Saturday, June 16, 2012

This should be more widely appreciated.

This would seem to be in current dollars. Remember that we had double digit inflation in the Carter administration due to the oil shocks. It seems to me that the data that would be more interesting would be the rate of growth of government spending relevant to the rates of inflation and to the rate of growth of the GDP.

It is important to realize the budget cycle of the U.S. government. The fiscal year is from October 1 to the following September 30. Presidents submit budget proposals to the Congress in January. The executive branch of government spends months prior to the submission in preparing their proposals. While an incoming president does review budget priorities after the November election, he does not then control the executive branch and is busy staffing his new administration,

The Congress after it receives the proposed budget, reviews and revises it and is to pass its budget bills by September 30th. Sometimes Congress does not get its work done in time and passes continuing resolutions to provide temporary funding to allow government activities to continue in the new fiscal year while the appropriations are finalized.

The Obama administration inherited high government spending, and more important, high levels of deficits; it also inherited from the Bush administration an economy in need of stimulus. The Bush administration in 2008 had also done the heavy lifting in preparation of the budget submitted in January 2009 (Obama's first year in office), and he faced a Republican House of Representatives in 2011 that created deadlock in the budgetary processes.

In short, I don't think the appropriations record to date is much of a basis for evaluation of Obama's fiscal policy.

He seems to have a pretty good take on the need to continue stimulating the economy to create jobs in the short run, as well as the need to cut the deficit and bring down the ratio of government debt to GDP in the next decade, and also the need to invest in education, science and technology, and infrastructure for the long run strength of the economy. Given a functional Congress he might do a pretty good job of balancing these objectives in a second term.

No comments: