Throughout my countless encounters with Democrats, I have been bombarded with this idea that, in fact, Reagan himself was a big spender…and it was Reagan that put us on a path of fiscal instability. Is this true though? According to the CBO, discretionary spending fell as a percentage of GDP under Reagan:

So what caused the debt & deficit to grow under Reagan? Turn to graph 2, which clearly illustrates that as a percentage of GDP, the items that grew the most were entitlement programs along with net interest payments, which no doubt had a substantial increase due to the high interest rates under the two administrations previous to Reagan.

Paul Krugman, a Nobel winning economists, has found himself as the new voice of Keynesianism; a form of economics which supports the idea that government spending indeed helps to lead to economic prosperity. Krugman supposedly has a track record of predicting economic crisis while maintaining his Keynesian mantra. He is a staunch supporter of government spending and has even said on February 2, 2008, that:

“One thing I’ve written about a number of times, but becomes especially worth emphasizing now that John McCain is the presumptive Republican nominee, is the myth of runaway federal spending under the Bush administration… But one thing he thinks he knows is that the Bush administration has been spending like a drunken sailor. Has it?

Consider the actual record of spending. Never mind dollar figures, which grow because of inflation, population growth, and other normal factors. A better guide is spending as a percentage of GDP. And this has increased, from 18.5% in fiscal 2001 to 20% in fiscal 2007.”

He then went on to state on February 19th, 2008, that:

Bush is right about something

Hate to say this, but he’s right when he says

I think actually the spending in the war might help with jobs…because we’re buying equipment, and people are working. I think this economy is down because we built too many houses and the economy’s adjusting.

In fact, I’d say that the sources of the economy’s expansion from 2003 to 2007 were, in order, the housing bubble, the war, and — very much in third place — tax cuts.

Of course, we could have gotten just as much or more stimulus by spending $10 billion a month on actually useful stuff– think how much domestic infrastructure could have been built or repaired for the cost of this miserable war. But the war was what we got.

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