| 18 February 2010
How do you feel one year later?
Well as previously noted in Stimulus Transparency of Recovery.gov, only 1/3 or $258 Billion has been allocated. Yet, all the Obama administration talking heads are out saying the stimulus package saved us from the precipice of a disastrous depression the likes we’ve never seen. Oh by the way, don’t forget that unemployment was not to rise above 8%. With the unemployment issues over the past year, the rise to 10%+, have created a new numerical nugget that you may not have known. Whereas Congress couldn’t properly write the AMT to adjust for inflation, they did hide a sliding scale for unemployment into the Stimulus. Therefore with current levels of unemployment and extended weeks of benefits, there has been roughly $80 billion added to the $787 billion package.
If $258 billion was sufficient, then why do we need to spend the remaining $500+ billion of unspent funds. Well, this is an election year, so can you say democrat political slush funds. What other conclusion can you reach, when you extend the government’s credit limit by $2 Trillion when you could have paid down the debt a by a 1/2 Trillion. Let’s not forget the impact of TARP, the $700 Billion loan to banks and industries. TARP was written into law as LOAN that was to be paid back to the nation treasury to lower the national debt. This administration is using this TARP as another slush fund by reallocating the returned funds to other areas that were not identified by TARP. So a combination of not spending the remaining Stimulus funds, returning repaid TARP funds to the treasury, and some wise cutting in the government budget, we could be approaching $10 Trillion in debt as opposed to $14 Trillion.
On this anniversary, we are bombarded with stories from the administration stating that we have been saved from a depression and the economy has started to rebound. Although, the administration's talking head continue to contradict each other, espeically when it comes to jobs "created and or saved". One has said that two million jobs have been "created and or saved" and another says one million. While recovery.gov says 595,263 jobs funded by the stimulus package. Of course, there are the other stories out there to counter those assertions where schools are running out of stimulus money, stimulus money used to prop up pension funds, new taxes, expiration of Bush tax cuts, cities declaring bankruptcy, China selling off our bonds, and many more like those.
So far we’ve used words and a few numbers to describe our current economic situation. This allows for individual interpretations and the ability for some to argue for either side of the argument. Therefore, let's look strictly at some astonishing numbers*:
- National debt at $12.3 Trillion and rising, which equates to $40,000 per citizen or $113,000 per tax payer
- Unfunded National debt at $107 trillion and rising, which equates to $348,000 per citizen. This is a combination of Social Security, Medicare, and Prescription Drug Plan. If you use the factor in the first bullet point of citizen vs. tax payer, then you would have tax payer liability of $983,000.
- Personal debt at $16.6 trillion and rising, which equates to $54,000 per citizen.
- Financial derivatives valued at $641 Trillion!
- Debt to GDP ratio of 86.6%
* These numbers and more can be found here
Therefore, with your current economic situation, and the likely fact that you are a tax payer, are you ready to start paying your $1,196,000 for government spending. If we don’t start paying this down, we will have saddled our kids with almost $400,000 of debt. The last two bullet points are scary stuff. Derivatives were involved in the housing bubble with the way mortgages were packaged and hedged. Derivatives are little understood and regulated financial instruments that need to be figured out and controlled in a hurry with a $641 Trillion liability. There are some economic theorists out there that believe there’s no coming back if debt to GDP goes over 90%.
Now that you know where the government has left us in economic terms, lets go back and take another look at the impact of the stimulus and other programs that were meant to stimulate. If you give the administration the benefit of the doubt with two million jobs "created and or saved", then the government has spent roughly $130,000 per job "saved and or created". It only gets worse if you go with one million or recovery.gov, respectively that would be $260,000 or $430,000 per job "created and or saved". The monies spent per job by the stimulus package deserve further inspection. The average private sector job is around $40,000 and the average government job is around $70,000. Therefore, in the best case scenario, the overhead (read red tape) for creating a private sector job would be $90,000. In the worst case scenario, the overhead of creating a private sector job would be $400,000.
After taking a second to ponder those numbers, it should be noted that the stimulus is not an isolated red tap machine. It has been noted last summer during Cash for Clunkers, the government spent roughly $24,000 for the average $4,000 voucher. A good analysis of the Cash for Clunkers can be found here at TheNewAmerican.com. Now, there are reports coming in for Cash for Caulkers with headlines like this in the LA Times, The federal government can weatherize your home for only $57,362 each. This definitely demonstrates a trend with regard to the amount of overhead (red tape) in these current stimulus-funded programs.
In summary, this is just a cursory expose of economic numbers affecting you today. The politics of today and tomorrow such as illegal immigration, social security and health care will have a major impact on these numbers. The current political trend is to continue digging a deeper financial hole in exchange for the soothing assurances that we've been saved from something even more disastrous.