by hilzoy
Merry Christmas! I just got back from having a wonderful Christmas (we do it early.) Friends, family, little nephews waking me up in the morning -- all marvelous. Now, alas, it is raining in Baltimore, and Mr. Nils (my outdoorsy cat), who wanted desperately to go outside once I got back, took one look out the door, shuddered, and slunk away to pout. I, meanwhile, have gone off to have dinner with friends, and then returned again. So I thought: why not address the thrilling topic: should the level of federal spending, and thus of surpluses and deficits, be attributed primarily to the President or to the Congress?
When I wrote my last post on this topic, I had thought they should be attributed to the President, both because the figures seemed to indicate that big changes in the levels of surpluses and deficits seemed to coincide with changes in Presidents, not with changes in control of Congress, and also because what I remembered about the fights over the budgets from Reagan onwards supported this view. However, since this claim has been challenged in various quarters, I thought: why not dig deeper?
I'm not sure exactly how one would go about directly measuring responsibility for federal spending levels. One obvious thing to do would be to find figures for the budgets various Presidents actually submitted, and compare them to what actually passed. However, there are problems with that approach: for one thing, Presidential budgets are probably initial bargaining positions, not Presidents' views of how much spending is actually needed; and for another, I'm not sure where to find the figures. I would have looked further, of course, had another possibility not suggested itself to me: namely, checking what accounted for the various rises and falls in the level of the deficit, and asking whether those rises and falls seem to track the ideological preferences of those who controlled Congress or those of the President.
For convenient reference, here are some useful graphs. The federal budget deficit:
The Reagan deficits seem to have been caused by two things: higher than average spending, and cuts in revenues. Let's take spending first. You can find what percentage of discretionary federal spending was spent on various uses in this GAO report (pdf), table 5.5. This table makes it clear that a huge increase in defense spending, as a proportion of discretionary spending, was the most important component of spending increases during the Reagan years. During the Reagan years (1981-1988), defense spending increased from 45.4% of discretionary spending in 1980 (Carter's last year) to 62.7% of discretionary spending in 1988 (Reagan's last year.) During the same time period spending on Education and Health and Human Services remained basically flat as a percentage of discretionary spending, while spending on Housing and Urban Development fell from 10.7% of discretionary spending to 2.3%, labor fell from 3.6% to 1.7%, and the EPA fell from 1.5% to 1.1%.
Whose priorities does this reflect? Who, during that time period, was a defense hawk and who didn't much care about labor, the environment, and the inner cities? Congressional Democrats are not the answer that leaps to my mind. Perhaps some people would disagree; however, I expect them to adjust their view of 1980s Democrats to account for the Tip O'Neill military build-up.
Reagan's major tax cut was passed in 1981 (but was phased in over three years.) He ran on a platform of tax cuts that were even larger than those that were finally enacted, and the tax cut bill had two Republican sponsors (hence the name by which it was most widely known: Kemp-Roth.) From the NYT (from the archive):
"A ''yes'' vote was a vote in favor of the President's plan. A ''no'' vote was a vote against it. Voting ''yes'' were 48 Democrats and 190 Republicans. Voting ''no'' were 194 Democrats and 1 Republican."
I call that a Republican tax cut. (The 1982 and 1983 tax hikes had both bipartisan support and bipartisan opposition; the 1986 tax reform bill was intended to be revenue-neutral, and also had both bipartisan support and bipartisan opposition.)
Are we done with Reagan? OK: let's move on to Clinton. The drop in the deficit under Clinton is the reverse of its rise under Reagan: it reflects a rise in revenues and a decline in spending. Back to the GAO report linked above: in Table 1.2, we see that while revenues, as a share of GDP, fell a couple of tenths of a percent every year from 1988 through 1992, they began to increase thereafter. Revenues are 17.5% of GDP in 1992, 17.6% in 1993, 18.1% in 1994, 18.5% in 1995, 18.9% in 1996, and so on until they reach their highest point, at 20.9% of GDP in 2000.
What happened in 1993 that would explain why revenues, as a percent of GDP, started jumping half a percent a year? The Omnibus Budget and Reconciliation Act of 1993, that's what. And who was responsible for its passage? That would have been the 217 Democrats, one Independent, and zero Republicans who voted for it in the House, and the 50 Democrats (plus Al Gore) and zero Republicans who voted for it in the Senate.
On to discretionary spending under Clinton, and thus back to Table 5.5 of the GAO report. Here, as far as I can tell, most forms of discretionary spending are essentially flat or shrink slightly, with a few exceptions: defense falls slightly (from 50.2% in 1993 to 46.2% in 2001); HHS rises slightly (from 5.8% in 1993 to 8.2% in 2001); Justice rises (from 1.7% in 1993 to 2.8% in 2001 -- can you say 'Community Policing Grants?'); and Homeland Security rises (1.7% in 1993 to 2.4% in 2001). I'm not sure what to make of the rise in Homeland Security, largely because I'm not sure what exactly they're counting under that category, but all the other substantial changes seem to me more in line with Democratic priorities of that period than with Republican ones.
I welcome disagreement and other people perusing the statistics, but, for what it's worth, I think that digging into the stats provides further evidence for the claim that Presidents set priorities. The Congress has the right and the power to set its own, of course, but in practice I don't really think it's fair to attribute what we normally call the Reagan defense buildup to the Democrats, or the cuts in defense of the '90s to Newt Gingrich. And it certainly doesn't make sense to hold the Congressional Democrats responsible for the Reagan tax cuts, or the Congressional Republicans responsible for the Clinton tax increases, both of which played a major role in the size of the federal deficit in the years that followed them.
Merry Christmas!
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