One of the great myths out there – a myth used to justify gutting social safety nets – is that there was a huge spike in government spending under Obama, and this is behind the huge jump in the government deficit. You can even see traces of this false reasoning in the arguments of Msgr. Charles Pope, (my rebuttal is here). This position might appear ubiquitous, but it is wrong. In truth, the deficit was cause by the recession, largely because revenues collapsed. Of course, those who want to blame spending point to a 4 percentage point increase in the ratio of government spending to GDP since 2007. This is big, right? Well, yes, but – as Krugman shows with his characteristic insight – this is because the denominator collapsed! If we actually look at what happened to spending itself, this is what we see:
In other words, the only forms of spending that grew much faster during the recession years were those items directly related to the recession. “Income security” is shorthand for the social safety net – unemployment insurance, food stamps, SSI, refundable tax credits etc. These items all surged because of the severe recession and huge spike in unemployment. This was exactly what was supposed to happen. But why does the spending myth prevail?