Rand Paul

Carter vs. Reagan on Spending, Take 2 featuring Ramesh Ponnuru


Earlier today, I posted an article titled "Rand Paul Is Right: Carter was thriftier than Reagan." I updated the argument with a correction at noon ET. The article discusses the Kentucky senator's characterization in the larger context of GOP and national politics, but here's the nub of the argument:

Paul is correct to say that Reagan was worse than Carter when it came to spending. As [Veronique] de Rugy does the math, Carter increased real spending 17 percent over the last budget of his predecessor, Gerald Ford. Over two terms, Reagan increased spending by 22 percent over Carter's final budget. On an annualized basis, then, Carter grew spending by 4.25 precent a year, while Reagan grew it by 2.75 percent. However, when expressed as a percentage of GDP, spending under Carter averaged 20.6 percent per year while Reagan averaged 21.6 percent. Spending typically really gears up in a second-term president's final years, so it's plausible to theorize that had Carter managed to stick around for eight years, he might have equaled or surpassed what the real-world Reagan managed. Note: The paragraph above has been edited to better reflect annual spending patterns.

When it comes to debt, there's no question that Reagan was worse. Over an eight-year reign, he tallied up $1.4 trillion in deficits, or an average of $177 billion per year. Carter—a famously cheapskate Southern Baptist—racked up just $253 billion over four years, for an average deficit of $63 billon per year. Tax revenue went up sharply under Reagan, for sure, but like a Hollywood big shot, he still managed to spend ever larger amounts, resulting in an average annual deficit of 4.1 percent of GDP. The Peanut Farmer From Plains? A relatively tiny 2.3 percent of GDP. (All this data if from the Congressional Budget Office.)

Read the whole thing.

de Rugy/Mercatus

Over at National Review's The Corner, Ramesh Ponnuru read the story before my correction and writes:

I think Gillespie makes some good points along the way. But I don't think his central fact is a fact. Gillespie writes: "Paul is also correct to say that Reagan was worse than Carter when it came to spending. . . . Carter increased real spending 17 percent over the last budget of his predecessor, Gerald Ford. Over two terms, Reagan increased spending by 22 percent over Carter's final budget."

But that means that on average, spending increased 4 percent per year under Carter and 2.5 percent per year under Reagan. That's a pretty sizable difference: If Carter had merely kept spending at the same rate in a second term, his total would have been 37 percent. Reagan looks worse only if you hold getting re-elected against him.

Update: Gillespie has edited the post. His new numbers are slightly off. (He's getting the annualized rates of increase by dividing the total increase by the number of years, which ignores compounding; you have to take roots.) But he concedes that on an annual basis, Carter increased spending faster than Reagan. Gillespie does not, however, agree with me that this fact is fatal to the Gillespie/Paul claim that Carter was the thriftier of the two.

I only now read Ponnuru's comments and do indeed stand by my claim that Carter was thriftier than Reagan. Thrift is not simply a question of how much you spend. It also has to do with balancing income and outlays. On this score, there's simply no way to pretend that Reagan acted responsibly. Tax revenue increased dramatically under Reagan and yet he still managed to massively increase the national debt. You don't do that by being thrifty.

Focusing just on spending, Carter comes out a clear winner if the metric is spending as a percentage of GDP. And as the chart above underscores, Reagan spent more each year than Carter did. While constantly increasing spending year over year has come to be expected, there's no iron law dictating that it happen. Just look at spending under Eisenhower, Nixon, and H.W. Bush for cases where presidents maintained essentially flat outlays. Clinton kept a tight leash on spending in the first four years of his presidency.

The annual rate of increase is an important factor to consider when evaluating spending patterns but it's simply one among many relevant metrics. On most of these, Carter does just swell. More important, there is nothing in Reagan's record to suggest he tamed Leviathan while in office. Somehow I doubt that most folks at National Review would say Obama is a cheapskate because annual increases in spending have been low on his watch.

Related: At Bloomberg View, Ponnuru says that while Rand Paul has no shot at the Republican presidential nod, "he has a better shot than any of the other candidates for getting picked for the No. 2 slot."

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    1. Version B: Teachers Union in standoff against feds, like Bundy Ranch, Chait silent on inherent racism of Teachers’ Union.

    2. Is every law from now on going to involve a waiver? That’s how you know that it is a really well though out law…

      1. Case-by-case! CASE-BY-CASE!

  1. But that means that on average, spending increased 4 percent per year under Carter and 2.5 percent per year under Reagan.


    Focusing just on spending, Carter comes out a clear winner if the metric is spending as a percentage of GDP. And as the chart above underscores, Reagan spent more each year than Carter did.

    They are just talking past each other. Carter increased the size of government relative to what he inherited at nearly twice the rate that Reagan did. Reagan, since he stated with a larger government, spent more money in real terms than Carter. Pomaru finds the first fact more persuasive Nick finds the second. Neither really gives a reason why their fact is more persuasive other than Pomaru likes Reagan and Nick doesn’t.

    1. There’s also another elephant in the livingroom no one is talking about:

      Congress controls the purse strings, and congress was Democratic through Carter and Reagan. So the question becomes, how much of the spending was driven by each respective Executive?

      With respect to Carter, he did put on a sweater and tell us to turn down the thermostat… so there is that. Carter thought small, very small.

      1. Nick as usual sells his readers short and tells a fairy tale. The truth is as you point out more complex than just what numbers correspond to which years. How much did each of them hold back the back from spending and how much did they encourage it. Nick, being really the laziest writer on Reason, doesn’t go into that.

        Did Carter spend four years at odds with Congress and keep spending from increasing 8% a year and 4% was the best he could do or was he the one that wanted 8% and only got 4%? Same with Reagan. The answer to those questions are what matter.

        1. So Obama supporters are right to refuse to blame Obama for anything regarding the economy and Ocare after 2010? If only those GOP meanies let us stimulate the economy and fix Ocare!

          1. If you are retarded I suppose. Are you this fucking stupid? Re read my post and think a little more. The amount a President is “responsible” has a lot to do with whether he was behind it coming out Congress or if he objected to it and had Congress force it upon him. So, yeah Obama kind of responsible for his “signature achievement” in a way that Carter and Reagen are not for something that Congress passed and left them shutting down the government as the only option to stop it.

            Do me a favor and stop posting the same retarded argument on every thread. We already have Tony and Shreek for that. We don’t need a third.

            1. Reagan was behind the FICA increase and military waste so he’s responsible for it. Thanks for backing me up John.

      2. Come now Paul, everyone knows that is just a mere technicality becuz veto pen.

      3. The House was Democratic during that time. The Senate was Republican for the first 6 years of Reagan’s term, and Democratic the rest. It was essentially the opposite of today’s situation, where we have a Democratic president and Senate, with a Republican house.

        1. Yes. And this is why Boehner bears a lot of responsibility for the spending that is happening today or the credit for it not being worse, depending how you look at it.

          Also, Congress was not nearly the lapdogs to the President under Reagan and Carter than they are now.

          1. I’m not saying Tip O’Neill and the Democrats are blameless. I’m saying that the narrative of “poor Reagan really wanted to cut spending, but he was forced to increase it that much by those all-powerful Democrats” is BS. It’s the same as the Democratic hacks today blaming obstructionist Republicans for all of Obama’s failures.

            1. “poor Reagan really wanted to cut spending, but he was forced to increase it that much by those all-powerful Democrats”

              No one is saying that. What I said was it would be interesting to know how and what each executive drove on spending.

              For instance, it’s pretty fair to say that Reagan drove military spending, but again, it still requires a willing and receptive congress.

          2. Congress is more hostile now than at any time in a half century.

            1. Don’t lock eyes with ’em!

            2. “Palin’s Buttplug|4.24.14 @ 3:30PM|#

              Congress is more hostile now than at any time in a half century.”

              Buttplug points out a positive in today’s political climate.

        2. The Senate was Republican for the first 6 years of Reagan’s term,

          If I recall my history, yes the Senate was “Republican”.

      4. Actually the Republicans held the Senate from 1981-87, the first 6 years of Reagan’s Presidency.

      5. That’s what I’ve always considered the greater factor, not who’s president. What I’d like to see is a scatter plot covering the same period as above, but with % annual increase in outlays on the Y axis and partisan composition of Congress on the X.

