"Increasing the Size of Government"

One thing that gets my goat in political debates these days is when folks - generally conservatives and critics of the Obama administration - bemoan that Obama has "permanently increase the size of government."  (approvingly linked to from Romney's top economic advisor, Greg Mankiw).  The general critique goes something like this:

When he (Obama) came into office, he favored a massive injection of new government spending into the economy in the name of “stimulus” — counter-cyclical federal activity aimed at offsetting depressed consumer demand emanating from a recession-battered private sector. The net result provides little if any boost to aggregate demand because the states — and to some extent private citizens — simply pocket the federal money and reduce their deficits and debts. Meanwhile, what federal taxpayers get is a permanent increase in the size of government.

It would be interesting to parse out exactly how Obama has permanently increased the size of government.  First, it would be useful if we had some consensus on what the "size" of government actually relates to.  Is it the number of people the government employs?  This seems unlikely, since, as Krugman has repeatedly highlighted, going back about 20 years, Obama's is the first that resulted in a sustained drop in public employment:



So it's not that.  It could be that conservatives think that the $800 billion stimulus itself amounts to a permanent increase in the size of government - in the sense that once we start spending $800 billion, Congress will continually reauthorize that spending level, creating a new baseline.  But that hasn't happened - the lion's share of the stimulus program was spend in the first two years, and Congress has made almost no attempt to reauthorize that spending (though, considering the underperforming economy, it certainly should have).

I think the only way it permanently increases the size of government would be by increasing government debt.  I don't think this is an intellectual rigorous way of defining the "size" of government - when I think of size of government, I think of what it's permanent spending obligations are (not one-off spending, like the stimulus), or how many people it employs. Still, the stimulus did increase government spending for two years, and that will have to be paid for, so in a limited way it did increase the overall amount of government we'll have to pay for.  Still, compared to other major fiscal events, it is minuscule:

So I don't understand the criticism that the stimulus permanently increased the size of government, when so many other recent programs and policies had a much greater increase, with far fewer critical peep to be heard from stimulus-critics.  But maybe I'm missing something.  Regardless, it would be nice if there were more consensus folks clarified what they mean by "size" of government.

Welcome Back

I feel like I have stuff to say about politics again.

This is "silly season" in presidential politics - most voters, who are quite reasonably involved in more important things, won't focus on the presidential campaign until after Labor Day, giving them about two full months to analyze the candidates.  This is smart and gives voters more than enough time to come to a reasoned voting decision.  (In fact, well over 90% of voters have, whether they know it or not, already made up their minds, even if they haven't started paying attention yet.)  Still the newsrooms and cable shows of America need something to report on, so we'll have oodles of absolutely meaningless stories about trivialities (i.e., Romney's dog's diarrhea and Obama eating a dog as a little guy).  I won't be talking about that stuff.

But.  There are tons of interesting things going on, both looking forward and backwards.  Looking forward, there are huge domestic and international issues that will be resolved, one way or another, in the very near future.  A nuclear Iran.  The expiration of a number of tax cuts at the end of the year (Bush tax-cuts, Obama payroll tax-cuts).  And yes, the looming presidential election.  Looking backwards, we are reaching the point where there is enough balanced reporting on the past three years - contrasted with valuable but flawed versions that appear in the daily news - to start to evaluate how the Obama administration has fared, what it has learned, and how it will function if reelected for a second term.

These are the things I'll talk about.