While spending reached its peak in 2009, fiscal 2009 started in October 2008, nearly four months before President Obama took office. President Bush signed the massive spending bill on September 30, 2008 which included a record budget for the Pentagon, aid for automakers and natural disaster victims, and an increase in health care coverage for veterans. On October 3, 2008, President Bush signed a $700 billion bank bailout bill to avert financial disaster. Not all of that ended in fiscal 2009 and President Obama reduced the total bailout to $475 billion. 2 weeks before President Obama took office, the CBO (Congressional Budget Office) projected that the deficit would be $1.2 trillion. CBO stated the reason for this was the federal takeover Fannie Mae and Freddie Mac and rising costs for unemployment insurance. Another factor was the automatic cost of living increase given to Social Security beneficiaries of 5.8% in January 2009. It was the largest increase since 1982. Social Security spending rose $66 billion in January 2009. Medicare costs rose $39 billion.
That's not to say that President Obama is not to blame for any of the spending. According to FactCheck's calculations, President Obama can be assigned about $203 billion of the spending. Libertarian economist of the CATO Institute, Daniel J. Mitchell has put the figure at $140 billion. Here's how FactCheck got there $203 billion. I'm quoting directly from FactCheck here.
A case can be made that Obama shouldn’t be held responsible for the entire $32 billion increase. The $410 billion was only $20 billion more than Bush had requested, according to Rep. David Obey of Wisconsin, the appropriations chairman. (See page H2800.) And CBO later figured the increase amounted to only $9 billion over what it was projecting on the assumption that the levels Bush approved for the first part of the year would be extended for the entire year (page 5).
But it was Obama who signed the bill, so we assign responsibility for the full annual increase to him, not Bush.
Only a portion of the total $106 billion it authorized would actually be spent during the remaining three months of fiscal 2009, however. Sen. Kent Conrad, chairman of the Appropriations Committee, stated on June 18: “ The conference report includes $105.9 billion in discretionary budget authority for fiscal year 2009, which will result in outlays in 2009 of $30.5 billion.” (See page S6776.)
Here again, a case can be made that Obama isn’t responsible for the entire $31 billion. Economist Mitchell argues that $25 billion in military spending should be assigned to Bush, because “Bush surely would have asked for at least that much extra spending.” But he didn’t. So rather than speculate, we’ll assign it all to Obama, who asked for it.
Here’s how we arrived at our $20 billion figure for Obama:
By the time Obama took office, Bush already had loaned nearly $21 billion to the two automakers from funds appropriated originally for the Troubled Asset Relief Program, and had committed the government to lend $4 billion more. But Bush left decisions on further aid to Obama, who poured in additional billions.
By the end of the fiscal year, the Treasury had made approximately $76 billion in loans and equity investments to GM, Chrysler and their respective financing entities (some had already been repaid). But for budget accounting purposes, not all of this was counted as federal spending under the TARP law. That’s because the government stood to receive loan repayments with interest, and held nearly 61 percent of the stock of the reorganized General Motors. What was counted as spending was — in rough terms — the difference between the estimated future value of those assets to taxpayers and their initial cost.
Treasury put the net cost of the GM and Chrysler support during fiscal 2009 at $45 billion (see page 110, the “Total subsidy cost” line under the heading “AIFP,” for Automotive Industry Financing Program). That’s the amount officially booked as a federal outlay for fiscal 2009.
We assume — we think reasonably — that the $25 billion committed under Bush would have been lost had Obama done nothing. So we subtract the full amount of Bush’s commitment from the net total of $45 billion that Treasury initially estimated for fiscal 2009.
For the record, the ultimate total cost of the auto bailout is now estimated to be lower than initially expected. It is put at $21 billion by the Treasury Department (see page 5) and and only $19 billion by CBO (see Table 3). But those lowered estimates don’t affect what was booked as spending in fiscal 2009.
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