There is no way to hide the huge numbers. $700B used to seem like an enormous sum. Forget “billions.” We’re into trillions and trillions. And mounds of debt. The Wall Street Journal editors provide a dose of badly needed perspective:
The economically crucial issue for the long term is how much the government spends, because that is what becomes a claim on current or future taxpayers. This is where the CBO forecast gets scary. Including the Obama stimulus spending and assuming the full $700 billion of bailout money for the banks, insurance companies, auto firms and so forth gets fully spent, federal outlays could approach $4 trillion in 2009. That’s double the $2 trillion Congress spent only seven years ago.
Federal expenditures are now rapidly outpacing the growth of the economy, which is expected to be negative this year. CBO estimates that even before the stimulus federal spending will climb to an all-time high 24.9% of GDP, up from the previous post-World War II high of 23.5% in 1985. Add the stimulus and bailout cash and we estimate the federal spending share of GDP will climb to 27.5%. All of this is fast pushing the U.S. to European spending levels, and that’s before Mr. Obama’s new health-care entitlements.
The problem with most of this spending is that it will be hard to stop once it becomes part of the annual CBO baseline. Congress never reduces spending year over year. While much of the $700 billion in Troubled Asset Relief Program money will probably be returned to the Treasury as banks redeem the government’s preferred shares, Congress will want to turn around and spend that cash on other things unless the Obama Administration says no.
. . .Whether or not you think new spending will stimulate the economy, the one undeniable truth is that this money has to come from somewhere, which means that it is borrowed or taxed from the private economy. This spending blowout is all but guaranteeing huge future tax increases, and anyone who thinks only the rich will pay is living an illusion. Taxpayers need some new champions in Washington — and fast.
So what’s the answer? It seems spending less and figuring ways to grow the private sector would be at the top of the list. Yet the Obama stimulus is based on the opposite: spending lots, growing the public sector and thinking up new ways to burden businesses (e.g. a health care insurance mandate). In exchange for the unproven and historically suspect theory that we can spend our way to prosperity, we are going to cripple our future growth and spend an increasingly large portion of our budget simply servicing the debt we’ve accumulated in building dog parks, skating rinks and a host of other “shovel ready” boondoggles.
Democrats used to harp on President Bush for his fiscal irresponsibility and tell us to think “about the children.” Well, he was a penny pincher compared to what’s coming down the pike; and the children and their grandchildren are going to be paying for all of this for years to come. We need more than a “performance czar.” We need someone to pull out those Ross Perot charts and explain to the politicians and voters the economic mess we are adding to as we continue to spend beyond our — and our great grandchildren’s — means.
