Spending Under Congresses and Presidents

I have been following Invictus’ posts (Hey, Big Spender, and Big Spender, Part II)on Barry Ritholtz’s The Big Picture blog, one of my favorite blogs, both for its macro perspective and for its conscientious commitment to the idea that one can work in markets and still value being a good citizen in favor of honesty, transparency, and for being paid for the value that one adds to the economy rather than the value one can extract from it.

The “Big Spender” posts written by Invictus (a pen name) looked at (among other things) the increases in non-defense federal spending under different Presidents to see if Republican administrations live up to their projected commitment to keep deficits under control. Democratic administrations were shown for comparison purposes, but held to a lower standard because the Democrats don’t claim to be master budget cutters, whereas the Republicans do.

The obvious issue with looking at this by President is that Congress is the body that controls spending and taxation policy, even if part of the President’s job is to propose measures to Congress and develop support for his or her policies. Thus, in addition to looking at spending in Presidential administrations, it makes sense to look at budget increases and spending for each Congress, broken down by 2-year Congressional Terms.




The above chart does just this, from the last congress of the Truman Administration (1951-1952) to the mt recent Congress in the Obama administration. The lines represent cumulative spending by each administration indexed to the final spending level of the previous administration. The bars represent the percentage increase in spending for each Congress (with scale on the right hand side).

We see that Truman and Eisenhower were the last Presidents ever to see a reduction in overall non-defense spending. After that, Congress has increased total spending every year, although the rates of increases have - on the whole - trended downwards for most of the last half-century. The Clinton years appear to have had the slowest average increases of any administration, although much of this was when the Republicans controlled the Congress. Spending during the Obama administration is similar to the spending under Bush II, although one should remember that defense spending for the wars in Afghanistan and Iraq (as well as the Vietnam War earlier) is excluded in these figures.

Ideally, one would color the bars by which party controlled Congress and whether it both houses were under the same party or not. To be honest, my day job keeps me from getting to that level of detail and fiddling with the chart, but perhaps I’ll get to it later. Ideally, I’d also get the bar scale to the left side of the graph, so the gridlines will line up better. Again, time constraints prohibit this, but maybe I’ll come back to it.

Since the data for 2010 only goes to the end of Q2, the chart estimates 2010 spending simply by doubling the spending recorded for the first half of the year. Data come from the Federal Reserve Economic Data database (FRED), and use the series FNDEFX. It uses the entirety of the data available, but excludes the Truman years because we do not have data on the full administration and using it would bias the Truman spending downwards. The last Congress of the Truman years is included to establish a baseline. Note that Congressional periods start with odd numbered years, because Congress is seated in January of a year following an election. It can be debated whether one should shift these figures one year further into the future, because current spending in the first year of a Congress is often determined by the last year of a previous Congress. Again, a topic for another day.