Posted by
Always To The Right on Friday, January 16, 2009 7:00:44 PM
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 [1] 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. [2] 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 “[3] 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. [4] 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? [5] 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 [6] 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. [7] Long term tax cuts coupled with [8] long term spending cuts. The borrowing bailout parade is what got us into this mess. It is time for a new direction.
Article printed from The Foundry: http://blog.heritage.org
URL to article: http://blog.heritage.org/2009/01/16/morning-bell-the-borrowing-bailout-parade-must-end/
URLs in this post:
[1] the CBO estimates that the feds will spend almost double that, $3.5 trillion, in 2009: http://bloomberg.com/apps/news?pid=20601039&sid=aGgZR28hHCPk&refer=columnist_hassett
[2] The Hill: http://thehill.com/leading-the-news/dems-propose-825-billion-plan-but-fear-its-not-enough-2009-01-15
.html
[3] virtually unfettered authority to spend: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/15/AR2009011504253.html
[4] The Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/15/AR2009011504253.html
[5] The Post: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/08/AR2009010804109.html
[6] points out: http://www.heritage.org/Press/Commentary/ed011509a.cfm
[7] Long term tax cuts: http://www.heritage.org/Research/Economy/wm2191.cfm
[8] long term spending cuts: http://www.heritage.org/Research/Budget/wm2199.cfm