Bush vs Obama: Facts And Observations

Tyler Durden's picture

Even as the political posturing over who spent what, how much and when reaches ridiculous levels, courtesy of the St. Louis Fed it is a short 5 minute process to fact check (thanks to the St Louis Fed's Fred) what the average annual federal expenditures, investment and consumption were/are under the regimes of Bush and Obama respectively. It also allows us to see what the average government saving, or rather, borrowing has been under the two administrations. The result, or rather the step function contained therein, may surprise some. Furthermore, we present a few observations from Sean Corrigan's latest later on the proclivity of the Obama administration to spend.... and spend... and spend... which demonstrates that while there certainly may be carryover from the previous administration, the eagerness of the current one to fund a record amount of disposable income via state transfer funding can not be blamed on the Bush by any sane person.

First, a head to head comparison of expenditures, investment and consumption. Net result: a 332% difference when it comes to net average annual savings (or rahter the opposite). Guess in whose favor.

And some follow up observations from Corrigan:

Come on, people! This is NOT the fiat money equivalent of the Cuban Missile Crisis, for goodness’ sake! We are not going to reduce the world to cinders on the morning of August 2nd if the imperial presidency actually has to hew to the Constitution for a change!

 

While there would no doubt be occasion for some interim difficulty in speculative markets if the US did not get to borrow even more next week, the Federal government need not actually default on that fateful day: one should not overlook that it does still face the option of simply not writing as many uncovered cheques as has been its all-too profligate wont.

 

Be aware that the world’s largest economy still luxuriates in a soaring deficit of over 12% of private sector net domestic product (the wealth-creating rump out of which such debt must be serviced and redeemed) despite the ostensible recovery being enjoyed there. This gap comprises no less than forty, potentially inflationary percentage points of a vast, $3.6 trillion level of annual expenditure which is not only bigger than the output of the entire German economy, but which amounts to an initiative– and responsibility- crippling 30%+ of PNDP—a proportion heretofore unprecedented in peacetime.

 

Post-crisis, the Obama administration currently doles out three times as much as did the hardly parsimonious first Bush one, as recently as 1990, burning through as much in a year as its predecessors in office managed cumulatively to consign to the flames in the entire first three decades of the post-WWII experience.

 

To imagine that one could not make a meaningful attempt at good housekeeping within such broad confines—without having to confiscate more private means or to penalise more individual endeavour along the way—is, frankly, risible: a fact of which the erudite, considered, and entirely sane Ron Paul (a man we would back over the likes of that elder statesman-manqué, Vince Cable, in almost any field of endeavour) is just as fully cognisant as he is aware that this game of brinkmanship is one of the few methods possessed by a no longer supine legislature to bring an arrogant executive to heel.

The punchline:

Absent the expectations of a renewed policy of monetization from the Fed, US Treasury rates are therefore likely to back up far more from the simple return of a modicum of free market pricing, regardless of their attached rating, than they are from a belated recognition by the zero-credibility agencies that no amount of politically-convenient pretence to the contrary can seem to put cloth on the back of a thoroughly naked emperor.

 

The fewer free rides the global hegemon enjoys— either in the debt or currency markets (and the two are, naturally interlinked - the more responsible his behaviour might become toward both us and his own oft-afflicted citizenry. This battle could just conceivably bring about exactly such a curtailment of his ‘exorbitant privilege’.

 

Can this be entirely a bad thing of which to dream?

And the chart the summarizes it, together with the caption:

For the first sustained time since the Great Depression, the stretch since May 09 has seen government handouts exceed contributions. Currently, a net 13.5% of personal disposable income comes directly from the state, the highest fraction in the eighty-year record. The swing from pre-crisis levels is ~$845 billion pa: what must this must mean for the deficit and debt?

As well as some other charts: