13 Comments

  1. nairbv June 28, 2008 @ 11:35 pm

    Could you post a graph with the last three graphs overlapped?

    I mean, the non-defense spending graph looks more jagged than the defense spending graph, but they do look pretty similar in general shape. I can’t really make out that the defense spending is so much
    more correlated to overall spending than the social programs graph.

    I probably lean more towards the view you’re expressing, but I don’t feel like the way you’ve presented the data makes it so obvious.

    I also think it would be interesting to remove interest payments from the data if possible. “Total government spending,” as it represents particular presidential policies etc, would probably give a better picture if it didn’t include money spent to pay off debt incurred by the mistakes of previous administrations. maybe you’re data already includes this though?

  2. Just ordered a new campaign bumper sticker - Early Retirement Forums June 30, 2008 @ 9:23 am

    […] Reagan took the size of the government from a low of 19.7% to a high of 21.6% [of GDP]. All to leave it at the same level he had found it. What he did do, was to destroy much of the social programs created during the Roosevelt Administration, with a government that was even bigger than Roosevelt’s. In fact, up to the Second World War, the government was never bigger than 20.7% of the GDP, and this is during the years of crazy government spending to get out of the big depression. The Politics of Debt

  3. Anonymous July 25, 2008 @ 1:26 pm

    1. Does your method of using % of GDP control for increase in inflation and population?

    2. Which party controlled congress at which times?

    3. You concluded big government results from “war, and not social programs” and cite “imperialistic adventures [as] the source of our fiscal problems.” Do you realize that Democratic presidents got us into WWII (FDR), Korea (Truman), and Vietnam (Kennedy)? Do you consider these “imperialistic adventures”?

    4. You urge fiscal conservatives to think again before voting Republican. Do you suggest that they vote Democratic? For example, will socialized health care proposed by Democrats increase or reduce spending and the size of government?

    5. Even the Republican party’s base criticizes the current Bush administration on overspending. No profound insights here. Hence, campaign promises by Romney and Guliani. By the way, had any of the Democratic campaigners promised to reduce spending or the size of government?

  4. Franklin July 26, 2008 @ 9:56 am

    1. Yes. The idea is that using % of GDP you are looking at how big the government is respective of the whole economy at any given time
    2. Both parties are together in this
    3. WWII may not be an imperialistic adventure (as a matter of fact is so emotionally loaded that making the argument that it was the greatest imperialist adventure ever would call for a whole book. The Republican party was then against intervention on overseas affairs then). I dislike Truman for being the spearhead of American imperialism in the second half of the 20 Century. I dislike him even more for how he used atomic energy.
    But you will have to admit that the Republican party is not different than them. It was, it is not anymore. Nixon was elected to end the Vietnam war (among other things) and he beat Goldwater whose plan was to nuke them. Neither of them were able or willing to withdraw before defeat based on republican principles.
    4. As the data shows, the social programs are really small compared to military spending. Reducing the size of our military to that of a defensive republican force, and not that of an imperial force with bases around the world, would allow for huge amounts of money to be spent on social and national development programs.
    The US created the current middle class by giving free College education to the GIs after WWII. The alternative was to have millions of able body unemployed young man with military training idling for 40 or 50 years. Shifting our focus from conquest to defense (we have a Defense Department not an Offense, Conquest and Occupation Department) would free money to provide not only free health care but also free college education.
    We are a rich country overextending our resources to sustain far away frontiers. The result, the history of Rome tells us, is that we are going to end up with an army formed and commanded in the field by foreign nationals with little interest in defending the republic.
    5. The republican party criticizes the current Bush administration on overspending so they don’t lose the vote of conscientious people like yourself. Those are nothing but electoral promises, like the ones made by Reagan.
    The Republican party stop being a fiscal conservative party with Reagan. Until the Republican base reclaims the party to the Republican ideals, I think they will be better off letting the current party hang dry and not trusting any more electoral promises.

  5. Anonymous August 31, 2008 @ 9:17 pm

    What you’ve failed to consider is that republicans following democrats are usually trying to restore a military that was weakened by democrat cuts to fund social programs. This is directly supported by the percentage of money that is spent on defense during republican terms. Spending that would be unnecessary if national security were maintained by the democrats. You’d think this would be clear after the two most recent defense failures – the world trade attacks. Both of which can be directly tied to reduce intelligence assets.

    If we could get just one democratic government that didn’t gut military, intelligence and defense spending, we’d see a republican government that didn’t need to spend so much repairing the damage. You might see more people willing to vote democratic. You might even see republicans that didn’t have to spend to restore our national security. It’s hard to be fiscally conservative, run social programs and repair the damage done by democratic naivete.

  6. America’s Future After an Obama Victory: Hope Hangs by a Thread « The Uncanny September 15, 2008 @ 10:47 am

    […] that our national debt and growing financial uncertainty can be solved by reducing taxes, the myth of Republican Fiscal Conservatism. The golf course set turns its back on the history tells us that this has never […]

  7. America’s Future After an Obama Victory: Hope Hangs by a Thread « The Uncanny September 15, 2008 @ 11:03 am

    […] that our national debt and growing financial uncertainty can be solved by reducing taxes, the myth of Republican Fiscal Conservatism. The golf course set turns its back on the history telling us that this has never […]

  8. The Terrible Plot of The American Economy | Finance Money Financial News December 24, 2008 @ 6:35 pm

    […] The Myth of Republican Fiscal Conservatism (7) […]

  9. Being Independent On Election Day | Finance Money Financial News December 24, 2008 @ 6:56 pm

    […] The Myth of Republican Fiscal Conservatism (7) […]

  10. Rush Limbotomy February 26, 2010 @ 1:05 pm

    It should be pretty obvious by people that Republican led adminstrations have created a wider gap between the extreme poor and the extreme rich, leaving a huge cavernous gap for the middle class to fall in.

    Republican-Conservative is nothing more than a hyped up oxymoron and is blatantly false. Republican economies for the last 50 years have been mostly disastrous.

    Now we stand in the wake of the great economic meltdown of 2008. Republicans?

  11. Franklin February 26, 2010 @ 9:57 pm

    Liked your article at http://thedrewpearceexperience.blogspot.com/2010/02/conservative-republican-think-again-its.html

    There is a correlation between failed presidencies (by assassination, impeachment, or otherwise) and fiscal conservatism. Clinton got impeached over the definition of “is” while Bush got away with almost everything. Now compare Bush’s crimes against Reagan’s and Nixon’s. Nixon, the bad guy, is the only one of the three who actually reduced expenditures.

    Follow the money, to the senate…

  12. Phil April 16, 2010 @ 12:58 pm

    The idea that the US military has ever been gutted post WWII is laughable.

  13. Perry Should Seek Unemployment Benefits « Bill White is Right 4 TX! July 8, 2010 @ 5:02 pm

    […] 1947 Government expenditures as a percentage of GDP illustrate quite graphically, that the biggest contributor to “big government” is national defense, not social programs.  Republican Presidents and leaders have been associated with greater […]

The Myth of Republican Fiscal Conservatism

Democracy, Economics, Iraq War, Politics Comments (13)

Seeing Rudy Giuliani and Mitt Romney fight over who is more of a fiscal conservative made me think that they are actually barking up the wrong tree. You see, although the Republican Party claims to be the party of “small government”, and many fiscal conservatives vote Republican for that reason, the record shows that the last Republican fiscal conservative president was Richard Nixon. What? Not even Reagan? No. Reagan was no more fiscally conservative than the so much maligned Jimmy Carter.

The following set of charts shows Government expenditures as a percentage of GDP, quarter by quarter since 1947. This method allows us to really know how much money our government is spending, not in dollar terms, which are meaningless, but in relationship to the wealth of the nation.

There are three presidencies during which government expenditures declined significantly: Dwight D. Eisenhower’s, Richard Nixon’s and Bill Clinton’s. Maybe it is just a coincidence that the two presidents that did more to reduce government expenditures were attacked from Congress.

So, let’s see in greater detail how Republican administrations fared compared to Democratic administrations. Not surprisingly, we see a big spike in government expenditures relative to national wealth during the Truman administration. This is during the Korean conflict, from 1950 to 1953.

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In 1953, we find the first post-war Republican president, Eisenhower.

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Eisenhower was able to reduce government spending from a top of 24.5% of GDP to a low of 20.05% of GDP. After that, the next relevant spike is during the Johnson administration and the Vietnam War.

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Amazingly enough, the Vietnam War was, in relative terms, less expensive to the Nation than the Korean conflict. The number of dollars spent is much higher, of course, but in terms of the national wealth, the expenditure is lower than it was during the Korean conflict, with a top of 23.3% of the GDP. You could say that richer nations can afford wars that are more expensive.

And now, for Dick Nixon.

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As you can see, during the Nixon administration, government expenditures were curbed from 22.7% to 20.2%, a brave effort that wiped 2.5% but which pales compared to Ike’s.

After that, nothing much happens really. So I am going to jump to the revered Ronald Reagan, who is the one who cemented the double talk of small government and big spending.

The Reagan administration “favored tax cuts and smaller government, introducing the largest tax cuts in American history” (according to that source of common wisdom that is Wikipedia).

And here is when we come to face the myth of smaller government, a myth created by the Reagan administration and perpetuated by the current administration.

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As you can see, Reagan took the size of the government from a low of 19.7% to a high of 21.6%. All to leave it at the same level he had found it. What he did do, was to destroy much of the social programs created during the Roosevelt Administration, with a government that was even bigger than Roosevelt’s. In fact, up to the Second World War, the government was never bigger than 20.7% of the GDP, and this is during the years of crazy government spending to get out of the big depression. What’s more, at its lowest point, the Roosevelt government was only 18.3% of the national GDP, a level never achieved by any other Republican up to President Bush.

What did I just say; George W. Bush is in fact a fiscal conservative? Well, the truth is, no. He is not. As a matter of fact, during his administration, the size of the government relative to the wealth of the nation grew by almost 2%.

image

So, where is this myth coming from? How come reducing social programs does not reduce government expenditures. The sad truth is that Republican politicians have been lying to their base for the past 25 years.

The chart of Nondefense expenditures relative to national GDP does not match any of the spikes or rises on government size.

image

As you can see, other than the spike during the Truman administration, and the one time low during the Eisenhower administration, the “big government” size is not dependent on reducing the social programs (reflected with other expenses on this chart).

Why and when does the government grow?

image

You just saw the answer. The biggest contributor to “big government” is national defense, not social programs.

The history of Big Government since 1929 looks like this.

image

If you are a fiscal conservative and you were thinking on voting republican, you may need to think again.

  1. The last fiscal conservative Republican president was Richard Nixon (although he was highly interventionist, and if he were judged by the same standards fiscal conservatives applied to FDR, a socialist)
  2. You may think that social programs are not the solution, but neither are they the problem
  3. It is war, and not social programs, where the government gets fat
  4. Imperialistic adventures are the source of our fiscal problems, not a solution for our Republic

Franklin @ November 30, 2007

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