The Road To Serfdom?

That's what President Bush has put us on, according to Peter Robinson, who cites, to prove his point, the following chart:

Note that the increase looks roughly twice as shocking as it actually is because the chart-makers, John Cogan and Glenn Hubbard, decided to start with a baseline of $200 billion rather than zero. They're honest enough to allow that a chunk of this increase is inflationary, and another chunk homeland-security related; what they don't show, though, is the growth of the U.S. economy during the same period, and how the Bush-era increase in discretionary domestic spending looks in historical context as a percentage of GDP. To his credit, Robinson queried Cogan on this point:

Q: The chart shows the increase in spending in dollar terms. Haven't you been able to find a chart that shows the increase in spending as a proportion of GDP?

A: No, I haven't—not in the time I've had available for Googling this weekend, which, since I've been scrambling to get the family ready to go back East for a couple of weeks (we're off at 4.30 this very morning) amounted to a little under half an hour. Sorry about that. And I'll check in the from the beach when I can.

Um ... what? According to Cogan's bio, he's a professor in the Public Policy Program at Stanford University, and his "current research is focused on U.S. budget and fiscal policy, social security, and health care" - yet he can't find a chart showing one of the most relevant statistics to a debate about whether George W. Bush is a wild and crazy overspender? I know where to find those statistics right off the top of my head, and I'm a rank amateur: Just head to CBO.gov, click on Historical Budget Data, and flip to page 8, where you'll discover that in 2001, when Bush took office, discretionary domestic spending accounted for 3.1 percent of GDP, and in 2007 it accounted for ... 3.3 percent of GDP. In the years between, it rose as high as 3.6 percent of GDP, which is on the high side by post-Reagan standards (we averaged 3.25 percent a year in the 1990s), but way lower than in the profligate, post-Great Society Seventies, when we were spending as much as 4.8 percent of GDP a year on domestic programs.

The bottom line: The Bush years haven't been a small-government success story by any means, and fiscal conservatives have every right to be disappointed. But the road to serfdom this ain't. (Certainly Friedrich Hayek himself, who vigorously defended free markets without taking anything like the Norquistian position on the pressing need to drown the welfare state in a bathtub, wouldn't recognize it as such.)

Comments

As a former lecturer in the Public Policy program at Stanford (for whatever that means) I also would have to ask why they chose 1997 as a base year. That was the first year of Clinton's second term -- Bush wouldn't become President for four more years, so he can't reasonably be held responsible for the increases over that time period.

Posted by Bill H | July 21, 2008 11:34 AM

This kind of fine-grained analysis doesn't matter, percentage of GDP and all that complicated stuff. The admission ticket to any serious policymaking discussion is to say that Bush is an idiot and a failure. If you don't say that, it's like suggesting that you don't care about diversity or the planet, and no one will listen to you.

Posted by y81 | July 21, 2008 11:46 AM

It may have been Robinson who couldn't find the chart, not Cogan. The post isn't completely clear.

Posted by Stephen | July 21, 2008 12:11 PM

The flagging economy and credit bailouts will likely push domestic discretionary spending (as a % of GDP) up over this final year of Bush's tenure. So when it's all said and done, President Bush will have presided over the biggest increase in domestic discretionary spending since the 1970s. And he will have done so during a time when he reasonably could have asked Americans to cut back for the war effort.

And note that Bush's spending record improved dramatically over the last couple of years, dropping from 3.6% of the GDP in 2005 to 3.3% in 2007. 2005 was the year when conservatives starting hitting critical mass with their criticisms of Bush's domestic spending.

Posted by Pincher Martin | July 21, 2008 12:13 PM

Let's all chant GDP, and not mention the nasty word deficit.

Posted by James | July 21, 2008 12:27 PM

And don't whatever you do mention the national debt.

Posted by James | July 21, 2008 12:30 PM

This "small government" nonsense conservatives like to attach to the robes of Saint Reagan is absurd. That you have to limit your analysis to "domestic spending" and leave out the skyrocketing "defense" budgets of Saint Reagan and Dumbya is enough to show how dishonest this approach is.

Posted by MoeLarryAndJesus | July 21, 2008 12:31 PM

Let's all chant GDP, and not mention the nasty word deficit.

Deficits can happen for different reasons, not all of them bad and not all of them within Bush's control.

Fiscal conservatives rightly focus on Bush's domestic spending because they see this strong evidence he is not disciplined where he should be disciplined.

Posted by Pincher Martin | July 21, 2008 12:35 PM

"...because they see this as strong evidence he is not disciplined where he should be disciplined."

Posted by Pincher Martin | July 21, 2008 12:42 PM

The worries of the Hayek/Mises worshippers about Bush growing government spending seem pretty laughable to me, too. The Bush administration has happily gone ahead and crimped the rights of the accused, asserted powers of surveillance and torture, and sought to immunize the executive from Congressional and judicial oversight. And people are worried about the government's slice of the economy? It's totally nonsensical.

