Pro-Growth Liberal: EconoSpeak: A Fuzzchart on Federal Spending Courtesy of John Taylor:
Mark Thoma used to crack me up when he would refer to those Jerry Bowyer National Review graphs as Fuzz Charts, since Bowyer usually tried to deceive his readers. Now if you miss those good old days--John Taylor has kindly decided to take over....
A starting point is to lay out in simple big picture terms what the House and Senate budget resolutions passed earlier this year look like.... The chart shows the recent history of federal outlays along with the path of outlays as a percentage of GDP under the Senate proposal and under the House proposal. There is a big difference in these two paths. Spending gradually comes down to pre-crisis levels as a share of GDP under the House plan and remains high under the Senate plan. I have been arguing since 2009 that undoing the recent spending binge is a reasonable goal, and prefer the House version on that count.
My problem with his chart is its historical starting point is 2000 when Federal spending as a share of GDP was only 18.5%.... A naïve reader might think the historical norm was the 18.5% observed in 2000, but my graph takes us back to 1961. And it turns out that Federal spending as a share of GDP was not always as low it was at the end of the Clinton years. The peace dividend years are over and future health care spending isn’t going to what it was in 2000--but John Taylor wants us to think there is something magical and normal about the Ryan budget.
Everybody--even John Taylor--agrees that the government needs to play a big role in health care spending, and that health spending in the future will be more than 20% of GDP rather than the less than 5% of GDP it was in 1950. Almost everybody--especially including John Taylor--isn't comfortable with levels of military spending as a share of GDP as they stood in the late 1980s. And everybody--including John Taylor--notes that America is aging, and that an aging America is one in which federal spending ought to be higher as a share of GDP.
I don't think that even John Taylor would say that the optimal level of federal spending in the future would be as low as it was in 2000, or back in the 1960s and early 1970s.
But that is what the graph he presents does say.
So what is the right way to deal with something like this? Taylor knows that the graph back to 1950 surrounded by words about changing security needs, the effect of recessions on spending in the short-term, the aging of America, and the shift of the economy toward medical care is much more informative than just the graph starting in 2000. We know Taylor knows. Taylor knows we know Taylor knows. We know Taylor Knows we know Taylor knows.
So what do we say? I'm tempted to simply say: "BUSTED!!" And I'm tempted to say: if you want to rejoin the technocratic conversation about American economic policy, you are going to have to step up your game, and learn to keep your game clean.
Is that the right line to take?