U.S. Spending 100% of GDP on Bailouts and Related Programs → Washingtons Blog
U.S. Spending 100% of GDP on Bailouts and Related Programs - Washingtons Blog

Tuesday, March 31, 2009

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


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:









For 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.

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