Following news that the economy had contracted slightly at the end of 2012, Fox News figures claimed both that government spending had not decreased, and that it had decreased because of President Obama's desire to cut military spending. Both are false -- the contraction in GDP came from a dramatic decrease in government spending, largely due to normal cycles in defense spending and the end of two wars.
Fox's The Five covered a report by the Bureau of Economic Analysis which found that the economy contracted by 0.1 percent in the fourth quarter of 2012. Co-hosts Dana Perino and Eric Bolling attempted to blame Obama for the decline in defense spending that contributed to the decrease in GDP, claiming that “the defense cut was actually the White House's idea in the first place” and was “part of sequestration, which started in the White House.” Co-host Andrea Tantaros later claimed “Spending actually didn't go down in the fourth quarter. It actually increased in the fourth quarter” :
But all three are wrong. Despite Tantaros' claim that government spending increased in the fourth quarter of 2012, the BEA report clearly indicates that it decreased dramatically, a factor that strongly contributed to the contraction in the economy:
Fourth-quarter federal government spending decreased at a 15.0 percent annual rate, reflecting a large decrease in national defense spending. The decrease in national defense spending is based on the Monthly Treasury Statement (MTS) for October, November, and December from the Department of the Treasury, which shows a large decrease in fourth-quarter outlays for Department of Defense-military programs other than for military personnel.
While non-defense government spending did increase slightly from the third quarter, the rate of increase was cut in more than half. Economists agree that not only is non-defense discretionary spending at its lowest level in 50 years, the ongoing lack of government spending is harming the economic recovery.
Perino and Bolling acknowledged the impact of defense spending, but the decline was not due to intentional cuts to military spending by Obama. In a post on The Washington Post's Wonkblog, Brad Plumer pointed out that defense spending generally drops in the fourth quarter of every year. In addition, the Pentagon is spending less money as the wars in Iraq and Afghanistan wind down:
Was this big plunge in defense spending unusual? Yes and no. To a certain extent, it's part of a pattern: Defense spending often rises in the third quarter of a year and drops in the fourth quarter. Here's a graph of the quarterly change in defense spending since 2010. Note the usual highs in September and lows in December of each year.
Yet the ups and downs were especially sharp in 2012 -- soaring 13 percent in the third quarter and dropping 22.2 percent in the fourth quarter. Part of that is due to the fact that defense spending is shrinking overall, thanks to budget pressures and the drawdowns in Iraq and Afghanistan.
Plumer acknowledges that some of the defense spending decrease may have been affected by the anticipation of automatic budget cuts that were negotiated as a result of the 2011 debt ceiling fight. But the cuts, known as sequestration, did not exclusively come from the White House, but came as a result of an agreement between Republicans and Democrats. Talking Points Memo's Brian Beutler writes:
The history here is much different and much more complicated. [House Majority Leader John] Boehner himself touched off the debt limit standoff by demanding that Congress match each dollar provided in new borrowing authority with a dollar of cuts to federal spending. President Obama was content to use the debt limit as a forcing mechanism to bring down 10-year deficits, but he wanted a deal that included tax revenue, and one that raised the debt limit enough to prevent the brinksmanship from returning ahead of the election. In the end, the parties were only able to agree on $1 trillion worth of cuts to discretionary spending. Under the Boehner rule that would've teed up a new debt limit crisis in the middle of the 2012 election. So leaders of both parties agreed to set up a process that would allow Congress to fast track legislation to reduce the deficit, ideally by at least $1.2 trillion. To make sure members came to agreement, both parties, including Boehner, agreed to include an enforcement mechanism that Republicans and Democrats found equally unappealing.