Monday, September 22, 2008

1.8 Trillion Dollars Is A Lot of Dollars

Most people don’t know what the government does with their money. A lot think that the money is used for pork (something like 3% of the annual deficit – we’re talking tens of billions, folks). Or for that matter, what a new bomber costs ($2 billion).

Here’s some detail from the always-interesting Chris in Paris at

For the US budget, here are a few examples from Bush's budget in 2007:

* Veterans' benefits at $73 billion

* Education was $90 billion

* Interest on US debt was $244 billion

* Medicare $395 billion

* Defense was $548 billion

* Social Security was $586

So all of a sudden, we can come up with $700 billion – no wait, that’s $1.8 trillion. If we don’t hurry up and give them what they want, it’ll probably be $2.6 trillion soon. (Go ahead, think I’m kidding.)

What does Obama’s health care plan cost? $50-60 billion a year for the first 10 years, which Republicans are certain is far too expensive.

On top of just the insane price tag, there’s the question of whether this will fix anything…(And this leaves aside the distrurbing parallels to the Iraq War run-up, where asking questions and tying the Executive's hands was thought to be Dangerous and Unpatriotic).

I keep coming back to the idea that we keep failing to speak about what is really important (i.e. Things We All Know ™). WHY aren’t banks lending to each other or to business or individual customers? Well, a huge infusion of cash would suggest that the reason is that the banks lack the funds to lend.

Wouldn’t that mean there was a lot of pent-up demand for loans that wasn’t being met?

I doubt many believe that the problems in our economy is not enough debt.

I’m keeping my eye on the ball. I believe that we have deeper and more serious economic problems than big financial institutions lacking adequate funds to lend. (I suspect they lack adequate funds to operate, for what it’s worth, and that the Big Scary Crisis is fueled by images of people having to take sacks of gold coins to the Pathmark. Likely as true of Mr. Hussein’s WMD’s and 45-minutes’ away drones.)

I think banks aren’t lending not because they lack funds but because they lack credit-worthy customers, both business and individual. I suspect that many companies will soon find that they too lack customers, as too many people simply have inadequate incomes.

We are on a decelerating downward spiral, the end point of which is surely not Goldman Sachs getting a trillion or two bucks. The end of this spiral comes when companies can’t meet their payrolls, workers drain all their funds and assets, and we end up at something very like a standstill.

And getting the great organ-grinder grinding again is 1000 (a trillion?) times more difficult than it would be to keep it going.

“Keeping it going” meaning that we should take that $700 billion (or $2.5 trillion) and use it for direct job creation: public works, loan guarantees to businesses using the money to create jobs, etc. We will also want some of that money available to pay for public relief – food stamps, short-term housing, rent assistance, etc.

Right now, only those who do not need credit can get it. There’s no use in making it even easier for them when there are tens of millions of Americans who need something even more pressing than a better rate on their car loans: jobs, groceries, gasoline, etc.

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