Which hurt more, 2008 or 2020?
Being 22, I have experienced many “once in a lifetime” events… twice in my lifetime. The two that I remember most vividly are the 2008 Financial Crisis, and the 2020 COVID Pandemic, both of which changed many people’s lives, and also changed the way the government played a role in all of our lives. The economic impacts of the 2020 COVID Pandemic are still being felt today, and the economic impacts of 2008 were felt for years and years after the fact. Using the House disbursement data, I want to see which catastrophe caused more of an impact, using the House spending to extrapolate the general economic health of the country.
Before we get into analysis, let’s describe the 2008 financial crisis, because that one is less (painfully) present than the other.
It started in 1999 when Bill Clinton repealed the Glass-Steagall act, which heavily deregulated American banks. The banks proceeded to start giving out mortgages to anyone who asked, and the worse the quality of the mortgage (high interest, etc) the higher the profit margin for the banks. This progressed until 2008, where many Americans could not pay their mortgages and defaulted, losing their homes to the banks as collateral. That would normally be fine for the bank, because the bank would still retain the value of the home, and survive the whole thing. The problem was that so many people had gotten mortgages that they shouldn’t have, the homes didn’t have as much value as they should. After Bear Stearns, a bank founded in 1923, failed, market hysteria and doubt in bank solvency ran rampant, plunging the world into economic chaos.
To dig into the data a little bit further, I had to find the House Disbursement data from 2008. I immediately ran into a problem here though, as the House website’s archive only goes back to 2009, which while only a year afterward, seems too removed to create an accurate comparison. Luckily, I was able to find a scanned paper copy of the 2008 House Disbursements, which provided the data that I needed. However, I could only find the data for Q1, so that’s what I will be focusing on for this project.
The first comparison that I wanted to make between these two datasets was a comparison of the net disbursements for their respective quarters. I found that in the first quarter of 2008, the total net disbursement amount was about 301,221,445.57, while in Q1 2020 the total disbursement was 352,169,479.42, so 2020 was higher than 2008.
In 2008 the net disbursement is higher, and that is probably because 2008 was much further along into the crisis of 2008 than Q1 of 2020 was into the COVID Pandemic.
The other thing that I wanted to see was how spending was allocated in their respective years, to see if that holds any information about the nature of the two crises. For example, in 2020, I imagine a lot more money is going to be spent on telecommunications equipment due to the nature of the crisis, while in 2008 it might be more spread out to combat the larger economic issue that they were facing. Here is the spending spread for 2020:
It seems as if the pandemic had not gotten into a big enough swing to see any major changes in how the money was being spent, as this is in line with other years. For 2008, due to the nature of the data I was able to find, I was not able to make a visualization for this data, as the data was in an unscannable PDF, however from the PDF it looks like the top 3 programs with the highest spending were: Salaries once again, Committee on Appropriations, and Telecommunications.
Based on the analysis of the numbers, it looks like neither of these crises really had too much of an impact on the house spending, as both years are actually really similar. It looks like House spending doesn’t change that much depending on the outside world, which makes sense as it’s a pretty closed ecosystem. I would imagine that 2020’s net disbursements are higher simply because the government spends more as time goes on.
I think I may come back to this at another time with a dataset that fits more with my question, like government spending overall, because I think it would be really interesting to see which of these crises costed more.