    2. People! Johnson inherited the Presidency. The others ran for the job and were elected. They inherited nothing. Can people stop using that idiotic term?

  2. “No shot?” Who is his gimme? If it’s Bush, he’s an idiot.

  3. Nick,

    Suppose Reagan has completely halted growth of government spending. Instead of growing the government at 2.5% imagine he achieved 0% growth. If that were true, he still would have spent significantly more money in reap terms and in terms of percent of GNP than Carter did. Yet, would you really call him a bigger spender than Carter? By the measurement you are applying now you would have to.

    Like most of your arguments, this one isn’t particularly compelling. Given the fact that since he inherited a bigger government than Carter, Reagan could have held spending constant or even shrunk yearly spending and still spent more money than Carter did, I don’t see how your measuring scale gives a clear picture of which was the subjectively bigger spender.

  4. Tax revenue increased dramatically under Reagan and yet he still managed to massively increase the national debt. You don’t do that by being thrifty.

    This is an important side-subject.

    If I recall the progressive argument, decreasing revenues is racist because you’re Starving the Beast. So putting aside Reagan’s profligate spending ways aside, he lowered marginal tax rates which fed the beast, so Carter is racist, Reagan is not, Q.E.D.

    1. Its not decreasing revenues thats racist, its decreasing the share of a person’s income that 1%ers (who are all white anyway right?) must pay to the federales.

      They don’t care about improving anyone else’s station in life. They care about tearing down those who have a better station in life. They’re feuled by nothing but envy.

      1. This. This is the entire point behind that new book by the French economist the left-wing media are all raving about right now.

  5. Smart guy, that Paul. Already has the albatross of his pa hung around his neck and then decides to piss off Reagan fans with some pointless remark that gives joy to all Democrats. He needs the Reagan fans to get nominated, as will penetrate his skull in due course.

    1. I agree. What does Paul get out of this other than the faint praise of various gadfly and beltway douche bag Libertarians? In return he pisses off a good portion of the voters he is trying to win.

      1. Oh stop that contrivance. He gets to stand out as someone with enough integrity and intelligence to call out even the sainted. I doubt the Reaganites are going to hate him for this.

        1. Sure. Pissing all over Reagan. That is the ticket to winning the nomination.

          Did Shreek take over your account? You are usually not this epically stupid.

          1. Paul is making a reasoned critique of Reagan and it is you that acts like Shriek. I hope the GOP isn’t so thinskinned and stupid are you are being right now.

      2. If he wants to run as the libertarian side of teh GOP, then yes, he should say things like that. I don’t think it would be wise for him to spend a lot of time on what was wrong with Reagan, but I think it’s good that he says something. If we are going to get any kind of change in the direction things are heading, we are going to need people who will tell it like it is, not always say what the assumed base wants to hear. If criticism of Reagan is such a big looser for Paul, then the GOP really isn’t ready to move in the direction Paul wants to go in.

  6. Is Congress going to be in your third story about Reagan and Carter’s spending habits?

    1. The article was concerning Rand Paul’s comments, which focused on the presidents. Obviously, presidents don’t have total control over the budget, but neither does Congress. Furthermore, the GOP controlled the senate for the first 6 years of Reagan’s presidency, the Dems only controlled the House during those years. During Carter’s term, the Democrats had an overwhelming advantage in both houses.

      1. Only the House? The sole body in government where spending can originate?

        1. That doesn’t give the House unilateral control over spending, or make the Senate irrelevant in the budget process.

          The political situation (in terms of party control of government) under Reagan was exactly the opposite that it is now. If you solely blame the Democratic House for the spending of the 80s, then I don’t see how you can’t solely hold the Republicans responsible for the spending today.

          1. I don’t blame the past or current state of spending on the House alone. Clearly the Senate and the President are part of the process. And you can certainly argue that the President, whoever it is, can wield a potentially powerful political weapon with the veto, and perahp becasue of that should bear more responsibility, at least for leadership or setting the tone. It is also fair to say that the House is much harder to herd in one direction – and perhaps that is where Presidential leadership can steer one way or the other. I am not trying to excuse Reagan or blame Obama entirely, but instead point out that the ultimate source of spending (and overspending) lies with the House, and if perhaps more effort was made to make that clear, their would be more calls for changes from the people that matter.

            Unfortunately, it has become far to symbiotic realtionship between the three with respect to spending; I’ll give you this if you give me that, then everyone – meaning the House, the Senate, and the President, certainly not the people actually paying for it – all get something that they want, that they beleive will make thme look good to their respective constituents so they can go back to their districts with and use as a campaign tool.

            The only quibble I’ll make about your comment about the political situaion being exactly the same now as then, just a mirror image, is that I think Tip O’Neill would run circles around Boehner, even as fat and drunk as he was.

    2. Besides, it is far easier for the lazy to focus on the titular head of the government as the responsible party, versus the Constitution (which I thought Reason loved? No more?) which clearly spells out which political body is responsible for spending.

      1. Being responsible for originating spending bills is not the same as being responsible for spending. They have a lot of the responsibility, but the senate and president play large roles as well.

        Yes, presidents get too much blame and credit for things that happen under their administrations. But Reagan is dead, and he’s not running for president. If people want to give him credit for the prosperity of the 80s and the end of the cold war, then he can also take some blame for the less good things that happened while he was president.

  7. Somehow, comparing whose record was bad versus whose was REALLY bad is…not all that inspiring.

    Rand’s overall point was that Reagan was no paragon of virtue when it came to government spending, and that remains valid. Would things have been different if he had had a GOP Congress? Maybe? However, the experience of 2001-2006 makes me believe it might have been worse.

  8. Rand Paul is still 100% right. Reagan sucked for his military spending profligacy and massive FICA hikes. End of debate.

    1. And what difference, at this point, does it make? Bad mouthing a dead guy well regarded by a great many of the people you need to nominate and elect you is smart, umm, how exactly? Are underwear gnomes involved?

      1. You can’t be this dense. Rand is critiquing his presidency. Are you going to get this hot ‘n bothered over criticism of FDR?

        1. Are you going to get this hot ‘n bothered over criticism of FDR?

          It would be pretty stupid for a man seeking the Dem nomination to attack a Dem scion like FDR.

          Paul’s criticism is principled and I even agree with him, but John is right, it is a stupid, pointless move that won’t win him friends among the people he will need to get a GOP nomination.

  9. Carter was also easily the most libertarian POTUS since Coolidge as he deregulated entire swaths of industries.

    I know that fact makes some of you squirm.

    1. It makes me somewhat less inclined to scorn him mercilessly for his piety mouthing vapidity.

    2. I think Carter gets too much hate. He tried to rein in spending in a lot of areas and did deregulate a lot of things. He was just a lousy politician and didn’t know how to play ball with Congress.

      1. And enabled dictators, oh and Rosalyn Carter was Rev. Jim Jones’s pen pal!

      2. He was a lousy politician who even drew a primary challenge from Ted Kennedy due to his lack of forcefulness and ego.

        Other presidents ranged from meglomaniacs to bullshit artists.

        1. Quit your lying shrike.

          We all know how much you hate Southern baptist Carter who mispronounced Nuclear worse then anyone on the planet.

          “Newkia” is not how you say Nuclear.

      3. He also managed to bring about decades of peace between bitter historical arch-enemies Israel and Egypt.

        A very impressive foreign policy accomplishment, which the dipshit in charge now damn near almost flushed right down the toilet with his mindless arrogance.

        1. He also managed to bring about decades of peace between bitter historical arch-enemies Israel and Egypt.

          That was on the backs of US taxpayers. Not impressive.

          Carter also energized the Department of Education. He also enacted windfall energy taxes. Shriektard is wrong.

          1. Cytotoxic

            “Carter also energized the Department of Education.”

            Are you claiming that that is a good thing ?

    3. Actually, asshole with shit for brains, there have been a number of occasions on these boards where Carter has been praised for just that.

    4. Eh, he also created two monstrous departments. So it’s a lot of poison to go with the antidote.

      So… maybe. A good case can be made for Ford over Carter though, so definitely not “easily”

    5. I gave him too much credit for that until I found out the deregul’ns were mostly just following the reports of presidential commissions that were inaugurated under Nixon and deliberated for several years. The only one I can think of out of all those commissions whose recommend’n wasn’t followed in large part was the Schafer Commission, which came out for decontrol of cannabis.

