(Washington, D.C., Monday, February 14, 2011) A new video released today by the Center for Freedom and Prosperity Foundation (CF&P) demonstrates how it is possible to curtail the burden of government. Entitled,"Spending Restraint, Part I: Lessons from Ronald Reagan and Bill Clinton," the mini-documentary highlights the examples provided by two recent Presidents – both a Republican and a Democrat – to show that good fiscal policy is feasible.
Dan Mitchell, a Senior Fellow at the Cato Institute, explains in the video that the key variable is government spending as a share of GDP. This ratio shows the burden of government relative to the productive sector of the economy. By this measure, both Ronald Reagan and Bill Clinton successfully restrained spending and reduced the burden of government. Capping the growth of domestic spending was the key factor.
Inflation-adjusted domestic spending increased at an average rate of less than one percent per year under Ronald Reagan, a rate much lower than the rate of economic growth. As a result, the burden of domestic spending fell by 2.5 percentage points of GDP during the same period. Bill Clinton, meanwhile, was able to turn projected deficits into surpluses by holding the average growth of domestic spending to less than three percent, while also capitalizing on the peace dividend from the end of the Cold War. By the time Clinton left office, government spending had been reduced by more than 3 percentage points of GDP.
Unfortunately, all of the progress made under these two Presidents has been erased by the profligate spending of Bush and Obama.