The Clinton Years vs The Bush Years – A Pet Peeve I have

Casey B. Mulligan, professor of economics at the University of Chicago, made a comment that he should know is disingenuous, he wrote:

the “big spending Democrat” stereotype is incorrect — government spending / GDP fell under Clinton and increased under Bush.

This comparison, used to argue that when it comes to spending there is no difference between Republicans and Democrats,  is made often, both in the blogosphere and by academics who should know better. The main problem I have with it is that it is not comparing apples to apples.  Milton Friedman argued that the best form of government, from a small government and low spending perspective, is a Democratic president and a Republican Congress, where Republicans control the spending (congress), and Democrats control foreign policy – precisely what we had under Bill Clinton. The worst form of government is when the same party controls the presidency and congress – precisely what we had under George W Bush.

In other words, you are comparing arguably the best scenario under a Democratic president with the worst scenario under a Republican president – of course they are going to be alot closer than what they really are. Don’t get me wrong: I am not arguing that Republicans are true fiscal conservatives, no, I am arguing that the gulf between the two is larger than what these “Clinton years vs Bush years” argument would lead you to believe.

The difference between the two is even larger when you compare the kind of spending each does: Republicans tend to overspend on wars while Democrats tend to overspend on entitlements. Wars are temporary, they are one time events that come to an end, whereas entitlements are forever and worst of all, they get more inefficient and expensive with time. Take FDR and LBJ – both were involved in wars and both created entitlements, FDR with World War II and social-security and LBJ with the Vietnam war and medicare. Yet today we worry about the growing costs of social-security and medicare while the financial costs of World War II and Vietnam, though expensive at the time, are now but forgotten.

And Bill Clinton would not have been any different, had he had more control of congress, Matthew Yglesias explains:

If the health care bill that the Clinton administration authored, pushed for, and staked its presidency on had passed you would say that FDR, LBJ, and Bill Clinton were the three main architects of the modern welfare state. Because the bill didn’t pass, the institutional legacy of the Clinton years is considerably more moderate than that and the Clinton administration is instead remembered for its responsible stewardship of national affairs. But that’s because congress blocked the bill not because of Clinton’s moderation.

That was the Republican controlled (for the first time in ~50 years) congress that blocked the bill.

A better comparison is between the Bush years and the Obama years – but given the fact that in Obama’s first 100 days in office, he’s already proposed spending more than Bush spent in his entire 8 years, including both wars, its a strong argument that there really is a difference between the two parties. Especially considering that most of Obama’s spending comes in the form of very expensive entitlements – entitlements that Obama is hoping will last forever.

You can argue that entitlements are worth the costs, that is an argument for another day, but you can’t make the argument that the spending is the same between the two parties.

5 Responses to “The Clinton Years vs The Bush Years – A Pet Peeve I have”

  • It is really short sided to talk about spending vs social impact. I think wars are a lot harder to quantify, but the social security and medicare have both made a difference when it comes to quality of living for Americans. I don’t think we are there yet with “entitlements” and this country can do better to take care of people. I don’t think it should come in the form of healtcare reform from the government side, but restructuring the way insurance companies are allowed to operate and rake all the money in… however, that is probably impossible at this time.

  • Logtar,

    Its just as difficult to quantify the supposedly positive affects of medicare and social-security. Government programs dont happen in a vacuum, they change incentives in society at large.

    Take for example social-security. The problem with having the government provide it is that it soon starts to replace the family providing elderly care. After all, if the government does it for free, why should YOU take care of your elderly father? Of course not all people will think this way but many will, and over time it changes the culture. Many economists argue that this is why in countries that have social-security and medicare, the elderly are no longer taken care of primarily by their family.

    And since the family is significantly more efficient than the government, it results in an overall reduction in quality of life for all: For the elderly, who would have been better off being cared for by family and the tax payers who now have to pay for it all.

    This is without even mentioning the tax distortion, reductions in economic growth, and so on that these programs cause.

    There is a rich literature in economics that states that the bigger government gets, the weaker the family. The trade-off is very real.

  • Claiming that wars have no long term costs is just plain wrong wrong wrong. There are a lifetime of costs to injured and maimed military making sure we compensate them and their families for education and health care (of course we saw under W that veterans health was left to rot in the mold at Walter Reed), there are economic costs from countries no longer doing business with us. The whole war mentality is an ongoing escalation in maintaining a bigger, stronger, powerful army than the next guy. We won the cold war but we kept right on expanding the miliatry industrial complex. A little success breeds an unending ever costlier chase to be sure that of the same outcome in future wars.

  • Hambone is right, right right. The long-term costs of war are enormous. Especially those that we undertake largely without the support of the international community. And then there are the intangible costs – what is the divorce rate of American soldiers on active duty?

    Having said that, I think there is a lot of truth in HP’s general thesis about party control and spending.

  • As I noted on my own blog just recently, we have a staggering number of mercenaries in Iraq and Afghanistan. 250 thousand paid contractors. That’s as many as the number of military personnel we have. Quite costly, and incentivized to maintain the war machine.

    Note that Obama’s building a huge embassy/fortress in Pakistan. Huge city of an embassy in Iraq. A war on “terrorism” which is a war on a never ending tactic, not a war on an identifiable enemy, which means perpetual war. For WWII the war ended when certain governments were defeated, but this war may never end. Until our economy comes crashing down due to our overspending.

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