    6. as he deregulated entire swaths of industries.

      Said by an idiot who chooses to forget only buying gasoline on “your day”- determined by your license plate number.

  10. It is Congress that spends money – and raises taxes – not the President.

    Reagan had to deal with Democratically controlled Congress run by the likes of Tip O’Neal.

    1. You’d do much better forgetting facts so we can remember the big event here is Carter vs Reagan.

  11. I guess you could also say (according to the graph) that Carter was “thriftier” than Clinton. But not even liberals would favor Carter over Clinton.

    Reagan was not a spendthrift, but he served two terms. I’m no historian, but Carter could have dramatically increased spending in his second term in response to the Iranian hostage situation, gas shortage, or whatever crisis that soured the public mood. And there’s no guarantee that Carter would have supported whatever made the Reagan presidency an overall success.

    I’m not under ANY illusion that the size of government will decrease significantly under Rand Paul. Carter will be “thriftier” after Paul’s presidency using Gillespie’s metrics. But if the GOP controls both house and senate, he’ll do plenty good things.

    I’m not interested in anyone passing some purity test. Reagan was a big spender but a great president overall.

  12. Posted from the dead zone of the earlier thread, some brief analysis of deficits vs. private sector GDP over the years, with an average of 2.8% from FY 1946 – 2011 Projected. Excluding bridge years (ex: 2009), average deficits per President are as follows:

    Postwar Truman (FY 46-52) – 0.57%
    Eisenhower – 0.58%
    JFK/LBJ – 1.70%
    Nixon/Ford – 2.79%
    Carter – 3.29%
    Reagan – 6.06%
    Bush I – 5.80%
    Clinton – 0.44%
    Bush II – 3.04%
    Obama – 11.32% (through FY 2011)

    Numbers in 2005 chained dollars from OMB / BLS, quickly manipulated in Excel.

    In terms of real outlays, Republican administrations average yearly growth of 2.13% while Democrats average 3.17% (again, excluding bridge years). These numbers include the projecting spending for Obama’s term from 2012 – 2016 (which actually depressed the D average). Germaine to the discussion, Carter averaged growth of 4.10% while Reagan averaged 2.36%.

    I plan on expanding this to add each house of Congress, but I don’t have the time today.

    1. Your chart misses net change in rates.

      Dubya took a surplus and left a $1.2 trillion deficit. Obama has cut it in half. Your chart just shows averages.

      A football coach who takes a 14-2 team to the Super Bowl then averages .500 is no HOF coach.

      But Bill Walsh took a lousy team and won three Super Bowls.

  13. You know it’s nice to see the myths about Reagan’s “budget cuts” laid to rest but the whole debate seems rather like a debate over moving the deck chairs of the Titanic. Wasn’t the last President to actually produce a surplus Eisenhower? Does this mean Reason will be posting future articles on the glory of Obama, especially if he pardons a bunch of people?

    education (a newly formed federal department he promised to kill upon taking office), Medicare (which he had denounced as “socialized medicine” in the early 1960s), and Social Security

    I thought Reason opposed Republicans engaged in pointless losing battles against popular programs?

    Also why was Thatcher a “Hero of Freedom”? Isn’t her “anti-government” persona just as phony as Reagan’s?

    And will the progs admit that Reagan and Bush were big spenders and stop calling the GOP a bunch of libertarian lunatics? Oh wait that would involve admitting that big government can be bad and that fiscal conservatism has some merit to it, so no.

  14. There is a difference between republicans and democrats ? since when ? peace

  15. I can’t figure out what I find more tedious… The outright apologia for Reagan’s obscene levels of military spending or the holier-than-thou Team Blue/Team Red arguments put out by holier-than-thou libertarians, who– my guess is– wouldn’t have dreamt of casting a vote for Walter Mondale. I mean… ewww…

    Quick question… Do you think the low deficits of the Eisenhower era were because tax rates on high earners were 90%. According to my Laffer School of Economics position paper, higher tax rates result in lower tax revenues but, yet, there’s this chart suggesting something to the opposite. Help out, please.

