The reality of federal spending under Donald Trump has done much to dispel the apparently false and long-disproven notion that Republicans are the political party of “fiscal responsibility”. With George W. Bush and Ronald Reagan, federal spending was pretty much “in full swing”. Some of the greatest fiscal years under George W. Bush were when Republicans also controlled Congress.
Trump, of course, dramatically took the GOP’s wasteful tradition far beyond all old levels, calling for unimpeded deficit spending, money pressures and a series of billions of dollars in bailouts and “stimulus packages”.
This time around, there is little reason to believe that the Democrats will deviate from the GOP trend. After all, over the past year it has been seen as hopelessly old-fashioned to express concerns about deficit spending or other issues with out of control spending. It is imperative now to spend a trillion here or there on top of the usual gigantic budget. We are in the new New Deal era. Do you need an extra trillion? Just print it out.
While the Democrats are likely to keep increasing spending at the new Trump levels, the Dems will have their own ideas on how to spend it. And this has been one of the main differences between the two parties all along. Both parties love to spend money. They just like to spend it in a slightly different way.
The myth of budget cuts
But even in this regard, the spending disparities tend to be overstated and skewed. For example, after Biden released his new proposed budget, the White House used the event as an opportunity to claim that social spending experienced years of cuts and budget neglect during the Trump years.
For example, White House spokeswoman Jen Psaki claimed today that the Biden administration “inherited a legacy of chronic underinvestment”. (In Washington, “investing” means just tax-funded spending.)
But how significant were these alleged spending cuts? Not much.
Inflation-adjusted social spending increased from 2016 to 2020
The truth is that, under Trump, social spending in the “big four” categories of social spending – social security, Medicare, non-Medicare health spending, and “income stability” – increased approximately 17 percent (in current dollars) from 2016 to 2020. During this time, the consumer price index (CPI) rose by 7.8 percent. Adjusted for inflation, spending in these categories increased from $ 2.69 trillion to $ 2.92 trillion over the same period. That is an increase of 8.5 percent. In 2020, this social spending accounted for more than 62 percent of all spending and 72 percent for non-military spending. In other words, social programs have rarely been forced to endure what we might call “gutted” or “slashed”.
Source: White House Historical Tables, Table 3.1.
(Remember, these numbers don’t include the extra trillion that is being spent on a variety of “emergency” and “stimulus” programs. We’re just talking about normal budgeted spending.)
The only category that saw a real decline was “income security,” which includes spending on unemployment insurance, grocery stamps and similar programs. But that does not mean that all welfare programs have been successful. Spending on Medicaid and other programs for low-income households (labeled “Health” in the graph) increased 16 percent (adjusted for inflation) from 2016 to 2020.
However, advocates of social spending insist they are the victims, as military spending (in 2019 US dollars) rose 22 percent from 2016 to 2020, far outpacing overall growth for social spending programs.
Source: White House Historical Tables, Table 3.2.
It is precisely this fact that helps fuel the misconception that social spending is a victim of “underinvestment” because it has not increased as quickly as military spending.
This is how the talk about government spending works in Washington. Social spending, military spending, and total spending, which have skyrocketed thanks to spending on relief efforts, significantly outperformed inflation from 2016 to 2020. In Washington, however, all spending is expected to grow at the rate of the fastest growing category. Everything that does not “keep up” – even if expenditure actually increases – should fall behind or be neglected. Since military spending has risen rapidly during this period, social spending must rise at least as quickly, otherwise it will fall victim to “underinvestment”. Now that Biden is president, as the Washington Post puts it, the new budget proposals will flip the script on budget priorities. Now the administration will finally devote much-needed attention to these parts of the federal budget, which are supposed to be allowed to wither on the vine.
But for anyone who has not drank Washington, DC, Kool-Aid, it is clear that there is no shortage of spending and no underinvestment, whether it is military, social or anything else. All of these programs are clearly full of what used to be taxpayers’ money, and no one in Washington is in danger of losing much in “investment” at all.