In his remarks on the debt ceiling deal, President Obama said, “The first part of this agreement will cut about $1 trillion in spending over the next 10 years....The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president.” This claim is utterly false, as domestic spending has actually gone through the roof. How, then, can Obama make it? He simply chooses not to count any of the major categories of domestic spending — Medicare, Medicaid, Social Security, and (soon) Obamacare — as part of “domestic spending.”
The White House Historical Tables (see tables 1.3 and 3.1) tell a very different story than Obama does. Some of the initial $917 billion in proposed spending cuts over the next decade (and likely far more of the $1.5 trillion in subsequent cuts) would come from defense. But even if that weren’t true, even if not one dollar of the initial $917 billion in cuts were to come from defense, it would still be true that non-defense spending — almost all of which is domestic — would be higher throughout the next decade, even as a percentage of the gross domestic product (GDP), than during any pre-Obama year in American history.
Under Eisenhower, non-defense spending averaged 7.5 percent of GDP. In the pre-Obama era, the all-time record for non-defense spending was 17.7 percent of GDP, set 20 years ago (in 1991) under the first President Bush. This year, under Obama, the tally for non-defense spending will be an estimated 20.2 percent of GDP, and under the proposed debt-ceiling agreement, non-defense spending would eclipse the pre-Obama record every single year for the foreseeable future. (Meanwhile, defense spending has dropped markedly as a percentage of total federal spending and will soon drop far more.)
So perhaps what Obama meant to say was, “Under this agreement, domestic spending will remain higher throughout the next decade than it ever was before I took office, easily doubling domestic spending during the Eisenhower administration — even as a percentage of GDP.”