Another day, another trillion dollars…this week the Senate passed an $838 billion “stimulus” bill. All that’s left now is to paper over the differences with the House version, throw in a couple more billion dollars, and start spending like Paris Hilton on a bender. This week’s stimulus bill is not to be confused with the previous stimulus and/or bailout packages known as TARP and TALF, which cost $700 billion and $800 billion respectively. All in, the federal government’s various spending packages over the past six months total just over $2.3 trillion. And that’s just the nominal cost, which doesn’t factor in things such as interest. When the long-term costs are included, the total price tag comes in somewhere around $8.5 trillion.
I’ve been trying to conceptualize just how much money we’re talking about here. Frankly, it’s an impossible task, since no human being has any sense of what these astronomical sums really mean. But to put it in perspective, let’s start with TARP. The nominal price of the Troubled Assets Relief Program (TARP) was $700 billion, $350 billion of which vanished without a trace under the watchful eye and steady hand of then-Secretary Paulson. The remaining $350 billion is going to be spent by current Secretary of the Treasury and tax-dodger-in-chief Geithner, but the details are still a little fuzzy. So fuzzy, in fact, that Wall Street dropped another 300 points upon hearing them.
Immediately after TARP came TALF, Bernanke’s Term Asset-Backed Securities Loan Facility, which came in at a cool $800 billion, bringing the total nominal cost of the bailout program to $1.5 trillion before the end of last year. Throw in the $838 billion package being bandied about Congress this week, and the grand total comes to $2.338 trillion.
Just to get a sense of how much money $2.338 trillion really is, consider the fact that the US government spent the equivalent of $5 trillion (in today’s ever-shrinking dollars) to fight all of World War II. The sum of all the goods and services produced in the United States in a year is approximately $14.6 trillion, so the Bush and Obama adminstrations’ panicked taxpayer-funded spending sprees represent 16% of GDP.
All of this spending, we’re told, is absolutely necessary to save us from certain doom. And according to President Obama, “the federal government is the only entity left with the resources to jolt our economy back into life.” Of course, as readers are well aware, the federal government doesn’t actually have any resources at all – it only has that which it takes away from the private sector. With this simple truth in mind, one has to wonder how the economy as a whole can be improved simply by taking money out of the private sector and then pouring some of it back in. This is what economist and historian Robert Higgs refers to as “swimming pool economics.” It’s like taking a cup of water from the deep end of the pool, pouring it into the shallow end, and expecting the overall water level to rise.
I don’t know if Obama and company actually believe this ridiculous theory, or if they’re just acting like they do in a deperate effort to “do something” (and vastly expand the scope of government control over the economy in the process). I suspect it’s a bit of both. One thing is for certain, though. The government only has three options for getting their hands on $2.3 trillion – by raising taxes, printing money, or borrowing it. No single method is going to be sufficient, so a combination of all three will be used. That means that we’ll all have less money in our pockets, and what little money we do manage to hang onto will buy fewer goods and services. And to top it all off, the massive increase in the national debt will impact generations to come.
The official Washington mantra for all of this ugliness is that the risk of doing nothing is just too great. I’m not convinced that’s true. If the “cure” for the disease is worse than the disease itself, you’re better off just living with the disease. And if the “cure” for the disease is being touted by the same group of people who are responsible for the infection in the first place, you might want to get a second opinion from a smarter doctor.
