Obama's Spending In Perspective

 Crossposted at Right Minds

Barack Obama has been taking a lot of heat for his extravagant spending habits, and with good reason. His stimulus package was massive—nearly a trillion dollars—and even liberal economists allow that it may have not been worth it, as it is both too small and the spending too protracted to achieve its goals. (And, of course, there is the additional consideration that it provided billions in funding for wasteful pork projects). And today, Congress approved a massive $410 billion omnibus bill, which seems to have been passed solely to provide more funds for pork. (In an inspiring exhibition of that responsibility and conscientiousness that has become a hallmark of the Republican party, Senate Minority leader Mitch McConnell managed to pull down an impressive $76 million dollars worth of pork for his home state of Kentucky.) And the projected deficit for this year is an astonishing 1.8 trillion, which increases the national debt by nearly twenty percent.

And Obama doesn’t seem to be done with his spending plans. He sees an increased government role in health care, which would be very expensive, and proposes a carbon tax-and-trade plan, which would hurt business a great deal. So Obama has hardly been fiscally responsible.

But while Obama’s fiscal skills may be horribly irresponsible, his skills, or lack of them, may not really matter much in the long run. Obama sees our current financial crisis as being so dire that deficits are irrelevant, and he may be right, on the principle that one might as well be hanged for a sheep as a lamb. Because the United States is in a very bad fiscal position, and nothing Obama does can really make things much worse.

First, consider the national debt. The national debt is about ten trillion now (about twelve trillion by the end of this year), an almost unimaginably large number. To put that number in perspective, the entire federal budget last year was about three trillion, the nation’s GDP was about thirteen trillion. Were the federal government to keep its current spending levels, but to spend money only on the national debt, it would take over three years to pay it off. And given that the federal government can’t even balance the budget, it doesn’t look like it will start paying off the national debt soon.

And what happens when you can’t pay off your debts? See Fannie Mae. Except nothing can bail out the federal government.

Even if the national debt were to disappear tomorrow, America still wouldn’t be out of the fiscal woods. Because it owes trillions in future obligations, obligations that will be almost impossible to pay.

In the next half century, the United States owes about $60 trillion, for Social Security payments, Medicare payments, and the like. That’s a little over a trillion dollars a year (and that number will only increase), over and above what it would spend already. It’s hard enough to see how it will afford those payments—but Social Security and Medicare (and the rest of the New Deal and Great Society programs) are perpetual—they won’t stop. So even if the U.S. somehow gets through the next fifty years, those obligations won’t go away—it will only be replaced by an even greater crushing weight of debt.

So does fiscal responsibility matter? Yes, because it’s no good making a bad situation worse. But really, Obama’s spending won’t matter so much over the long run—the nation faces much larger budget problems than Obama’s contributions. And sadly, it is hard to see a plausible solution to the problem, especially given that America almost certainly faces at least four more years of a Democratic government.