Austerity This Ain’t

The results are in. The federal government spent about 5% more in 2011 than it did in 2010, a real increase in spending:

The Congressional Budget Office recently finished tallying the revenue and spending figures for fiscal 2011, which ended September 30, and no wonder no one in Washington is crowing. The political class might have its political pretense blown. This is said to be a new age of fiscal austerity, yet the government had its best year ever, spending a cool $3.6 trillion. That beat the $3.52 trillion posted in 2009, when the feds famously began their attempt to spend America back to prosperity.

What happened to all of those horrifying spending cuts? Good question. CBO says that overall outlays rose 4.2% from 2010 (1.8% adjusted for timing shifts), when spending fell slightly from 2009. Defense spending rose only 1.2% on a calendar-adjusted basis, and Medicaid only 0.9%, but Medicare spending rose 3.9% and interest payments by 16.7%.

The bigger point: Government austerity is a myth.

As I pointed out in a post a couple of weeks ago, the same is true here in Illinois, in New York, and in California. Sure, you can find states that have reduced real spending. But you can find a lot more that have increased spending.

In that post I asked for the operative definition of austerity. Unless your definition is “spending less than I want to”, austerity this ain’t.

One more remark about public spending. If you want to slow the decline in government jobs, cut public employee pay across the board by 10%. The reason that state and local governments are cutting back on employees is that they’re required to balance budgets and when tax revenues are down the only way they can pay the step increases that the public employees’ contracts call for is to reduce the number of employees. Revenue is a constraint. Public employees’ contracts are being treated as a constraint, too. The irresistible force and the immovable object.