Painting the TARP

 

The Obama Administration seems to be quite happy over this MarketWatch story in which it is claimed the Obama budget expansion never happened.

Over Obama’s four budget years, federal spending is on track to rise from $3.52 trillion to $3.58 trillion, an annualized increase of just 0.4%.

There has been no huge increase in spending under the current president, despite what you hear.

NPR reports that Obama campaign officials are delighted. The problem is, the article uses data that has been unduly influenced by one-off events, and charges the 2009 impact of the Obama stimulus to the Bush Administration.

There’s little doubt that Bush’s 2nd administration spent more than otherwise expected, but it’s worth noting that the numbers rose dramatically in that last year. 

The first thing to know is that when we say FY2009 — which the MarketWatch writer charges to the Bush Administration — it measures spending for the dates 10/1/2008 to 9/30/2009. Obama’s stimulus package added $185 billion to the FY 2009 deficit, all of which the writer is assigning to Bush.

TARP added $368 billion to the deficit in 2009 that did not happen in 2010. Jed Graham wrote in 2010 that the Obama Administration had overstated the cost of TARP by $100 billion, which also then gets charged to the Bush Administration by the MarketWatch piece. And TARP in general put all of its costs in 2009 then adds revenue as loans are repaid and assets sold off later on. TARP distorts the data used in the story. These data are from CBO, in billions.

FY 2005 $2,472.0

FY 2006 $2,655.1 (+7.4%)

FY 2007 $2,728.7 (+2.8%)

FY 2008 $2,982.6 (+9.3%)

FY 2009 $3,518.2 (+18.0%)

The MarketWatch story assigns the spending on stimulus correctly to Obama, but leaves the TARP on Bush, while crediting Obama for recovery of assets from TARP loans and asset sales.

Thus the story uses a distortion of the data caused by a temporary large spending program to tell a story that just ain’t so. If you’re going to charge Bush for TARP, you have to put back the repayment of TARP to Bush’s credit, which the MarketWatch story fails to do. This will not be an easy story for the Romney campaign to tell, in my view. Far simpler it is to say: “The Bush Administration chose to create a one-time loan program that expected repayment of TARP funds. The Obama Administration has continued instead to keep spending at that elevated level in the names of stimulus and Solyndra, something the Bush Administration would never have done. Had they had a third term, the number would properly have been negative as TARP was repaid and debt retired, something a Romney Administration intends to do.” I’m sure Peter or Rob or James could make this sing.

There are 11 comments.

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  1. Profile Photo Contributor
    @DianeEllis

    Thanks for this lucid explanation, King. In the Ricochet support box yesterday, we received an e-mail from a supporter of the President’s citing this article. He writes:

    President Obama spending has been the lowest by any President sinceIke? (Source: Rex [sic] Nutting, “Government outlays rising at slowest pacesince 1950s” Rex [sic] Nutting, MarketWatch.com, May 22, 2012.)

    […]

    Ask ’em. Don’t just take it from a stranger or pundit with an agenda.Do a search for the facts. No one Party has it all right. Collectfacts for each issue. We need facts and some discussion of what might be best for the massesof voters, which, of course, includes employees and officers ofcorporations. You will sell a lot of subscriptions because of the adrenaline youstir up with your hot, fearful, and confrontational rhetoric. Did youknow that adrenaline is part of sexual arousal? Unfortunately, fear reduces morale; reduced morale reducesproductivity; reduced productivity reduces the wealth of the 1%. ReadAesop’s fable “The Hen Who Laid the Golden Egg.” It is less than 300words long. You may come to understand why the worker is so precious.(Use Google.)
    • #1
  2. Profile Photo Contributor
    @KingBanaian

    Had the emailer searched the facts, he might have found the context of the data Nutting uses. He might have even found it arousing.

    • #2
  3. Profile Photo Contributor
    @KingBanaian

    Separately, why is the emailer so concerned about productivity? Higher productivity eats into labor hours and saves the entrepreneur some costs, true. But profits have risen too.

    • #3
  4. Profile Photo Inactive
    @dogsbody
    Diane Ellis, Ed.: Thanks for this lucid explanation, King. In the Ricochet support box yesterday, we received an e-mail from a supporter of the President’s citing this article. He writes:
    President Obama spending has been the lowest by any President since Ike?

    […]

    We need facts and some discussion of what might be best for the masses

    […]

    The condescending tone of this email is almost too good a self-parody to be true, but “the masses” is the cherry on top. The people on the Left truly think in terms of 1930s political propaganda.

    • #4
  5. Profile Photo Inactive
    @dogsbody

    Of course, the emailer also needed to tell Ricochet about SEX. Because conservatives are so repressed about SEX!

    The emailer has read about it on Google. Sex, that is.

    • #5
  6. Profile Photo Member
    @MBF
    King Banaian: The problem is, the article uses data that has been unduly influenced by one-off events, and charges the 2009 impact of the Obama stimulus to the Bush Administration.

    Under this standard, the FY2008-2011 budgets should really be charged to Nancy Pelosi and the Democrat Party. As in the group that constitutionally controlled the purse strings during that time.

    Using the last GOP House budget (FY 2007) as the baseline, the Democrats have increased spending by 32% in 4 years, or 7.2% per year.

    FY 2007 $2,728.7

    FY 2011 $3,603.1

    In the end it doesn’t really matter who gets blamed for what in 2007 or 2011. The bottom line is that we are swimming in debt and unfunded liabilities up to our eyeballs, with an economy “stuck in the ditch” that can’t come close to producing enough wealth to fund all the promises. The only solution is to reform the promises, one way or another.

    • #6
  7. Profile Photo Listener
    @FricosisGuy
    King Banaian: This will not be an easy story for the Romney campaign to tell, in my view. Far simpler it is to say: · · 2 hours ago

    “I’m appointing a public debt special prosecutor and issuing subpeonas for Dubya, Dear Leader, Pelosi, Hastert, Reid, Lott, DeLay, Schumer, et al. ”

    Let’s put on a show trial! 

    • #7
  8. Profile Photo Inactive
    @user_83937

    I align myself with Belling Fan; that’s the origin of the asymptotic rise in spending and TARP, Stimulus, whatever, are just the momentary crises used to justify it.

    • #8
  9. Profile Photo Inactive
    @WhiskeySam

    Any time these political pieces start circulating with who spent what, I immediately start suspecting the numbers because it seems like someone is always manipulating definitions or accounting to make the numbers support their argument. I wish there were more plain-spoken truth like what King has put forth he to dispel this misinformation.

    • #9
  10. Profile Photo Inactive
    @dogsbody
    Mark Belling Fan

     The bottom line is that we are swimming in debt and unfunded liabilities up to our eyeballs, with an economy “stuck in the ditch” that can’t come close to producing enough wealth to fund all the promises.

    That reminds me: have you noticed that President Obama doesn’t use that “car stuck in a ditch” image of the economy in his speeches anymore? Perhaps because under his leadership we’ve been stuck there for 3 and a half years?

    • #10
  11. Profile Photo Contributor
    @Midge
    Diane Ellis, Ed.: In the Ricochet support box yesterday, we received an e-mail from a supporter of the President’s citing this article. He writes:
    […] You will sell a lot of subscriptions because of the adrenaline you stir up with your hot, fearful, and confrontational rhetoric. Did you know that adrenaline is part of sexual arousal?

    Heh. It sounds like Ricochet got his adrenaline flowing.

    • #11

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