News & Analysis
U.S. Stimulus Verdict: A $3.27 Trillion Porker
The gargantuan stimulus bill Congress has rubber-stamped with virtually no Republican support contains tens of billions of the very spending projects that made the legislation a lightning rod for criticism. And although the bill is generally described as costing $787 billion, the Congressional Budget Office reports the actual figure is now closer to $3.27 trillion. That stems from the $744 billion it will take to pay for the additional debt the legislation will create, and $2.527 trillion in increased spending from the new and expanded programs the bill will spawn over the next decade. – News Max
Dominant Social Theme: Conservatism makes the hard calls.
Free-Market Analysis: It has been fascinating to watch the American sociopolitical dialogue play out since the 2008 presidential election put Barack Obama in the US "oval office." Conservative American media firms such as News Max and various European entities are now beginning to recycle classical liberalism with a kind of desperate efficiency. But because these same entities backed the same sort of quasi-socialist and militaristic policies for the past decade, the larger electorate is likely left adrift, not sure who to trust or what explanations are the correct ones. This will no doubt manifest itself in various forms of group neurosis and psychosis in the upcoming months and years.
In fact it already has. One such example, surely, is the American election of the socialist consensus builder Barack Obama. He was put into office, ironically enough, by capturing the wave of popular discontent with the heavy-handed and ruinous militaristic socialism of the previous administration. While the total costs of the Bush administration are perhaps difficult to calculate, it is likely that the United States' two-front war against Iraq and Afghanistan alone, will easily cost a cool US$1 trillion, and probably a lot more.
Nonetheless, discontent with the Bush administration did not rise immediately. In fact, the administration got away with its patrician-style, military-industrial support for years because it funded military expenditures through various kinds of monetization including the sale of Treasuries abroad, mostly to China and was able to find soldiers for its volunteer army without having to resort to the draft. (Now, of course, China is suffering, too.)Without having to raise taxes, without having to face Vietnam-era inflation and without having to resort to the draft, the administration was able to sustain a war presidency without confronting the immediate costs.
But when the real history is finally disentangled, it will surely show that the policies of the 2000s further destabilized the world's reserve currency and dissipated the world's store of wealth. It was Federal Reserve money-printing in large part that inflated not only the American economy but the global one to epic heights to pay for America's military adventurism and ongoing, reckless domestic spending.
Americans (and Western citizens in general), unskilled in the economic arts as part of what can only be described as a deliberate dumbing down of the citizenry, know muzzily that something has gone seriously wrong. But, no, they still have not figured it out with clarity. In America, one handy solution, in lieu of a real understanding, was to vote for "change" in the person of Barack Obama. But now promises even more confusion. It has not taken more than 30-days for Obama's change to be revealed as yet more spending – an incredibly large amount of spending – some US$3 trillion according to the article excerpted above.
The administration did not need to pass a spending bill. It could have managed the same trick via Fed monetization that the Bush administration did. But a bill that gives away tax monies provides the US federal government with the delicious opportunity to declare that because tax dollars are "at risk" and those who receive such funds much accept the strings attached. This not only provides a foundation for various kinds of political grandstanding, it also allows the federal political machine to target more precisely its allies, rewarding certain cartelized groups – unions, the education and health establishments, etc. – with massive amounts of funding that will preclude, or at least put off, considerable, immediate agitation and social unrest.
Having quieted the leadership of a considerable cross-section of American interest groups, the administration can now turn its attention to various highly targeted legislative agendas that provide additional rewards for additional selected allies.
It is unfortunate that the Obama administration has chosen this sort of strategy, though realistically there was probably not much else it could do. It is also unfortunate that the Republican opposition to the Obama spending package has crystallized around "conservative" rhetoric. In fact, the Republican intelligentsia, including the country's powerful neo-con punditry and radio talk-show hosts, have recast themselves as conservatives and are refusing the Republican label that they wore with varying amounts of enthusiasm through the past eight years.
Conclusion: The current spending packages are not actually intended to "stimulate." They are more likely a way of buying off civil discontent and buying time to prop up the system. Meanwhile, there is an ongoing mainstream media campaign to confuse the Western middle class about the real reasons for the debacle. The unfortunate result will be that many in the middle class will not take logical precautions to protect themselves by buying money metals and investing in various forms of gold and silver. Additionally, as frustration builds, it will be up to the electoral allies of European and American politicians to hold the line. This is the "delicate balance" that is continually finding its way into the lexicon these days.
Sundry bailouts are all about buying off a cross-section of the sociopolitical leadership with an eye toward controlling popular frustration while the real reasons for the crisis continue to be obscured. The burning issue of the upcoming decade will not be how to fend off an economic spiral that is already underway, but how to defuse middle class frustration that can spill over into real civil discontent. That is the real battle, and it has already begun.