Economist James Galbraith: Bush Fiddled With Gov't Spending to Postpone Recession Effects
Last summer, economist James K. Galbraith predicted in Mother Jones that the Bush administration would increase government spending in 2008 in order to postpone the worst effects of the recession until after the next President took office:
The [$600 stimulus check most taxpayers received last year] isn't the only little Dutch boy thrown headlong at the dike this election year. Government spending, especially for defense, will be up: Military spending as a share of [gross domestic product] is expected to grow by $75 billion in fiscal 2008, enough to neutralize a 0.3 percent decline in GDP. Dick Cheney was secretary of defense for Bush 41; just before the 1992 election he engineered a big run-up in outlays, as the military restocked following the first Gulf War. (It was exposed in the first Clinton "Economic Report.") Is the Pentagon up to that trick again? I'd be astonished if it were not.
Now it seems Galbraith's prediction has proven true. GDP numbers for the first quarter of 2009 are out, and they don't look pretty. Galbraith writes in an email:
Federal Government spending was up 7.0 percent in the fourth quarter but DOWN 4 percent in the first. Looks to me, off-hand, like the old election-year trick, which I naturally predicted (in MJ) early last year. Octokyphosis, as Ed Tufte called it many years ago: humping in October. Maybe a bit delayed, and too late to help John McCain.
A look at the actual numbers on government spending seem to confirm Galbraith's suspicions: there are big drops in defense consumption and gross investment between the Bush adminstration's last quarter and the Obama administration's first one. Don't believe it? Read Galbraith's original story and decide for yourself.