I often hear from those on the left about how much better the Clinton years were than the Bush years and today. Well, let’s compare the size of government during the Clinton years (1993-2000) to the Bush years and today.
First, my favorite chart again to get a general idea of where we are now versus the Clinton years. Clearly, government spending is much higher now:
Total government spending (federal, state, and local) during the Clinton years averaged 34.3% of GDP. During the Bush years, it averaged 35.0%. During the fiscal year just completed (2010) it was 43.9%. Are those on the left really arguing for a 9.6 percentage point reduction in government spending? And what 21.9% (9.6 divided by 43.9) of government will the cut?
Let’s look at the tax side of the equation. Total government revenue (federal, state, and local) averaged 35.2% of GDP during the Clinton years. It was 34.4% during the Bush years. Today (FY 2010), due to the recession, it stands at 30.4%.
What is remarkable is the similarity between the Clinton years and the Bush years, on average. The Bush years saw total government spending 0.7 percentage points higher than during the Clinton years, but total government revenue 0.8 percentage points lower. However, not all this credit and/or blame can be assigned to these Presidents or even to the Congresses because these figures include state and local government, as well. On the balance though, these periods were remarkably similar.
Another interesting factor is that government spending fell 4.5 percentage points during the Clinton years, yet rose 4.4 percentage during the Bush years. Government revenue saw the reverse, up 3.9 percentage points under Clinton but down 4.2 percentage points under Bush. Much of this is simply the result of economic cycles. Clinton started after a recession and ended with a bubble. Bush started with that bubble and ended with a recession.
But the most notable thing is what is occurring today. Under President Obama, government spending as a percentage of GDP has risen 6.9 points while revenue has fallen 2.6 point. Again, President Obama and Congress cannot take all the credit/blame because most of this change has been due to the recession. However, government spending has risen more under Barack Obama in just two years than it did under Bush in eight. In fact, government spending as a percentage of GDP in 2009 alone rose more than it had in the previous 36 years. During the previous recession (2000-2003), total government spending rose 2.7 percentage points and we recovered from that recession just fine. In this recession (2007-2010 so far), government spending as a percentage of GDP has risen 8.9 points and the recession continues.
All this raises a few questions:
- What have we to show for this 8.9 percentage point increase in the size of government?
- Do the liberals really want to return to the Clinton day? Are the liberals willing to reduce government spending by 21.9% (9.6% of GDP)?
- Will conservatives trade a tax increase equal to 4.8% of GDP in exchange for cuts to government equal to 9.6%?
As for me, I’d gladly trade the tax increase for smaller government because we are already paying for the tax increase. To fund our budget deficit, government is issuing debt and printing money. Instead of charging us taxes, they are devaluing the Dollar. Instead of paying for our large government through taxation, we are paying for it with reduced value of our wealth and increasing foreign ownership of our country. Therefore, taxes are much less important than government spending. So yes, I’d certainly support an increase in taxes equivalent to 4.8% of GDP IF AND ONLY IF we reduce government spending by 9.6%, returning us to those much hallowed days of the Clinton Presidency and Contract With America Congress.
* This does not reflect my opinion of Clinton as a person or his policies. Likewise, much of the above talk of “Clinton years” was the result of general economic trends and the Republican Congress. As always, I am a firm believer that history moves in trends and our leaders reflect those trends. (See my book, The Path to Tyranny. Additionally, I plan to write an entire book on this subject in the future.)