The 4.6% Truth: How Absurdly Small Stimulus Spending Really Is

Created 02/09/2009 - 5:22pm

Conservatives have spent the better part of a generation complaining that spending on social programs is what's responsible for the massive deficits their outsized defense budgets and tax cuts have created. Mathematically, it's as absurd a line of thinking as ignoring government data and insisting that the New Deal exacerbated the Great Depression [1]. Indeed, non-security spending by the government is relatively tiny [2]. But that doesn't stop the right from claiming otherwise, because their argument serves their political goals: It lays our country's fiscal problems at the feet of the middle- and working-class that benefit from social programs but have a far smaller voice in the political process than the political donor class (which benefits from big defense contracts and regressive tax policy).

Now, as the debate over the economic stimulus has intensified, these same conservatives have simply updated their argument, insisting that our government is too focused on spending money on social programs. But a look at the numbers shows just how idiotic that claim really is.

Bloomberg News today reports [3] that if/when the stimulus bill passes, the federal government will, in sum, be on the hook for $9.7 trillion in total financial commitments to solve the economic crisis. Out of that, roughly $450 billion of that is the direct spending in the stimulus bill (58% of the $780 billion stimulus is spending - ie. $450 billion - while the other 42% is tax cuts). The rest is a mix of cash given to the banks (TARP money), FDIC guarantees for losses, and Federal Reserve Bank loans/swaps.