On Wednes­day, the United States Bureau of Eco­nomic Analy­sis announced that the Gross Domes­tic Prod­uct decreased in the fourth quar­ter of 2012 by an annual rate of 0.1 per­cent. It’s the first con­tract­ing quar­ter since 2009.

Granted, we’re not talk­ing about a large con­trac­tion, but the results were par­tic­u­larly jar­ring, in light of the third quarter’s expan­sion at a 3.1 per­cent annual rate. And any con­trac­tion is poten­tially dan­ger­ous to the over­all eco­nomic health of the nation.

Of course, peo­ple started assign­ing blame right away. It started with the BEA, who got a first crack at it by virtue of pub­lish­ing the report. The BEA noted that most cat­e­gories of GDP increased, includ­ing real per­sonal con­sump­tion and real non­res­i­den­tial fixed investment.

What decreased? The growth in real pri­vate inven­to­ries was one, tak­ing 1.27 points out of the GDP growth num­ber. That’s pretty big, though it’s sea­son­ally typ­i­cal as inven­to­ries are drawn down for the hol­i­day shop­ping sea­son. An even big­ger con­trib­u­tor was a 15 per­cent decrease in fed­eral gov­ern­ment con­sump­tion expen­di­tures, which took 1.33 points out of GDP growth.

Inter­est­ingly, all of that shrink­age, and then some, came from cuts in defense spend­ing. Non­de­fense grew by 1.4 per­cent, but defense shrank by 22.2 per­cent. The BEA didn’t explore why defense expen­di­tures dropped by over a fifth.

Econ­o­mists, look­ing at the data, fol­lowed up with a united recog­ni­tion that cuts in gov­ern­ment spend­ing were directly respon­si­ble for the shrink­ing quar­ter. Some noted that it was specif­i­cally defense spend­ing cuts that were the culprits.

Democ­rats pointed to Repub­li­can intran­si­gence on arriv­ing at a bipar­ti­san solu­tion to the bud­get. It does appear to be related to the bud­get issues, and both par­ties have been point­ing at each other. My sense has been that Repub­li­cans (par­tic­u­larly in the House) have been unwill­ing to budge on any­thing unless the immi­nent con­se­quences are dire. Regard­less, it’s not the mutual Con­gres­sional fin­ger­point­ing that caught my eye.

Sen­a­tor Marco Rubio (R-​​FL) had an inter­est­ing spin on it. “We’re begin­ning to see proof in the last three months of last year the Amer­i­can econ­omy shrunk and it shrunk under this Pres­i­dent because of his poli­cies,” he said in a Thurs­day inter­view on FOX News.

So let’s see in what way his claim could be true. It’s cer­tainly true that the Amer­i­can econ­omy shrank in the last three months of last year (assum­ing the BEA’s pre­lim­i­nary num­bers hold up, any­way). It’s also cer­tainly true that it shrank under this Pres­i­dent, since he was in office last year. But did it shrink because of his policies?

It’s not that the report sug­gests that the pri­vate sec­tor is being harmed by Obama’s poli­cies. The pri­vate sec­tor has showed steady growth for over three years in a row, includ­ing that last quar­ter. The sea­sonal inven­tory shift accounted for just under half of the drop from the third to the fourth quar­ter. It was a cut in defense spend­ing that accounted for nearly all of the remain­ing neg­a­tive change. Either one alone would have left a small but detectable growth in GDP, albeit a smaller one than in the prior quar­ter. Together, they led to a very small shrinkage.

Why did defense spend­ing drop in the fourth quar­ter? It was a com­bi­na­tion of sev­eral fac­tors, but two in par­tic­u­lar stand out. The United States has been draw­ing down mil­i­tary oper­a­tions in Iraq and Afghanistan over the past year, reduc­ing the need for mil­i­tary expen­di­tures. At the same time, the uncer­tainty sur­round­ing the seques­tra­tion facet of the Fis­cal Cliff meant that the Depart­ment of Defense couldn’t count on hav­ing its full 2012 com­ple­ment of spend­ing in 2013. Any respon­si­ble orga­ni­za­tion in that sit­u­a­tion seeks to can food and store it in the cel­lar in prepa­ra­tion for the long win­ter ahead. It appears that DoD did exactly that, sav­ing money in order to bleed it later to soften the impact of sequestration.

So these two DoD-​​related fac­tors had the most sig­nif­i­cant impact on gov­ern­ment spend­ing, and thus the drop in GDP, in the fourth quar­ter of last year. Which of Obama’s poli­cies con­tributed to those two factors?

In terms of the draw­down, Obama’s pol­icy from his days cam­paign­ing in 2007 was to get us out of Iraq and Afghanistan. Rubio believes we should stay in Afghanistan longer. So, yes, in an area of pol­icy dif­fer­ence between the two, Obama con­tributed to the fourth quar­ter shrink­age. Is that what Rubio meant?

And Rubio has opposed the seques­tra­tion, though only inso­far as it applies to defense spend­ing. His stated poli­cies amount to sup­port­ing tax cuts, rev­enue cuts, and cuts in domes­tic spend­ing, while main­tain­ing or increas­ing defense spend­ing. To the extent that defense seques­tra­tion led to pre­emp­tive spend­ing reduc­tions by the DoD, this does put Rubio on record as oppos­ing a pol­icy that led to the fourth quar­ter drop in GDP.

But was Obama in favor of seques­tra­tion? The record isn’t entirely clear. He claimed not to have pro­posed the sequester, but Bob Woodward’s inves­ti­ga­tion con­cluded that he did. Obama did clearly state that he was in favor of hav­ing an unde­sir­able alter­na­tive in front of Con­gress as a means of achiev­ing a bipar­ti­san solu­tion to the grow­ing national debt. When he signed the Bud­get Con­trol Act of 2011, which cre­ated the sequester in the first place, he said “We’ve seen in the past few days that Wash­ing­ton has the abil­ity to focus when there is a timer tick­ing down and when there is a loom­ing dis­as­ter.” His point was that the value he saw in seques­tra­tion was in it being a forc­ing func­tion. He didn’t imag­ine (nor, inci­den­tally, did most Amer­i­cans) that mem­bers of Con­gress would be able to con­vince them­selves that going over the cliff would be bet­ter than arriv­ing at a deal that required com­pro­mise on the parts of both parties.

With the clar­ity of hind­sight, it’s eas­ier to see how wrong we were.

None of this should be taken to imply that Obama was in favor of the defense cuts, though. So did Obama’s poli­cies lead to the defense cuts that came from seques­tra­tion? At best, they did obliquely inso­far as he agreed to the terms, and signed the bill. In other words, not in prin­ci­ple, but some­what in practice.

Of course, it’s unlikely that many (if any) of FOX News view­ers who saw that inter­view came away with the belief that Rubio was refer­ring to Obama’s oblique sup­port of seques­tra­tion, or draw­ing down mil­i­tary activ­ity in Afghanistan. Whether inten­tion­ally implied or not, those who either didn’t have the time or didn’t have the incli­na­tion to look into the under­ly­ing num­bers would infer that it was Obama’s eco­nomic poli­cies (exem­pli­fied by the ARRA stim­u­lus and ACA health­care bills) that led to the drop in GDP.

That infer­ence would be very wrong, illus­trat­ing the dan­gers in (Afghan?) blan­ket eco­nomic statements.

Oh, by the way…we’re approach­ing the fis­cal cliff…again…

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