New York Times columnist Paul Krugman has been whining for well over a year that the $787 billion Porkulus (which was rescored by the CBO to $862 billion; plus, neither of these figures factors in the accrued interest for this spending since it’s all borrowed money, so the total will be higher) wasn’t large enough to have fixed America’s economic problems. He did again yesterday with a post that is chock full of charts and graphs that he uses to “prove” his point. Except that he’s wrong. By well over $1 trillion.
Let us dispense with the myth that the government injected less than $1 trillion of taxpayer dollars to stimulate the economy. That only works if we use the definitions provided by the left, which, as we should already know, don’t mean squat. So it’s time to properly define how much stimulus money the government has injected over the last 2 1/2 years, because that’s when this all started.
The problem is how does one define stimulus. If we look at the “official” stimulus bills that were passed in 2008 (the $150 billion “Economic Stimulus Act of 2008”) and 2009 (Porkulus; linked above), we get the following:
- From the beginning of the 2008 ESA, “To provide economic stimulus through recovery rebates to individuals, incentives for business investment, and an increase in conforming and FHA loan limits.”
- From Sec. 3(a)(1) of Porkulus, “To preserve and create jobs and promote economic recovery.
- From Sec. 3(a)(3) of Porkulus, “To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
- From Sec. 3(a)(4) of Porkulus, “To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
Between the two, that’s over $1 trillion of government investment and tax incentives in little more than a year. So that’s how stimulus is defined. But that is hardly the amount the government has invested over that time. No, not by a long shot. After the 2008 ESA, there were the bailouts of Bear Stearns, AIG, TARP (which includes the bailouts of GM and Chrysler, and absorbed the bailout of AIG), and the bailouts of Freddie Mae and Freddie Mac.
The real big government spending was via TARP and the Fannie and Freddie bailouts. Plus, two unemployment extensions were passed: one in 2009 and one this year (remember, Speaker Pelosi says unemployment outlays create jobs and are one of the biggest stimuluses to our economy; right). Between the three ($700 billion for TARP*; $145 billion, so far, for Fannie and Freddie**; and $80 billion for the unemployment extensions), that is nearly $1 trillion in what could be called stimulus money to get the economy going again. When added to the $150 billion for the 2008 ESA, that brings the cost up to $1.1 trillion. Then there is Cash for Clunkers, the Home Energy credit, and all the mortgage assistance programs (which didn’t work); I don’t have the figures for those, but in combination add up to billions of taxpayer dollars to stimulate the economy. When you add all that to the $862 billion Porkulus, we get to $2 trillion in government stimulus over the last 2 years.
Krugman thinks the $862 billion cost for Porkulus wasn’t enough to stimulate the economy. He was right, but for all the wrong reasons. If Porkulus had been doubled, it wouldn’t have done a thing but add that much more to the national debt. As I’ve shown, the government has already injected more than 150% of the total amount of Porkulus, on top of Porkulus itself, into the economy and it hasn’t fixed our fiscal situation. Krugman doesn’t understand that no amount would have mattered, it would never have been enough. But being a liberal and a Keynesian, Krugman can’t see past his ideology and keeps demanding more and more money the federal government doesn’t have on a policy of failure. And because he is a liberal, he will define “stimulus” by how his ideology and his Democratic masters tell him to define it; you never hear Krugman or any liberal mention the fact that all of the other programs I’ve highlighted were supposed to help stimulate the economy as well, and the cost of those exceed what Porkulus is going to cost the American people.
So if someone tells you that enough stimulus wasn’t injected by the government into the economy, ask them if $2 trillion was enough. And if they counter that Porkulus was only $787 billion, tell them that it actually cost $862 billion, and that there were over $1.1 trillion in other stimulus money for other programs and bailouts. Then tell them that maybe they shouldn’t read Krugman or any other liberal anymore.
The Keynesian kiddies had their shot at fixing the economy and failed, just as they did during the Great Depression. It’s time some adults take a handle of the government’s role in handling the economic recovery and start reducing the insane spending going on.
*The CBO put out a report on TARP in March of this year. Most of the money given to banks has been paid back, including interest. But AIG and the bailed out auto companies still owe the vast majority of money they were given. And in then end, even if all the money is eventually paid back, including interest, TARP will have cost taxpayers $109 billion, money we’ll never see again.
**It is estimated that the Fannie and Freddie bailout could go to anywhere between $160 billion to $400 billion. And since Treasury has given the two an unlimited line of credit with which to draw from, it’s possible in a worst-case scenario that the bailout could be upwards of $1 trillion. Remember, neither Fannie or Freddie were part of the recent financial regulation law now implemented. Considering how these two always seem to be run by crooked Democrats (*cough* James Johnson *cough*; *cough* Franklin Raines *cough*; *cough* Jaime Gorelick *cough*), there really isn’t any mystery as to why Fannie and Freddie weren’t part of that legislation.