In an earlier post on health care, I included some words and a graph from Jonathan Chait. It distracted from the rest of the discussion and it lost its impact, too. So here it is on its own with some additional commentary.
Jonathan Chait got in on the act, too, but extended the delusion to include the stimulus
First of all, the stimulus is temporary. And the spending surge is scheduled to largely recede:
I realize that conservatives believe that the stimulus will “really” be a permanent addition to the spending baseline. I have yet to see this explanation account for the mechanics of how Congress will add the stimulus to the regular budget, especially with the constraints of pay-as-you-go financing. It’s simply a variant of free-floating quasi-paranoid anti-government animus.
Actually, in North Carolina, it is the big government supporters who act as though they believe the stimulus will be permanent. How else can we explain a budget that spends $1.6 billion in stimulus money on continuing obligations?
The thing to pay attention to in Chait’s graph is not the bump in spending, but its after-effects. Through 2008, federal spending was no more than 20% of GDP. In 2000 and 2001, spending was closer to 18% of GDP. We are now in the middle of three years with federal spending taking a quarter of GDP. When this gets back to “normal,” federal spending only falls back to about 23% of GDP. The problem with this is that federal tax revenues have never exceeded 20% of GDP. So the new normal at the federal level means annual deficits equal to 15% of federal spending every year.
And Jonathan Chait thinks that’s good news.
