April 6, 2009

April 6, 2009 | Commentary on Budget and Spending

Even Drunken Sailors Have a Credit Limit

The saying "spending like a drunken sailor" comes from the 1700s and 1800s, when sailors would come ashore from a long time at sea and go on a wild spending spree. These sailors were constrained by the amount of their paycheck and the Credit they could incur from people who knew them.

President Barack Obama has something that a drunken sailor lacked: a printing press that prints government cash and Credit, not to mention the power to tax when he runs a bit low. Generational theft is alive and well in America, and, according to my calculations, the Obama spending spree has cost the taxpayers, their children and grandchildren a whopping $4.27 trillion in spending and $2.4 trillion in new taxes to date.

Let's take out the calculator and add up all of the Obama administration's spending to date.

First, President Bush pushed Congress to pass legislation to approve the Troubled Assets Relief Program (TARP) for President Obama, making you, the taxpayer, the insurer of $350 billion in bailout monies. The bill allowed the tapping of the second half of the bailout program, made modifications to the program for homeowners, and increased Federal Deposit Insurance from $100,000 to $250,000. The Congressional Budget Office (CBO) estimates that in the next five years our deficit will swell by $14.8 billion as a result of TARP outlays.

These appear to be very forgiving estimates. The bottom line is that taxpayers are being put on the hook for $350 billion of TARP monies controlled by Obama and Treasury Secretary Tim Geithner. You may actually be on the hook for even more, if there is a run on banks and individuals tap the increased coverage on deposits. For the purposes of tallying up the cost of the Obama spending spree, we will give appropriate Credit (so to speak) to the Bush administration for the TARP abomination.

The first spending bill President Obama signed into law was the expansion of the Children's Health Insurance program, adding $40 billion over the next 10 years to the program. This new cost would be paid for by increasing taxes, so we'll build this cost into your burden of increased Obama taxes and Obama spending. This is mere chicken feed, compared to Obama's big-ticket agenda items.

The so-called Obama stimulus proposal, known to supporters as the American Recovery and Reinvestment Act, was a serious assault on your wallet. The stimulus signed by the president cost the taxpayer $787 billion according to the CBO. They further estimate that interest over the next 10 years to pay for the plan may balloon the total cost to $1.17 trillion. And these are low-ball estimates.

Most likely, popular entitlement programs like Head Start, Medicaid, COBRA, and the Earned Income Tax Credit won't be allowed to expire in two years. Therefore the true cost of the stimulus plan is $2.527 trillion, with an additional $744 billion in interest to finance the debt. This will put the real price tag for the stimulus bill over 10 years at $3.27 trillion.

That's $3,270,000,000,000.

President Obama signed into law the Fiscal Year 2009 Omnibus appropriations bill, the measure that finished the appropriations process for the remaining programs not completed under the Bush administration. According to CBO, the earmark-laden bill (about 8,500 of them) cost the taxpayer $20 billion more than the funding that had been approved under a Continuing Resolution that had level funded programs at Fiscal Year 2008 levels.

Is your wallet crying for mercy yet?

The president's $3.6 trillion budget blueprint is a whopper. According to my Heritage Foundation colleague Brian Riedl, the Obama budget will "increase spending by $1 trillion over the next decade" and "raise taxes on all Americans by $1.4 trillion over the next decade." A simple calculation gets us to the president's budget costing you $2.4 trillion in new taxes and new spending over the next 10 years.

Hold on to something: The stimulus, plus the Obama budget, gets you to $4.27 trillion in spending and $2.4 trillion in new taxes.

Calculating the cost of Ben Bernanke's printing press should also make you shudder. The dollar in your pocket devalues every time Bernanke prints more money.

According to Bill Beach of The Heritage Foundation, "[T]he monetary base is rising by 1,492% since September 2008. That's a fifteen-fold increase. M2 (a broad measure of the money supply) is rising at a 10 percent annual rate. M1, which measures the cash in circulation, has gone up by 14% over the past year. When the base and the money supply rise by this much in so short a time, I worry about inflation. With the Federal Reserve target interest rate basically at 0%, the Fed is printing money to stimulate the economy."

The problem with this radical increase in the money supply -- and we are talking about trillions of new dollars -- is that it will do irreparable harm to the value of the dollar.

The bottom line is that the Obama administration taxes too much, spends too much, borrows too much and prints too much of your children's dwindling inheritance. Instead of giving checks to your kids to pay for college or a down payment for a first home, a parent may have to give their kids a bill for all the new spending Obama is heaping on future generations. The figure of $4.27 trillion in Obama spending and $2.4 trillion in Obama taxes are simply staggering.

All this new spending, printing and taxing will radically expand the size and scope of the federal government. These calculations are only ballpark figures, yet they should serve as an early warning to all Americans that the functional equivalent of a drunken sailor, aided by Bernanke's printing press, is at the helm of our White House. And he's taxing, borrowing and spending you and your kids into the poor house.

Brian Darling is director of U.S. Senate Relations at The Heritage Foundation

About the Author

Brian Darling Senior Fellow for Government Studies
Government Studies

First Appeared in Human Events