The Cost of the Crisis: $23 Trillion

by Sal on July 21, 2009

in Economy,Politics

The events of the last year have produced a flurry of legislation so complex, and debated and passed so quickly, that most of the citizenry (not to mention the members of congress) have no idea what the government has passed and how much we are spending.  Enter Neil Barofsky.  Barofsky is an economist who also happens to be the special Inspector General for the Troubled Asset Relief Program (TARP).  In his report to Congress yesterday, he outlined that the cost allocated to all of the programs passed to deal with the economy, including those by the Federal Reserve that did not require an act of congress, is $23 Trillion dollars.  Now, Barofsky did not say that we had spent or would spend that amount of money, but that we could approach that amount if we spend all that was allocated (have you ever known a federal agency to practice fiscal restraint?).

$23 Trillion dollars.  To put that into perspective, that is nearly double America’s current Gross Domestic Product, which is currently about $14 Trillion.  That means the government is spending almost double what we produce as a nation in a year just on the economy.  Now, a sane person could argue that this spending is necessary to fix the economy (I would argue that it is not and is nothing but waste), but then what justifies spending another $1.6 Trillion on Health Care, and levying a massive cap-and-tax plan at this point in our history?  Obama is ignoring the massive spending and is driving this nation slowly towards insolvency.

A few weeks ago, I had a debate with a friend on the prospects of economic recovery.  My friend (who was an economics major in college, while I was not) argued that the engine of the economy would overcome the massive anti-growth programs being created and executed in Washington.  He almost had me convinced, but now I am not so sure.  If Obama gets his way, take the $23 Trillion in expenditures on the economy, couple it with the wholesale takeover of two American industries (the auto industry, and more critically, health care) and a massive new tax scheme on the engine of economic growth, energy.  While a short-term recovery may be in the cards, the long term outlook is massive government debt, high inflation, and economic stagnation (if not contraction).   If Obama doesn’t watch it, he will forever be known as the President who bankrupted the United States of America.

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