Posted by Sanjay | July 21, 2008 12:46 PM

Let's have a look at the linky Ross provided:

Debt as a % of GDP in 1968: 33.3
Debt as a % of GDP in 1980: 26.1

So for the Nixon/Carter 70s, the debt as a percent of GDP decreased.

Then by 1988: 40.9

Whoa, that's a whopping 14.8 increase!

By 1992 we were at: 48.1, another big increase. Nice to see that after 12 years of Republicans the debt to GDP ratio increased from 26.1 to 48.1, and increase of 22!

After 8 years of Clinton, we were at: 35.1, a decrease from 48.1 to 13.

For 6 years of Republicans controlling the budget, we went back up to 37.1, a modest increase.

If you want to make the case that Bush isn't as much a big spender as the tax and spend conservative tandem of Regan/Bush sr., go ahead. But by Ross' own metrics, Republican presidents have consistently increased the amount of debt serviced by the public. I think that's worth noting that an increase of 2 is not big deal for Ross. If you are truly and economic conservative, then you'll pine for the days of Democrat presidents. You know, days when budgets get balanced and debt goes down.

What is truly frightening is the coming debt boom. After many years of tax and spend policies, Regan left Bush with huge debts that needed servicing. I fear that Bush will leave us with huge debts needing servicing in another 2-3 years.

Posted by freddiemac | July 21, 2008 1:12 PM

Looking at spending as a percentage of GDP may make the growth in government spending look smaller, but it isn't very interesting. Of course we expect businesses to grow and evolve--we want more commerce, more trade, more jobs, and we want more products and more services. And that's all wonderful, because this growth is the result of voluntary transactions that meet individual and societal needs. But do we really want our Government to grow in step with this? Should Government be trotting out new policies just like businesses trot out new products? Should Government deploy new agencies just as businesses create new divisions? I think not, and suspect that most conservatives would agree. Over time, we'd hope that the growth of the private sector would vastly outpace the growth of our government, and that the percentage of GDP used for government would shrink significantly, right?

Comparison of growth in government to GDP is something Bush apologists do to try to salvage Bush's reputation, but there's nothing conservative about it.

Posted by Jeff | July 21, 2008 1:13 PM

Mr. Douthat,

I don't mean to accuse you of dishonesty but it does seem that you are being a little bit disingenous. Why exactly are you comparing domestic spending as a portion of GDP? As far as I know taxes are not tied to GDP. Woudln't it be more honest to compare domestic spending with the percentage of revenue recieved?

Would you mind explaining to those of us who lack the requisite literacy in such matters what you mean to show by tying discretionary spending to GDP when GDP has the capacity to increase without increasing government revenues?
I don't understand?

In a related note I thought the point was that we are morgating the futures of ourselves and our children by increasing the debt without increasing taxes. Eventually the money that one spends has to be paid back in some form or another. It does seem that we are heading for Weimar Republic style inflation.

Posted by Sorn | July 21, 2008 1:44 PM

Here's one thing I'd like to know:

What domestic spending HAS gone up so dramatically? That is, okay, we're spending a lot more here at home. Where are we spending it?

Posted by Klug | July 21, 2008 3:07 PM

Your analysis has a glaring flaw. That is that we can't operate at a deficit forever.

Deficit spending was created to help our country through tough times. The only plausible idea however is paying the money back during good times, like Clinton did.

So rising GDP is no excuse to increase deficit spending. If anything it is especially important to decrease or eliminate the deficit when GDP is growing, so you'll have room to budge when the good times end.

We will soon see how awful it is to continue running up the bills during a good cycle now that the tides have turned again, and we have the same crappy economy as before, but without coming off of the Clintons balanced budgets.

Posted by stwf | July 21, 2008 3:37 PM

how is it that this chart doesn't include Bush's military spending and his so-called War on Terror? the iraq war has cost a trillion dollars so far, and it's even over.

are the conservatives pretending that this is NOT discretionary spending? that it is not somehow part of the government? that it is not being financed by deficits? i assure you guys, the chinese have no such illusions.

Posted by raft | July 21, 2008 4:16 PM

But do we really want our Government to grow in step with this? Should Government be trotting out new policies just like businesses trot out new products?

The compensation of public employees (if properly calibrated to begin with) should increase in step with the compensation of private sector employees. The government should have able people to perform its proper functions, and such will grow increasingly difficult to recruit if there is a secular decay in the salaries of public employees vis-a-vis private sector employees. (I think the difficulties you have with public employment in our time are overstaffing, excessive security and loss of accountability due to civil service regulations and union rules, and actuarily unsound pensions; you could say that compensation is thus not properly calibrated).

Posted by Art Deco | July 21, 2008 5:35 PM

As the capacity to produce wealth in the private economy expands enormously, the percentage drain of our private wealth into the largely corrupt and incompetent government sector should decline toward zero. It doesn't.

This needs explaining.

Many of us who pull the wagon work enormous hours, and not unusually more than half of those hours are owned by the government sector and it's clients.

