As I mentioned before the giant increase in the 2009 budget deficit that everybody is acting so freaked out about was caused by a 400$ billion loss in tax revenue as well as an almost 562$ billion increase in outlays. Where did all that money go? A lot of that extra spending was made directly as a result of the Great Recession. Of the 562$ billion extra spending, 397$ billion of it was a direct result of the recession and most of that was just bailing out the banks. Here's how I arrived at these numbers.
The 397$ billion doesn't include money meant to stimulate the economy. I included all the money spent to bailout the banks as well as unemployment and increases in domestic spending on the poor. While I didn't include most stimulus money, however, I did include unemployment and other income security programs that may have been extended as part of the American Recovery and Reinvestment Act.
So here's how it all broke down(The individual accounts can be found here): (Numbers are in millions of dollars)
- TARP - 151252
- GSE Bailout(Fannie\Freddie) - 86830
- FDIC\NCUA - 3813
- First time buyer Mortgage Credit - 9386
- Medicaid - 49498
- Unemployment - 77545
- Food and Nutrition - 18407
I know I've talked about the spending increases in2009 before and already graphed the biggest increases. This time I wanted to break down the spending a little differently to demonstrate a couple different points. First, the graph:
(Click on the Chart of a larger view)
So two points. First of all, after adding up TARP, the GSE bailouts, and the increase in Deposit insurance it adds up to be more than the increased costs of Unemployment, Food and Nutrition(food for the poor), and Medicaid. So that means of that extra 562$ billion that our government spent in 2009, significantly more of it went to help the bankers and "investors"-the ones that helped get us into this mess, than those that are now poor or unemployed because of the recession. That's <span style="text-decoration: underline;">messed</span> up!
Now to the second point. Look how little actual stimulus spending actually occurred in 2009 over 2008. Once you take out all the spending to bail out the banks and the money that's meant to keep people afloat, that only leaves 165$ billion left in the budget plus another 9.3$ billion for the housing credit. That's assuming all of it when to stimulus spending and not just natural increase of government cost. That remaining money was spread out amongst various departments and block grants to states and local governments. I'm not sure how that bit of money was meant to jump start a 14 trillion dollar economy that is in it's worse recession in over 70 years. I think I'm starting to understand why the recovery is starting to sputter and why so many people are calling for a "jobs bill." The first stimulus just wasn't enough.
Vice President Joe Biden once said in a debate, "Don't tell me what you value, show me your budget, and I'll tell you what you value." If that is true here's what our government valued in 2009:
- Rescue the Bankers and investors.
- Help the Unemployed\poor barely get by
- Stimulate the Economy
I don't know about you, but that's some perverse spending priorities. Hopefully Fiscal Year 2010 will look a bit better.