Friday, October 25, 2013

A Fuzzchart on Federal Spending Courtesy of John Taylor

Mark Thoma used to crack me up when he would refer to those Jerry Bowyer National Review graphs as Fuzz Charts since Bowyer usually tried to deceive his readers. Now if you miss those good old days – John Taylor has kindly decided to take over when Jerry left off with his latest:
A starting point is to lay out in simple big picture terms what the House and Senate budget resolutions passed earlier this year look like. The chart below tries to do this. It was put together from those resolutions passed last March. It provides the year-by-year totals (not ten years sums) needed to compare the two budgets. This kind of chart is more useful for comparing budgets than the ten-year multi-trillion dollar totals which few people can understand. The chart shows the recent history of federal outlays along with the path of outlays as a percentage of GDP under the Senate proposal and under the House proposal. There is a big difference in these two paths. Spending gradually comes down to pre-crisis levels as a share of GDP under the House plan and remains high under the Senate plan. I have been arguing since 2009 that undoing the recent spending binge is a reasonable goal, and prefer the House version on that count.
My problem with his chart is its historical starting point is 2000 when Federal spending as a share of GDP was only 18.5%. Note the Ryan plan would bring us back to this level whereas the Senate plan would leave this share closer to 22%. A naïve reader might think the historical norm was the 18.5% observed in 2000, but my graph takes us back to 1961. And it turns out that Federal spending as a share of GDP was not always as low it was at the end of the Clinton years. The peace dividend years are over and future health care spending isn’t going to what it was in 2000 – but John Taylor wants us to think there is something magical and normal about the Ryan budget.

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