    1. There is no help for socialists. None.

  16. Even having lived through Carter I never once realized what a spend thrifty hero he really was. It’s really amazing how we only remember the bad stuff.

    1. You mean how he sold weapons to Islamists and then funneled profits on those sales to right wing death squads in Central America

  17. Split hairs over who was Republican and who was Democrat under which president, it stands that the the 80’s were the pivot point where deficit spending – on an unhealthy exponential curve – has led to the heavy debt burden on all of us COLLECTIVELY. A crazy use of proverbial credit cards from 1981-2008, by BOTH parties, that has damaged our markets, our economy, and our money supply. Everything that has us entering a nice “1970’s eastern block” reality starts in that time period.

    If we’re not going to criticize Reagan, then can we at least not have the narrative that the Gipper SAVED the country? The 80’s were the last best chance to defuse the time bomb put into place in the 30’s (by his hero Roosevelt) and limit the amount of damage, if any at all. The 80’s is when the bills for unfunded promises started to come due, and should have been the pivot point to undo the damage of the New Deal and Great Society. And all we got instead were more, reconfigured illusions.

    1. cont.

      All the last 30+ years of nonsensical treasury policy did was wire more C-4 to the timer, with a trainload added on in the last 5-10 years. All Reagan did was cut taxes and ramp up borrowing to make people believe they were wealthier than they were. People have been conned into the thinking there were two “pies” when there was only one. In the end, if Reagan truly desired to cut taxes AND spending, when it became obvious we wasn’t going to fulfill that desire, he needed to lose the credit cards. But he simply passed on the formula to the next generation, so that anyone who now points out the folly involved, going back to Reagan, is a libertarian kook. It’s a shame that things have gotten so distorted that ANY financial conservatism whatsoever is “dangerous nonsense”.


      If anyone thinks Gross Federal Debt ballooning 18% in eight years is “conservative”, then THEY are the kook.

  18. Carter spent less and the country was in the duldrums with inflation and high interest. Reagan spent a little more and took the nation out of recession and gave the nation it’s pride back. Sometimes you have to spend money to make money.

    1. Adding 18% of the GDP to the debt load, in 8 years, is a “spending a little bit”? It was Keynesian-ism without an off switch, one that we have practiced ever since (with some leveling off, here and there, only to surge upward yet again), and is now spiraling out of all control. Did you happen to look at the link in my post a few days ago, above? Such optimistic interpretation of the 80’s only proves just how easily the masses were blinkered by “the boom”. It was all financed with “credit cards”. Adding 20-30% to your own household budget by maxing out 2-3 credit cards isn’t exactly sound fiscal policy. Keynes can be countered for his theories, which are only supposed to be short term. It is deadly to commit to such philosophies for 30+ years.

  19. Might mention that “real spending” admits of several definitions. You certainly can’t arrive at it applying the usual deflators. House prices in this country have about doubled every decade. The only thing that has kept us from becoming ever poorer has been the “reserve armies” of the 3d world and our ability to command commodity discounts though seignorage and our ever-ready military-industrial complex. Even so a lot of contemporary America reminds one of a Potemkin village.

  20. Fuck Rand Paul, Nick Gillespie and Reason. Having lived under Jimmy Carter and Ronald Reagan, you deserve Obama with no Reagan in sight. At a time when you could actually appeal to disenchanted Ds & Rs you pseudo-libertarians blow it with a bunch of meaningless bullshit. Yeah, arguing with Ramesh Ponnuru, that’s productive, who’s next? Jonathan Chait? Yeah, keep defending all the BS that pours from Rand Paul’s mouth, that’s the ticket, because we know a politician could never be full of shit or pandering, right?

    Oh, and congratulations on Reason’s BOLD position on free speech re: Ayan Hirsi Ali. What was it – 4 articles criticizing her or stating Brandeis wasn’t wrong to deny her the honorary degree that they offered her in the first place? So very brave!

    All this & gender neutral bathrooms, recommendations on improving Obamacare, open borders without dismantling the welfare state – congratulations Reason! You’re on course to destroy the notion of libertarianism for another generation or two.

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