Data for the graph above and the following observations come from table 5.6, found here.
If you look at the above graph you see that under Republican administrations, discretionary spending tends to go up. Under Democratic administrations, discretionary spending tends to go down or stagnate.
Since 1981, Republican administrations have raised discretionary spending 18 out of their 20 years in power. Democratic administrations have had 13 years in power, and raised discretionary spending in five of them.
These data suggest that Tea Party-types might want to grapple with the possibility of a party change.
These data also suggest it is wrong to use the Murray-Ryan budget to conclude the “conservative movement won” and “Obama lost” the fiscal showdown. To be sure, discretionary spending has dropped since 2010, when the GOP took the House. Indeed, it has dropped to levels Paul Ryan advocates. Given the context of slow economic recovery (high unemployment), combined with already bottomed-out interest rates, I’m of the position any fiscal austerity is macroeconomically indefensible.
But the other side is this: discretionary spending was always meant to come down off 2009’s stimulus — it was a stimulus, not a new deal. (For that fact, federal unemployment insurance was also meant to be reduced, or eliminated.)
So while I agree discretionary spending came down too much, too soon, we’ve probably witnessed the last large-scale budget war for a while. How long a while is, I don’t know. Here’s a guess: no new budget showdowns until at least after 2016. Winning in 2016 requires the GOP to court wider audiences than the Paul Ryan-tea-party-cut-cut-cut single-option allows. And if we’ve now re-set the baseline for discretionary spending, $1 trillion isn’t the worst-case scenario: we’re basically back at pre-recession levels.
And also, as shown above, there is this: discretionary spending usually goes down during Democratic administrations anyway. Perhaps the victory happened before the Tea Party even ocurred, when Obama in 2009 was able to pump more than $300 billion into non-defense discretionary spending. Ryan has effectively rolled that stimulus back. But he merely turned the new baseline into the old baseline. From this baseline going forward, will we see a stable rise in discretionary spending, as history suggests? We shall see. It will be interesting to note what happens to discretionary under the next Republican administration, given the party’s recent fiscal profile.
In the meantime, politics should not blind us to the most important domestic trend: activity is picking up on the demand-side of the private sector.