Thursday, March 12, 2009

It's Only 1%... of $787 Bil

We tax all the others and pass the revenue on to you

The prez isn't proud of his funding bill but he does remind us that earmarks are "less than 1%" of the proposed spending." $7 bil is less than 1% of $787 bil and even adding in the sure-to-come cost overruns it will probably still be less than 2%.

TimmyG boasts of the $730 mil that the stimulus gives to the SBA, which he sees as a pillar of any economic recovery. Less than 1% is significantly low to the prez. Less than 1/10 of 1% is significantly high to TimmyG. It's a shell game, the pea is our money and we don't have a chance of winning.

Meanwhile, TimmyG tells us that ""we are doing in weeks what countries did in years." Maybe, but is that a good thing?

In my Feb. 9 blog I asked "What if the plan doesn't work?" Now we know the answer: More spending, even if more spending hasn't helped. Bush spent the first tril and it didn't work. The prez spent the second tril and it didn't work. From Bloomberg March 5:

Geithner also said yesterday that details on a separate $1 trillion program to remove distressed mortgage assets from banks’ balance sheets will be coming within the next two weeks.

Isn't "removing distressed mortgage assets from banks balance sheets" what the TARP plan -- since renamed the "Financial Stability Plan" -- was supposed to do? We overpaid $78 bil for TARP assets but weren't we supposed to get something for the remaining $272 bil? That was only from the first $350 bil (did you know the word "tranche" before this?) and how much financial stability did we get for that?

OK, playing only slightly loose with the numbers, that's $3 tril we're talking about already. Here's what three tril looks like:


If that doesn't give you sticker shock, just wait for the next plan. Two tril down, another on the way and what are we going to get for it? Let's hope it's not a plan for the 4th tril, but what are the chances?

It’s going to require more carefully designed, appropriately conditioned capital from your government, as well as a much more powerful set of direct credit support to the markets that are critical for consumers and small businesses.” -- TimmyG to the Senate last week. Good-bye chances.

Carefully designed, appropriately conditioned capital? How much of that have we seen so far?

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David Brooks of the NYTimes offers a good summary of the administration's general position on the budgets HERE. It is thought-provoking and reasonably objective and a good piece.

Don't get it right, just get it written. -- James Thurber

1 comment:

  1. No, I never heard the word tranche before. Had to look it up... Good stuff. Keep writing.