Debts, Deficits, and Spending: Yes, Obama has Reduced Spending.

There’s an argument whether Obama has reduced spending or not. The answer is yes. This answer seems counter-intuitive to many, so let’s run through it. There are two main points of dispute.

1) What years count? In particular, do you count 2009 towards Obama or Bush? Some try to put it under the Obama category, since he was President for almost all of that year (sworn in January 20th). However, the budget was set under Bush. Most reasonable people would categorize it under Bush.*

2) Spending is not the same as the debt. Go check out this chart from Wikipedia. Go ahead, click there now. I’ll wait. Are you back yet?

The basic issue is the confusion between spending and debt. Obama (or his mouthpieces) have never claimed that debt decreased or slowed. They claimed that spending did. Under Obama spending went down 2.4% in 2010. That’s the answer right there.

But at the same time the debt has increased massively. How can this happen? It happens because tax revenue was been extremely low. Debt = Revenue – Spending, right? If revenue goes down significantly, the debt grows. Tax revenue has been very low, primarily because of the Bush tax cuts and the economic recession. Next time someone brings up the debt, ask them “Since we are already reducing spending, do you support tax increases to reduce it?” Watch their heads explode.

To finish the educational portion of this post, the deficit is the accumulation of debt over time. Understanding the basic math of revenue, spending, debt, and deficit is essential to have an informed opinion about governmental priorities. It doesn’t hurt to understand your own personal finance either.

* What about the stimulus package? Most of it passed under Bush, but Obama added another $140 billion or so. If you add that in, you get the below chart:

Presidential Spending

I would welcome any 2011 numbers under the same methodologies to extend this out. The only reference I can easily find suggests that spending went wwwaayyy up in 2011.

Here’s another way of looking at this. Most people would like the US to have more of a “Tax Less, Spend Less” philosophy. Democrats are still perceived as “Tax and Spend”. To whatever degree that is true, the corrollary is the Republicans are the party of “Don’t Tax, and Still Spend”. Which is better?

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