Watching The Trillions Pile Up
By Howie Rich
With another $2 trillion in federal interventionism announced within the last week alone, the price tag for America's economic “recovery” continues to soar to stratospheric, scarcely-comprehensible heights.
First we had hundreds of billions for troubled – now “toxic” – assets.
Then we had President Barack Obama's $787 billion bureaucratic bailout – an unprecedented expansion of programmatic, status quo spending that will create the “Mother of All Annualizations” for dozens of cash-strapped state governments that even now still refuse to live within their means.
Next there was “quantitative easing,” which is another way of saying our federal government started printing money so that it could purchase more of its own debt.
All told, the feds have pledged $13 trillion to deal with the current recession – or trillions more than our existing national debt.
Think about that for a moment - $13 trillion.
It took several generations of Washington politicians more than six decades to rack up America's national debt – although in fairness to the politicians of previous eras, more than a third of it was added during the last decade as Congress and the White House ran annual deficits of half-a-trillion dollars each year beginning in 2003.
Yet in spite of the fact that we were already lurching along on an unsustainable course, it has taken the current crop of Washington politicians less than a year to exceed the entire national debt as they have jumped from one taxpayer-funded “solution” to the next – all in response to a crisis largely of their own making.
Last Wednesday, in addition to announcing the purchase of $300 billion in Treasury securities, the Federal Reserve announced that it was purchasing another $750 billion in government-guaranteed mortgage-backed securities.
All together, that's another trillion dollars into the rabbit hole – but politicians were so busy making hay over the AIG bonus scandal that they scarcely noticed the expenditure.
Basically, we are printing money to purchase “toxic” debt – a policy that began with the onset of this crisis and which has already substantially eroded the U.S. dollar.
This week, the Obama administration announced yet another $1 trillion plan aimed at “purging balance sheets” of this debt so that banks can begin lending again – which obviously ignores the fact that we've spent hundreds of billions to get them to do that already and they're obviously not taking the bait.
Curiously, this latest plan is built around government “creating a market” for private sector investors to purchase these bad assets.
Wait - if these assets had value, wouldn't there already be a market for them?
Amazingly, this inherently contradictory logic is what forms the very basis of our government's increasingly irrational, exorbitantly expensive meddling in the American free market.
Despite our country's founding wisdom (and the two centuries of unrivaled prosperity it produced), America's new leaders view capitalism as a flawed, antiquated way of thinking – because after all, the myth is that the market caused this problem.
In fact, in a Wall Street Journal op-ed published earlier this week, Obama's Treasury Secretary Timothy Geithner essentially blamed consumer debt and not enough government regulation for the housing collapse – comments which were echoed in Canada the week before by former President George W. Bush.
But just as the government decided which people would be given loans they couldn't afford, it now decides which companies are too big to fail from the fallout.
It then decides to purchase up to 80% of some of these companies (with your money) to keep them from failing.
In addition to that, it decides how many hundreds of billions will go toward bailing out Fannie Mae and Freddie Mac – the true heart and soul of this crisis – as well the trillions it will take to clean up all of their “toxic” mortgage-backed securities.
Finally, when none of that works, the government decides how many trillions of new dollars it will print to fill in the holes.
$13 trillion later, I would humbly submit that the only holes in need of filling are the ones in the heads of people who continue to fall for this scam.
The author is Chairman of Americans for Limited Government.