Do We Have A Spending Problem?

In a Wall Street Journal interview about fiscal cliff negotiations House Speaker John Boehner quotes President Obama:

“We don’t have a spending problem.”

While the President often says the word “cuts” at his campaign style media events, his next words usually are “so we can make investments in…”  It’s hard to avoid the conclusion that he is still committed to his spending (investment) agenda, that he is not alarmed by huge annual deficits and exploding debt and that he simply is not interested in spending reductions except at the Department of Defense.  In short he really doesn’t believe there is a spending problem.

Liberty Works humbly offers four charts to help the President and his media cheering section realize that there is indeed a spending problem that will soon become a spending crisis. 

The first chart is a history of spending over the past six decades.  After adjusting for inflation spending is up 394% with an alarming spike in the most recent four years. [Continued below the chart]

The second chart shows spending as a percentage of the economy or GDP.  This is a way to quantify the cost born by the private economy.  This comparison tends to flatten the increases over previous decades but the spike in last four years appears even more alarming because the economy has weakened under the burden of increased regulation, health care mandates and government borrowing. 

When asked what’s to blame for spending and deficits being so high President Obama and the Democrats most often cite defense and “wars not paid for.”  As the next chart  shows, defense is responsible for very little of the total increase.  The real spending problem is is the explosion in the cost of entitlements.  [Continued below the chart.]

The last chart puts the growth in the cost of entitlements in context.  Entitlements are payments to individuals of cash, food stamps, medical services, rent subsidies, etc.  The cost of entitlements should then have some relationship to the size of  the population. But as the chart shows, since 1980 the population has grown 39% while the cost of entitlements, adjusted for inflation, has grown 263%.


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