Tags: Laffer | Obama | Spending | moore

Laffer & Moore: Obama Exploded Spending

Tuesday, 12 Jun 2012 08:06 AM

Arthur Laffer, former economic adviser to President Ronald Reagan, and Wall Street Journal editorial board member Stephen Moore say that government spending exploded under the Obama administration.

"The numbers are mind-boggling," Laffer and Moore write in the Journal.

"From the second quarter of 2007, i.e., the first full quarter of a Pelosi-Reid dominated Congress and a politically weakened President Bush, to the second quarter of 2009 when President Obama assumed office, government spending skyrocketed to 27.3 percent of GDP from 21.4 percent," they wrote.

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"It was the largest peacetime expansion of government spending in U.S. history."

After taking office in 2009, with spending and debt already at record high levels and the deficit headed to $1 trillion, President Barack Obama proceeded to pass his own $830 billion stimulus, auto bailouts, mortgage relief plans, the Dodd-Frank financial reforms and the $1.7 trillion Obamacare entitlement, Laffer and Moore note.

While spending did come down in 2010, it wasn't the result of spending cuts but rather because TARP loans began to be repaid, and that cash was counted against spending.

Moreover, on Jan. 1, 2013, the nation faces the largest automatic tax increase on investment and businesses in generations, including the end of the Bush tax cuts and the more recent payroll tax cut, Laffer and Moore note.

According to the Congressional Budget Office, this would drain $607 billion out of the economy next year, pushing us back into recession.

“The right point of focus is not at what pace spending has grown under President Obama but instead how much more he needs to cut spending from its bloated levels to bring the economy back to health,” Laffer and Moore say.

“The huge increase in spending as a percentage of GDP under Presidents Bush and Obama is the reason we are experiencing the slowest recovery since the Great Depression.”

Reuters reports that states are remaining tight-fisted over spending even as their revenues are expected to top the levels seen before the height of the recession, unnerved by the clouds over the U.S. and global economies.

For the upcoming 2013 fiscal year, total U.S. state revenues will increase by $27.4 billion, or 4.1 percent, to reach $690.3 billion. General fund spending, however, will rise by only $14.6 billion, or 2.2 percent, according to a survey of governors' budgets.

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2012-06-12
Tuesday, 12 Jun 2012 08:06 AM
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