitimate comment or two. If so, I very much apologize and hope you’ll try again.

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15 Responses to “Surgin’ USA”


  1. 1 1 Ben

    He’s addressing people who say that spending has surged under the Obama administration. And indeed, wouldn’t you expect a surge given the bailout, two stimuli and everything else?

  2. 2 2 Ben

    The real scandal is that he zeroed the Y axis of the second graph to make the spending increase look smaller while not zeroing the Y axis of the first graph.

  3. 3 3 Benkyou Burito

    Steven– I think you are getting the term surge and increase mixed up. Indeed government expenditures have increased 27% in the last 4 years, and they have increased 82% over those of just 10 years ago.

    But surge denotes a rapid or sudden increase. That has just not happened. Using BEA numbers as Krugman did ( http://bit.ly/cvwTOx ) I looked at the quarterly numbers for government spending between 2000-q2 and 2010-q2, the last ten years we have data for shows the yearly federal budget growing slowly and steadily the entire time, about 1.5% rise per quarter.

    It also looks like you are cherry picking years, or you fail to correct for 2009q2 which is either an anomaly or an outlier as far as gauging public spending goes.

  4. 4 4 Harold

    He shows 2 graphs, one with an increasing slope, and one with a pretty steady slope. The first one is spending as % GDP, the second is the one above (spendingh in $). The point he is making is that the increase in slope in the first graph is caused not by increased spending, but falling GDP. There has therefore not been a surge in spending, but a steady increase.

    He is commenting on the change in slope, not the slope itself. You may think he is commenting on the wrong thing, but it is his comment.

  5. 5 5 Nick

    I think reading his prior post on spending and how fiscal stimulus in the way he has long (to his credit) argued for hasn’t really been tried to amounts that would meaningfully effect the economy.

    I’m not sure if I agree with his prescription, but if you do look at the actual underlying, direct, fiscal spend on ‘job creation’ it is relatively pitiful when compared to the task at hand.

  6. 6 6 John Faben

    I think this is unfair on Krugman.

    Krugman’s opponents say: look, the graph of spending as a percentage of GDP has a much steeper slope over the previous two years than over the last two years of the Bush administration.

    Krugman responds: well, yes, but that’s because GDP has dropped, not because spending has been rising more quickly.

    Steve says: well, spending has been rising at the same rate for the past 4 years, and that rate is quite high.

    Steve’s point may or may not be valid, but Krugman’s explanation for the steepness of the slope in the first graph over the years 2008/10 seems pretty accurate.

  7. 7 7 Thomas Bayes

    I’m confused. If I look at federal outlays here:

    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

    I see an estimate of $3.7 trillion for 2010 and about $2.7 trillion in 2006. I’m sure someone with knowledge about federal fiscal policy will be able to point out what is missing from the table I referenced. Social security? Still, this table has some value for this discussion.

    Here are some interesting numbers based on inflation-adjusted outlays:

    2008-2010 (two years)
    Outlays rose from $2.7 trillion to $3.3 trillion. (22% growth)

    2002-2008 (six years)
    Outlays rose from $2.2 trillion to $2.7 trillion. (22% growth)

    1990-2002 (twelve years)
    Outlays rose from $1.8 trillion to $2.2 trillion (22% growth)

    As a percentage of GDP, inflation-adjusted outlays were 22% in 1990, 19% in 2002, 21% in 2008, and 25% in 2010.

    And my favorite: inflation adjusted deficit has grown (negatively) from -$150 billion in 2007 to -$1.3 trillion in 2010.

    Feel the surge?

  8. 8 8 Thomas Bayes
  9. 9 9 Cos

    Aren’t you being dishonest here? Isn’t this similar to the deception you criticized the AFL-CIO for recently?

    Look at Krugman’s post, and it’s pretty clear he’s debunking a claim that spending surged under Obama showing that spending growth has remained steady for about five years, and even slowed down slightly last year – the opposite of “surged”.

    If you look further, you can see that in context of the column he’s defending and the criticism of that column that this post is a response to, the graph in question makes the point he intended to make.

    “Consider, in particular, one fact that might surprise you: The total number of government workers in America has been falling, not rising, under Mr. Obama. A small increase in federal employment was swamped by sharp declines at the state and local level — most notably, by layoffs of schoolteachers. Total government payrolls have fallen by more than 350,000 since January 2009.

    Now, direct employment isn’t a perfect measure of the government’s size, since the government also employs workers indirectly when it buys goods and services from the private sector. And government purchases of goods and services have gone up. But adjusted for inflation, they rose only 3 percent over the last two years — a pace slower than that of the previous two years, and slower than the economy’s normal rate of growth.

    So as I said, the big government expansion everyone talks about never happened.”

    http://www.nytimes.com/2010/10/11/opinion/11krugman.html

  10. 10 10 Harold

    Is the difference federal vs. total govt (state plus federal)? This line from Krugman might explain the difference between the two sets of figures:
    “So states and cities, which can’t run large deficits, were forced into drastic spending cuts, more than offsetting the modest increase at the federal level.”

  11. 11 11 Benkyou Burito

    Krugman is using BEA numbers for total government expenditures. I like to the table in my earlier post.

    It’s interesting to see the Steven pulls 4 years out of his hat to compare spending levels. 4 years ago we were at an uncharacteristically low level of government spending considering the long term trend.

    Obama has had lower than average spending growth every quarter except for his first, when massive short-term spending was needed to address the financial crisis.

  12. 12 12 Cornelius McFudgemuffin

    If you look with your eyes you will notice the chart only goes up about one and a half centimeters. That is hardly a stimulus at all. Seriously, you all have to learn as much maths as me.

  13. 13 13 Seth

    Krugman offers this in response to the apparent surge on the spending as % of GDP chart:

    “Yes, that’s right: it’s what happens when you divide by GDP in a time of terrible economic performance.”

    This doesn’t compel me to believe that spending as a % of GDP is not relevant.

  14. 14 14 Ken B

    “But surge denotes a rapid or sudden increase.” Surge implies sudden only in an electrical context. Waves and flood-tides surge and can do so relentlessly. (English is full of traps for the unwary). The context here strongly suggests to me the surging flood-tide analogy so Burrito seems off the mark here.

    The point at tissue is not has spending surged but does a graph showing a 25% rise in a short period disprove a surge. I’m guessing if your blood pressure, your mortgage payment, or your weight went up that fast you would be laughed at for saying “surge, what surge, look at this chart.”

  15. 15 15 Brian Moore

    Ben is totally right:

    “The real scandal is that he zeroed the Y axis of the second graph to make the spending increase look smaller while not zeroing the Y axis of the first graph.”

    Yeah, this is 100% not kosher on Krugman’s part. You cannot resize the Y axis and then visually compare both graphs. If you actually look at the % increase in each graph, the 2nd actually shows a HIGHER increase than the first. Krugman has “refuted” his critics by finding a graph that actually shows a higher relative increase in gov spending…

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