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Two very important charts from Matthew Yglesias

January 24, 2013

These were originally posted by Yglesias here and here.

The first chart was mind blowing for me:

1358957025187

Why is that so mind blowing? I’ll let Yglesias himself explain (emphasis mine):

“The data show government health care spending per capita in the United States and Canada. The United States spends more. And that’s not more per person who gets government health insurance, it’s more per resident. And yet Canada covers all its citizens, and we don’t. That should be considered shocking stuff, and yet I rarely hear it mentioned.”

and here is the second, somewhat less surprising, chart:

FRED Graph

Again, Mr. Yglesias:

“People are very interested in partisan politics. Political partisans are very interested in the presidency. The president is an important player in federal budget debates. And thus people are very interested in questions about federal government spending “under Obama.” But the national economy doesn’t care about why money gets spent or which level of government spends it.

And taken as a whole, consolidated government spending—federal, state, and local—simply hasn’t surged. You can take the beginning of the recession or the beginning of the Obama administration or whatever you like as your starting point and it still hasn’t happened. Spending continued on essentially the previous trend throughout the official NBER business cycle dates, and then flattened out in a nearly unprecedented way once the economy began. “

It’s true there are record deficits under the president (see next chart), but that has to do with falling tax revenue during the recession, automatic spending increases as a result of hard times (think of unemployment insurance, food stamps, etc) and yes, the largest stimulus package in history. It still should put things into perspective that even with an $800 billion stimulus package (which I fully support, by the way) spending really only increased along with the trend and then it completely flattened out, which is unprecedented.

FRED Graph

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