The $5.4 trillion we’ll pay if the stimulus package doesn’t work

$1.6 trillion of $5.4 trillion? The choice us yours

A major sticking point with the bailout discussion is cost. Republicans have blared endless about just how much a trillion dollars is — a stack of $100 totaling a trillion could reach Pluto or something, go around the globe at the equator eight zillion times, etc. One facet of the stimulus package story that nobody is discussing, though, is how much the government will pay (with our money) if the package doesn’t work. A cursory glance at the details of our country’s budget problems makes $1 trillion look like a bargain.

Last month, Harper’s Magazine had a cover story that I wish they would make available online because the link would go viral, and you would get better pictures of the graphs in it then crappy ones I take with my cell phone camera. Anyway, the story is titled “The $10 Trillion Hangover” and it details the money added to our national debt by the Bush administration. $10 trillion is actually a conservative estimate — the debt could balloon to $13-15 trillion. Why? Ask Freddie and Fannie.

I made a photocopy of the article (and went at it with a highlighter, which I may not have done if I knew I would post a photo of it online in the future), and to your right is a crappy picture I took showing one part of one graph in the article — the mortgage back securities debt part. The full graph itself is called “The Bill” and it succulently details all the debt added to the government over the past eight years. Now the graph attributes $.1.6 trillion to the government taking over Fannie and Freddie, but that’s a low estimate. This blurb from the article shows why the mortgage debt is a real wild card:

When the federal government took over these failing residential mortgage giants, it also assumed their $5.4 trillion in mortgage-backed securities and outstanding debt.

Cutting straight to the point, that $1.6 trillion the government is responsible for now will balloon — potentially to $5.4 trillion — depending on the amount of home foreclosures in the future. Those are costs the government will have to account for. And whose money will they use? You guessed it, yours.

This makes current discussions on the cost of the stimulus bill silly. $1 trillion? Pshaw! Try $5.4 trillion if the stimulus bill doesn’t work. A trillion has now become pocket change.

The choice for the Obama administration is simple: get real stimulus done. If this means hopping off the bipartisan pony ride and even, if necessary, brutally bludgeoning that pony to death, do it — or we all suffer the consequences. And what are those consequences? It could be a repeat of the 1930s… Do you want to find out? You shouldn’t. I certainly don’t.

5 Responses to “The $5.4 trillion we’ll pay if the stimulus package doesn’t work”

  1. rawdawg says:

    man dont even get me started i was having a good morning until this

  2. tas says:

    Don’t you know that reading about politics and economics should only be done when you’re alone, late at night, with access to a steady supply of alcohol? For those that have the means to do so, actually moving next door to a liquor store is recommended.

  3. Dan D says:

    The economy seems to get worse every day, but that makes it all the more important to see that the stimulus is properly done — if it needs to be done at all.

    Is Obama making a mistake by not make a bigger effort to see that the stimulus bill is a bipartisan effort?

    During the election Obama promised change, specifically change in the way the political system works.

    Wouldn’t a big part of this change be to try to get Republicans and Democrats to work together on a stimulus bill at this critical time in our nations history?

    Stumping along the lines of what Obama has been recently saying amounts little more than I won the election so I have a mandate from the people so we are going to do what I want to do.

    How does that help encourage the Republicans to want to work with Obama?

    All of the elected officials — Democrats, Republicans, and Independents — have the mandate of the people that elected them otherwise they would not be holding office.

    Obama’s line of reasoning that he has a mandate also forgets that he represents all the people that did NOT vote for him.

    Although they might not have voted for him he still has a responsibility to them as well to not squander their tax dollars and to not ignore the law makers that they have duly elected.

    http://www.weeklypoint.com/2009/02/09/obama-pushes-for-stimulus/

  4. tas says:

    Obama’s line of reasoning that he has a mandate also forgets that he represents all the people that did NOT vote for him.

    Different time, different situation, same office: When FDR was making preparations to enter World War II (we knew we would enter the war before Pearl Harbor, which galvanized the public), the majority of the people he had a mandate t represent did not want to goto war. So should FDR have been allowed to make preparations before the fact?

    In the long run, of course, we all know what the right decision was to make.

    Presidents are supposed to be leaders, and as such the are supposed to have leeway in making decisions which effect the prosperity of our nation.

    Stumping along the lines of what Obama has been recently saying amounts little more than I won the election so I have a mandate from the people so we are going to do what I want to do.

    Not to be an asshole or anything, but have you been paying attention to the news lately? Bipartisanship, cutting back of the stimulus bill, etc… Equating Obama to, dare I say, Bush in this respect is pretty unfair. Check out the current stimulus bill in the Senate — nearly 40% of it is Republican tax cuts. Nearly 40% of the Senate is Republican — yet they don’t think the bill is good enough. Who’s being overly partisan now? — WITHOUT any mandate whatsoever, I might add.

  5. Jack Jodell says:

    This, better than anything, illustrates the hypocrisy of congressional Republicans. They piss and moan about individual provisions rather than recognizing the vital importance of the bill as a whole. With them continuing to look at individual trees, we’ll never make it out of the proverbial forest! These dinosaurs are no more the “loyal opposition” than are alQaeda or the North Koreans. They don’t want to cooperate and contribute to any Obama or Democratic initiative. They just want to pout and stonewall. The Republicans got us INTO this horrible mess, and now they act as though they want to KEEP us there!

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