The Power of the Purse
The GOP cut outlays as a share of GDP for three straight years.
Photo: Getty Images/iStockphoto In the Tom DeLay-George W. Bush era a decade ago, we often lambasted Republican overspending. But amid all the conservative denunciations of the John Boehner era, a key political fact is typically ignored. To wit, the GOP takeover of the House in 2010 has led to a marked decline in federal spending.
The nearby table tells that big fiscal story, in absolute dollars and as a share of the economy.
The fiscal years 2009-2011 represent spending under the Nancy Pelosi-Harry Reid Congress supported by President Obama. The stimulus boosted spending to a modern record of 24.4% of GDP in 2009, and it stayed high at 23.4% in 2010 and 2011 even as the stimulus was supposed to be winding down.
Overall federal outlays hit $3.6 trillion in 2011 and under normal Beltway practice would have kept on climbing.
Then Republicans won the election in 2010 on a mandate to cut spending. Their first-year leverage was limited since they took power in January after fiscal 2011 was nearly five months old and Congress had already voted its budget for the fiscal year that ended in September 2011.
But note what happened starting in fiscal 2012. Total federal outlays fell two years in a row—from $3.6 trillion in 2011 to $3.45 trillion in 2013 before starting to rise again to $3.51 trillion in 2014. The spending decline was even more marked as a share of the economy, falling for three straight years—from 23.4% in 2011 to 20.3% in 2014.
This kind of spending restraint almost never happens in Washington, no matter who controls Congress. The only comparable modern periods occurred in the Reagan Presidency and again in the first rush of the Gingrich Congress in the mid-1990s. Even in those periods total outlays in current dollars kept rising, though they fell as a share of GDP.
What explains the decline since 2011? Defense spending has ebbed, but by only about 0.8% of GDP from 2009-2013. That means domestic spending fell by about 2.8% of GDP during the same period.
One glib explanation is that the 2009 stimulus was supposed to phase out after two years, but don’t forget the stimulus included “maintenance of effort” mandates that obliged states not to cut from previous levels. Does anyone believe the Pelosi Congress would have allowed similar spending declines?
A better explanation are the discretionary spending caps and sequester included as part of the 2011 agreement between the House GOP and President Obama. Those caps forced discipline that has kept a lid on spending-as-usual. Each year President Obama has requested far more spending in his budget proposal, but Congress stayed under the caps until easing them slightly for the current fiscal year in the 2014 budget deal.
Spending is creeping up again despite the caps, thanks in part to a 18.6% increase so far this year to pay for the expansion of Medicaid under ObamaCare. And outlays will again rise rapidly unless the Affordable Care Act is replaced and Medicare and Social Security are reformed.
But the lesson of these numbers is that the Republican House has fulfilled its promise to restrain federal spending. In other words it has used its power of the purse under the Constitution to shrink the burden of government—despite ferocious opposition over four years from a Democratic Senate and President. We recognize this won’t matter to those who make a living by pretending that Republicans are no different than Democrats, but it is the truth.
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