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A Project of The Annenberg Public Policy Center

Did Gingrich ‘Slash’ Federal Spending?

Winning Our Future’s new TV ad falsely claims Newt Gingrich “slashed” spending in his four years as House speaker. Federal spending went up 18 percent from 1995 to 2000, the time frame mentioned in the ad.

In addition, the ad credits Gingrich for “record-breaking surpluses.” There were surpluses for four straight years — from fiscal years 1998 through 2001 — but Gingrich already had left Congress in January 1999. The largest of those surpluses came in fiscal year 2000, when Gingrich was already out of office.

‘Slashed’ Federal Spending?

The pro-Gingrich super PAC has been running an ad called “Renew Prosperity” in the days leading up to the South Carolina primary.

The ad recalls the economic boom of the late 1990s and credits Gingrich, who was House speaker from January 1995 to January 2000.

Announcer: Under Newt Gingrich, overall federal spending was slashed. Federal deficits were turned into record-breaking surpluses.

Let’s first take the claim that spending was “slashed.” It’s simply not true. The Office of Management and Budget’s historical tables show total outlays (table 1.1) continued to rise from fiscal year 1995 ($1.5 trillion) to fiscal year 2000 ($1.8 trillion). That’s an increase of $273.2 billion, or 18 percent.

How can Winning Our Future say “overall federal spending was slashed” if spending didn’t go down? The text on the screen provides more details: “FEDERAL SPENDING relative to GDP DECLINED from 1995 to 2000 by an astounding 12.5%.” (The ad emphasizes the words “federal spending” and “declined” by putting them in caps.) That claim is close to correct, but it doesn’t support the claim that spending was “slashed.”

Total federal outlays relative to the nation’s gross domestic product (table 1.2) went from 20.6 percent in fiscal 1995 to 18.2 percent in fiscal 2000. That actually figures out to a decline of 11.7 percent, not 12.5 percent. But the decline had less to do with any fiscal restraint than with the booming economy and the dot-com bubble.

During that period, GDP increased much faster than federal spending — rising from $7.3 trillion in 1995 to $9.8 trillion in 2000, a difference of $2.5 trillion or 34 percent.

Bottom line: Federal spending wasn’t “slashed.” It just rose about one-third as fast as GDP.

‘Record-breaking Surpluses’?

It is true that the federal government in the late 1990s and into the early 2000s enjoyed surpluses. But there are problems, too, with the claim that Gingrich is the one who is responsible for turning deficits into “record-breaking surpluses.” As we have written before, Gingrich has wrongly taken credit for helping to balance the budget for four years — even though he was not in office for two of the four years. This time, Winning Our Future goes even further to call the surpluses “record-breaking.”

The record surplus — as measured in dollars — came in fiscal year 2000: $236.2 billion. But those spending bills were introduced and signed into law between May 1999 and November 1999. Gingrich announced in November 1998 that he would resign as speaker. He left Congress altogether in January 1999.

Gingrich could claim some credit for helping to turn deficits into surpluses of $69.3 billion in 1998 and $125.6 billion in 1999 — which were record amounts at the time, as measured in dollars.

Another way to measure surpluses is as a percentage of the total budget — and by that measure the surpluses in Gingrich’s time were not actually records. The $69.3 billion surplus in 1998 was just over 4 percent of the total $1.7 trillion budget, and the $125.6 billion in 1999 was 7.4 percent of the total $1.7 trillion budget that year. But we found 17 instances since 1901 when the surpluses were larger as a percentage of the budget than it was in 1999.

The record surplus? In 1927, the surplus was $1.2 billion on a budget of only $2.9 billion. That’s a surplus of slightly more than 40 percent of the total budget. And in 1948, there was a surplus of $11.8 billion on a $29.8 billion budget — or 40 percent of the total budget.

One last thing, the ad ends with a photo of Gingrich and President Reagan, as the announcer speaks of Gingrich having the “right policies and the right leadership.” But the more appropriate photo would have been with President Clinton.

All the economic indicators mentioned in this ad — the 11.1 million new jobs, 4.3 percent unemployment, and the sharply rising stock indexes — occurred when Clinton was president, not Reagan. As speaker, Gingrich worked closely with the Clinton administration during this time. But, as his Republican rival Mitt Romney correctly pointed out during the Jan. 19 debate in South Carolina, Gingrich was a relatively junior member of Congress when Reagan was president, and the Gipper referred to Gingrich just once in his diaries after meeting with a group of “young Rep. congressmen.”

— Eugene Kiely