Call it what you want, but when a family's "freedom from government" day come in mid July, it's not unreasonable to call it actually occurring serfdom, when history tells us that serfs from the past often owed far fewer hours to the owners of those hours than do the current generation of American serfs.

Posted by PrestoPundit | July 21, 2008 6:20 PM

Correct that.

Change

"the owners of those hours"

to

"the thieves of those hours"

Posted by PrestoPundit | July 21, 2008 6:28 PM

How bad does the chart look if you include non-discretionary spending increases?

Posted by Jeff | July 21, 2008 6:44 PM

Thanks, Sanjay! And I was being nonsensical all this time!

Posted by Marquis de Gazongas | July 21, 2008 6:52 PM

our analysis has a glaring flaw. That is that we can't operate at a deficit forever.

Of course we can, in an economy that grows over the long term. As long as you keep debt level manageable as a % of GDP (more crucially interest payments as a % of government revenues), there's no reason the deficit can't remain to help fund economic growth.

Now what a "manageable" amount of debt means is open for debate, but last I checked people were still buying treasuries for like 5% yield so I think we're in pretty good shape.

Posted by right | July 21, 2008 7:28 PM

As the capacity to produce wealth in the private economy expands enormously, the percentage drain of our private wealth into the largely corrupt and incompetent government sector should decline toward zero. It doesn't.

1. What share of civil servants are on the take? How does that compare with employees of private enterprise?

2. How is competence defined, most particularly when there are not analogues of government services produced by commercial corporations and philanthropies?

There are such things as 'public goods' that private producers have no incentive to generate; there are such things as 'common property resources' whose uses has to be regulated lest they be completely degraded; here are miscellaneous situations where costs are incompletely borne by producers and passed off on third parties, there are others where the nature of the commodity renders it difficult to restrict its use to purchaser; there are still others where unregulated markets generate a natural monopoly. There is also this persistent idea that justice and the operation of markets is not completely coterminous. Government in its narrowly economic dimension exists to address these contingencies.

Through inertia, vested interests, and public addlement, there is state provision and state allocation in a number of sectors where such serves neither the interests of efficiency, equality or virtue in the common life: agriculture and forestry, postal services, and education to name three. You will still need the government, and to be properly concerned with improving the performance of the civil service rather than reflexively trashing it.

Posted by Art Deco | July 21, 2008 7:34 PM

You're a genius, Art Deco. I'd never thought of any of that before. Thanks for bringing new ideas to the conversation. It's a real help.

Posted by PrestoPundit | July 21, 2008 7:45 PM

Call it what you want, but when a family's "freedom from government" day come in mid July, it's not unreasonable to call it actually occurring serfdom, when history tells us that serfs from the past often owed far fewer hours to the owners of those hours than do the current generation of American serfs.

I would refer you to Jerome Blum's, The End of the Old Order in Rural Europe for a rough accounting of the economic burdens of serfdom in Eastern Europe in its final stages. (If I recall correctly, it is inconsistent with your account).

The ratio of public expenditure to domestic product is about 0.35 in this country. Public purchases of goods and services account for about 18% of domestic product. The rest are income transfers. The goods and services may be inefficiently generated, but they are real goods and services and not readily transferred to the private sector. The politicians who make these determinations have to work within a matrix of public opinion and carry with them a sense of what the public will put up with (often too much); the old feudal seigneurs did not face that type of constraint. (You are also not bound to the land, nor are you reliant on an analogue of the seigneur for procedural justice).

Posted by Art Deco | July 21, 2008 7:51 PM

On incompetence and corruption: happen to see today's story on truckers allowed to drive while receiving full Federal disability?

Posted by PrestoPundit | July 22, 2008 12:13 PM

Art Deco, you are indeed a genius, but evidently you've never grasped the concept of "the principle of charity" when reading a text. May I suggest you Google it.

Evidently I was not much thinking of "serfdom in Eastern Europe in its final stages."

Posted by PrestoPundit | July 22, 2008 12:17 PM

Historical comparisons aren't the best measure of spending performance. For example, the Democrats were in control of Congress for much of the run up in domestic spending thru the 70's and 80's. So to assign this increase to either Congress or the President slants the truth.

That chart is at best misleading without noting the Iraq war spending. the criticism is that the Republican party, when in complete control of the handles of government, increased domestic discretionary spending while also spending massive amounts on the war.

Posted by cmb | July 22, 2008 5:25 PM

I think everyone's misattributing the A's in the Q and A to Cogan, but it's actually Peter Robinson doing a Socratic exercise with himself. Look, at one point, the writer QUOTES Cogan in the third person.

And in the intro, Robinson says "Readers instantly began peppering me with questions about the chart." The Q&A follows.

And so it's Robinson who couldn't find the chart because he's packing for his beach vacation. Not Cogan.

If I'm wrong, my foot's in my mouth, but if I'm right, this thread got a little out of hand in questioning Cogan's professionalism. ('Cogan's undoubtedly a hack,' etc.)

Posted by jf | July 22, 2008 7:55 PM