Stimulus?

A concensus has been reached in Washington about the need to pass an economic stimulus package as soon as possible. The only real focus of the debate is its final size. A summary was released by the House Appropriations Committee which details the costs of all the projects proposed by the House of Representatives. It totals $850 billion over two years. President Obama released a report on the estimated economic benefits expected from a stimulus this big. Its necessary to point out that these estimated benefits are based on the assumption the Federal Reserve will maintain a zero interest rate policy (ZIRP) for the duration of Obama's first term. While there are signs deflation may be setting in, its unclear how long it will last. And Given the large amount of "new" money that has been and will continue to be pumped into the economy, it makes the Obama Administration's choice of basing its four year estimates on ZIRP very interesting.

Why did I point all that out? From Bloomberg:

The government wouldn’t be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010, according to a new report that suggests it may take longer than expected to boost the economy.

A Congressional Budget Office analysis of President Barack Obama’s plan found that most of the approximately $355 billion in proposed discretionary spending on highways, renewable energy and other initiatives wouldn’t be spent before 2011. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said.

About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019, the report said. Republicans said the analysis showed that the plan, unveiled last week by House Democrats, won’t get money into the economy quickly enough.

Basically, the CBO's analysis shows the bulk of the job-creating portion of the the proposed economic stimulus package will not begin to be spent until after 2010. This goes against the concensus that money aimed at creating jobs needs to be spent as soon as possible. It also brings into question the true benefits of adding another $850 billion to the government's total debt problem.

A Prompting

The Congressional Budget Office released estimates Wednesday of a projected $1.2 trillion budget deficit for FY2009. This figure represents 9% of total GDP and does not include the cost President-Elect Obama's proposed $800 billion stimulus package. With national debt already totaling a staggering $10.66 trillion, the US Government is significantly accelerating the pace of its fiscal wrecklessness. Only a well informed citizenry can stop it. And that is the point of this blog - to highlight information that will better inform family, friends, and anyone else wanting to follow America's unrelenting march to fiscal armageddon.