With a new GOP majority in the House and the addition of 87 Republican – and largely Tea Party supported – freshmen, a lot of Americans believed the federal spending race horse would be tamed and put back in the barn.
In fact, last spring the GOP took a lot of credit for passing $38 billion in "cuts."
But, newly released numbers by the Congressional Budget Office indicate that instead of giving the government a close shave, for all the talk about spending cuts, Congress barely plucked a single whisker from Uncle Sam's beard.
Spending in FY 2011 actually increased 5%, hitting yet another all time record high of a staggering $3.6 trillion. Last week, the Treasury announced the second highest budget deficit in history for FY 2011, $1.299 trillion, exceeded only by the 2009 deficit of $1.412 trillion. The $1.293 trillion of red ink in 2010 follows in a close third place for all time. As a percentage of GDP, the last three deficits have been 10.0%, 8.9%, and 8.4% - each of them larger than any single year since 1945, the last year of World War II.
Democrats and some Keynesian economists fanned the myth that austerity had erupted in Washington and serious spending cuts had actually happened, and many blamed the "lack of spending" for slowing economic recovery and job creation. In July USA Today said, "Already in 2011, softer government spending has sapped growth."
Last summer, Joe Biden's once chief economic adviser Jared Bernstein said that "government spending cutbacks have been a drag on growth in recent quarters and have led to sharp losses in state and local employment."
The head cheerleader of the Keynesians and NY Times columnist Paul Krugman wrote just last month that "the turn toward austerity (is) a major factor in our growth slowdown."
It takes someone in total denial to argue that Washington has imposed an era of "austerity" when in fact annual spending has increased 5% while the economy is close to completely stalled. Many believe we have already slipped back into negative growth territory. As the Wall Street Journal editorialized, "Government austerity is a myth."
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 22nd, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 21st, 2014 | John Ransom