The numbers would be bleak if they weren’t so scary. A budget deficit four times bigger than last year’s record red ink. One year’s debt equal to 13% of GDP. A record $3,550,000,000,000 budget. And 46% of that spending will be “paid” for by new borrowing.
But wait — there’s less!
There have been 5.7 million jobs lost since December. A lousy Treasury bond auction last week signals slower growth and higher inflation. And retail sales just dropped for the second straight month.
But don’t fret, dear reader — the stimulus has arrived. Or has it? Really, how stimulating is President Obama’s big package? Not very. Even the New York Times reports that “the stimulus bill has directly injected around $45.6 billion into the economy.” That’s as stimulating as a Merchant-Ivory reboot of Indiana Jones.
To keep the math easy, let’s round those dollars up to $50 billion. Then we’ll round the size of the U.S. economy down to $12 trillion. So the stimulus has, thus far, provided a jolt to the economy equal to 0.004% of GDP. That’s four tenths* of a single percent. Feeling stimulated yet?
Look at it another way. Assume 200 working days a year, of eight hours each. That’s about $60 billion each work day produced by the U.S. economy. So Washington has stimulated the economy to the tune of not-quite seven hours of work from each American with a job. If the president had just asked everybody to go in to work one Saturday, we could have added the same amount to our current GDP — all without borrowing it from our kids.
Oh — and I almost forgot to mention that the president’s economists agree that the worst of the recession is over. They expect growth to resume in the second half of the year, which, by my rough calculations, begins on July 1. Now might also be a good time to mention that most of the “stimulus” spending has been social service spending support to the 50 states. In other words, welfare payments the states would have made, regardless. So, really, if we’d have all just worked a little late a couple of days last week, we could have slept in on Saturday.
Sadly, no. Porkulus was never about juicing the economy. It’s about baselining massive new government spending under the guise of an “emergency.” Well, the emergency is nearly over, yet the spending has barely begun. Strangely enough, that seems to be all according to plan, says Vice President Joe Biden. “We’re 85 days into a two-year program here — we’re trying to get the money out as quickly as we can, but not too quickly, so we don’t end up really screwing up here.”
As it turns out, two years from now we might really appreciate the money — because what The One gives you with one hand, he’ll take away with the other. The White House, and its compliant press corps, says again and again that “95% of Americans” will see a tax cut. Unless, of course, you smoke. Or drink sodas. Or drink alcohol (What???). Or snack. “Sin” taxes are going up, all to pay for massive new spending on health care.
Meanwhile, the New York Times reports that “the Medicare fund … is expected to run out of money in 2017, two years sooner than projected.” And that Social Security “will be exhausted in 2037, four years earlier than predicted.” With news like that, we’re going to need all the investment and growth we can muster. Unfortunately …
Chrysler’s “managed” bankruptcy is going to make raising capital more difficult, as investors become wary of our thuggish new business climate. Forbes magazine’s Richard A. Epstein charitably characterizes the president’s mucking about in Chrysler’s reorganization as “injecting unneeded uncertainty” into the economy.
Speaking of uncertainty, President Obama’s “cap-and-trade” energy tax proposals could increase fuel expenses on everyone, rich and poor alike, by $1,500 per household each and every year. It’s going to be difficult to grow our way out of that burden, if radically increased federal borrowing ($9 trillion or more over the coming years) crowds out investments in the private sector. Or if the Treasury or the Fed keeps printing brand new dollars by the trillion, causing the dollar to crash and/or inflation to spike. So whether it’s in the form of higher inflation, higher interest rates, or reduced growth, taxes are going up on … approximately 117% of all Americans.
Is it any wonder that more and more of the economy is being driven into the untaxed underground? In the new issue of Reason, Greg Beato writes, “The number of listings in the barter section of Craigslist jumped 100 percent from January 2008 to January 2009.” Tax receipts, already plummeting, are sure to decline even further, as Americans “go Galt in miniature” by relying on barter or home brew (anybody have any good vodka distilling recipes?) and whatever else they can do to stay out of the way of Washington’s greedy, groping, grasping little fingers.
A massive underground economy. An ever-more massive federal government. Major manufacturing and financial industries in the hands of the president and his cronies. Unprecedented debts we’ll have to either repudiate or inflate away. A business climate based on fear and favor.
In other words, welcome to the Banana States of America.
So maybe we should cross our fingers and wish the stimulus the best of luck. It might provide the best times we’ll see for a while.
*Corrected — thanks for the comments!
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