Perhaps the most discouraging aspect of the debate over the stimulus
bill is that the two parties are fighting over what percentage of the $900
billion in spending would go toward stimulus right away. As sure sign we’
re about to approve it.
As a quick update, the Congressional Budget Office last month
offered its opinion that only about a third of the stimulus bill would
actually be spent in the first two years. Obama’s new budget chief wrote
back that he thinks 75% of the money would be spent in the first two
These arguments are a diversion but are nonetheless a sign that the
spenders have won once again, since almost no one is talking about
Which is too bad, because nothing is a perfect prescription for what
ails us. As many writers opined over the last week, there’s little evidence
that a government spending spree would pick the economy up any faster
than simply waiting it out.
To that we’d add that the government already spends 8% of its
annual outlays on interest on the federal debt. Can we raise that figure
considerably and still say we’re stimulating the economy? We say no.
Resigned as we are to watching this thing pass in some form, we
cannot help but offer a few big-picture reminders about how large the
government has gotten, and will get:
1) Congress is considering a $900 billion spending bill, essentially a
$900 billion supplement to the regular spending bills. If approved, the
$900 billion bill would be bigger than the cost of the entire federal
government in 1984.
2) Treasury is already on pace to borrow $1.227 trillion in the first
three quarters of FY 2009. This level of borrowing is roughly equal to the
cost of the entire federal government in 1990.
3) If Treasury has to borrow $1.7 trillion this year (very likely), that
would be bigger than the cost of the entire federal in 1999.
The US, so proud of its style of government, now has something else
of which to be proud… it now has two governments. There’s the actual
traditional government, and the shadow government that exists only
through the magic of borrowing. This year, it’s conceivable that the
government will borrow one dollar for every dollar it collects in tax
But as we like to say here, at least we’re not Europe.