I’m always surprised when folks on the right tout the GOP as a party of small and limited government. This runs counter to the historical time-series data. Via Matias Vernengo at the Naked Keynesianism blog, I have imported a noteworthy chart below which attempts to put everything in perspective. The chart indicates that the federal outlays (expenditures) as a % of GDP have consistently gone up during the Republican administrations and reversed under the Democrats. The only exception is the first two years of the Obama admin., where the spending grew during 2008-2009 due to the shortfall in revenue, up-tick in automatic stabilizers, i.e. unemployment insurance, etc., and of course the stimulus. However, this preliminary growth in spending fell in 2010 (despite the continuation of the two wars, the Libya campaign and the offshore wars in Pakistan and Yemen). However, this raises a red flag: At a time when we require ambitious deficit spending to offset the shortfalls in private investment and spur aggregate demand, the chart shows that the Obama administration has succumbed to the deficit hawks.
Also note, the exponential rise in defense spending during the Republican administrations and an unchecked rise in the healthcare spending due to the healthcare cost inflation. If the Republicans and Democrats are serious about retiring the nation’s debt, I hope they’re ready to tame the costs of defense and healthcare. We need to scale back our foreign ambitions, and make important patches to the healthcare law that would insure more discipline in the health-care market.