Fact Check: Lack of Federal Spending Did Not Cause GDP Plunge

The White House and its media didn't even stop to take a breath. Before news of U.S. GDP shrinking 0.1 last quarter had even hit the cable airwaves, we were being told by both that this collapse was mostly due to the fact that the federal government didn’t spend enough during the last quarter of last year. Translation: Don't blame Obama for this. Had we just grown the size and power of The State like he wants, we'd all be sitting in clover.

Except that simply isn't true.  

There was no decrease in government spending during the fourth quarter of last year. In fact, the government spent more money between October and December of 2012 than it did during the previous two quarters. So federal spending actually increased during the 4th quarter.

Would you like some facts to go with your media propaganda?

Federal outlays by quarter:

1st: 966,188

2nd: 884,957

3rd: 809,969

4th: 907,912

Now we're being told the economic slide wasn't due to an overall decrease in State spending, but that it was due to a specific decrease in federal spending, and, naturally, Hurricane Sandy:

“A likely explanation for the sharp decline in Federal defense spending is uncertainty concerning the automatic spending cuts that were scheduled to take effect in January, and are currently scheduled to take effect on March 1st,” explains Alan B. Krueger, the Chairman of the Council of Economic Advisers in a statement. “The decline in government spending across all levels reduced real GDP by 1.33 percentage points in the quarter.”

Here's Ezra Klein, who the Washington Post still sells as an objective journalist:

Less spending from the Pentagon, for one. Government defense expenditures plunged by a staggering 22.2 percent between October and December. According to the Bureau of Economic Analysis, the Pentagon spent significantly less on just about everything except military pay. Had the Pentagon not cut back on spending, the economy would have grown at a weak but positive 1.27 percent pace.

If a cut in federal defense spending was the problem, there still wasn't an overall decrease in federal spending. It should've been a wash.

Are Klein and his White House trying to tell us that the only government spending that helps economic growth is defense spending? Apparently, the dreaded Military Industrial Complex is more powerful than we thought.

As far as blaming Sandy for this, that's utter nonsense. Katrina was much worse, and affected the entire country due to disrupted oil production.  Furthermore, the GDP only dropped from 3.8% to 1.3% -- or 2.5% after Katrina. To blame Sandy, which only affected a very specific region, for a plunge of over 3%, is nothing more than propaganda. Moreover, during Sandy, we had two campaigns pouring billions into the economy.

It's just a fact that Obama's "recovery" has never been much of one. Obama's trickle-down government policies have failed. Staggering deficits have investors freaked; the constant push to punish the rich has employers freaked; crippling regulations have small business freaked; and this ongoing uncertainty and the non-stop removing of money from the private economy trickles down to a point where something's got to give. And the victims are who they always are: the poor and the jobless.

Already the media is spinning today's news as a one-time anomaly. This spin allows the White House and the media to pretend that nothing's changed from all the election happy talk that assured us Obama's recovery was some kind of miracle.

The State and the media have aligned, and for the fourth year in a row, prosperity really is around the corner -- you know, because they say so. 

 

 

Follow  John Nolte on Twitter @NolteNC


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