Before President Bush took office, the federal government took in $2 trillion in revenue in 2000. As Bush leaves office, the federal government is expected to take in $2.4 trillion in 2009. In other words, after eight years under President Bush, the federal government is taking in $400 billion more a year in revenue. So why did Congressional Budget Office project a $1.4 trillion deficit for the 2009 budget? Massive spending increases. In 2000, the federal government spent just $1.8 trillion. Now the CBO estimates that the feds will spend almost double that, $3.5 trillion, in 2009. Oh, and by the way, these figures do not include the nearly $1 trillion in new deficit spending that President-elect Barack Obama wants to throw at our struggling economy.
Yesterday House Democrats unveiled their first economic stimulus package bid. Current price tag: $825 billion. Everybody in Washington expects that total will go up quickly when the Senate adds its wish list sometime next week. But Democrats in the House are already making it clear that even this soon to be trillion dollar package is just a down payment. The Hill reports: “House Appropriations Chairman David Obey (D-WI) said the massive bill ‘may undershoot the mark’ and suggested Congress may have to spend more money to stimulate the economy.”
None of these unprecedented figures even includes the $350 billion in bailout money spent by the Treasury since October, or the additional $350 billion the Senate gave Obama “virtually unfettered authority to spend” yesterday. Those are considered ‘investments’ and for the purposes of accounting fictions do not count as spending. But all that money comes from somewhere, and the Obama team views the two programs inexorably linked. The Washington Post reports: “Top Obama officials say both initiatives are critical to turning the economy around: The spending package seeks to stimulate spending by showering cash on consumers, local governments and businesses. The bailout program, meanwhile, attempts to forestall trouble in the financial system, where risky lending practices helped spark the recession in the first place.” But is their any real difference between the spending package and the bailout program? The Post also reported earlier this week that the Obama team was seeking to expand the bailout program to “municipalities, small businesses, homeowners and other consumers.” Sounds exactly like the stimulus package to us.
So adding in the $160 billion stimulus package President Bush signed this spring, the federal government has already pumped $510 billion into the economy and now wants to add another, at minimum, $1.2 trillion. Is any of this working? Is there any science or history that suggests it will? No. As Heritage Senior Policy Analyst Bian Riedl points out:
Policymakers are basing the “stimulus” bill on economic models that wrongly assume every $1 of government spending increases the economy by approximately $1.60. Is it really that simple? By that logic, debt-ridden, big-government countries like Italy, France and Germany should be wealthier than America. And why stop at $800 billion? Such logic suggests unlimited prosperity could be guaranteed by the government borrowing and spending $800 trillion. Should America be basing such costly decisions on these types of economic models?
The economy sank because people over-borrowed for houses they couldn’t afford, and financial institutions over-borrowed for investments they badly misjudged. Washington’s solution is to borrow $800 billion that it cannot afford. How will adding $800 billion to the national debt solve a recession created by imprudent borrowing? There is an alternative. Long term tax cuts coupled with long term spending cuts. The borrowing bailout parade is what got us into this mess. It is time for a new direction.
Quick Hits:
- Some time after he gains unfettered authority to spend $350 billion in bailout money, but before he spends all of his $825 billion economic stimulus money, Obama plans to hold a “fiscal responsibility summit.”
- A majority of those surveyed believe Obama will be able to achieve every one of his 10 major campaign promises and some supporters say he’s even “making strangers on the street friendlier.“
- The New York Times reports that the latest use of financial bailout money “Hints at Nationalization.”
- The U.S. Foreign Intelligence Surveillance Court of Review declassified an August 2008 opinion holding that President Bush’s terrorist surveillance program is constitutional.
- In his farewell address last night President Bush said: “As the years passed, most Americans were able to return to life much as it had been before 9/11. But I never did.“