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U.S. Spending 100% of GDP on Bailouts and Related Programs

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George Washington’s Blog
Wednesday, April 1, 2009

As I have previously pointed out, Paul Krugman is calling for the U.S. and Europe to spend an amount equal to 4% of their gross domestic products on the financial crisis.

Today, Bloomberg notes:

The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

In other words, instead of spending 4% of GDP, the U.S. is committing to spending close to 100%. This dwarfs spending during the New Deal:

U.S. Spending 100% of GDP on Bailouts and Related Programs Us gov spending histry by function 1902 2010For those who argue that much of the trillions being spent today is in the form of loans and guarantees, I would argue that taxpayers will never see most of this money ever again. It is spent, and gone. Indeed, most of the financial giants which the loans were made to are insolvent and will be out of business in a couple of years.

Mark my words, the chart above will end up showing that spending will soon exceed 100% GDP.

U.S. Spending 100% of GDP on Bailouts and Related Programs obama 340x169

This article was posted: Wednesday, April 1, 2009 at 3:59 am





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