One trillion reasons to skip a new stimulus plan

Last Updated: 3:33 AM, October 8, 2009

Posted: 2:36 AM, October 8, 2009


LET'S do some simple math.

Pretend that money is a little tight in your household right now and you need to borrow. (OK, maybe money really is tight but we're going to play make-believe anyway.)

Before this borrowing, you already owed $10,024. One year later, after the new loan, you owe $11,919.

So your indebtedness -- or household deficit -- went up by $1,895 in a year.

That was easy.

But let's say that some of that new borrowing -- how about $197? -- came from your Aunt Millie and Uncle Burt. They expect to be paid back but not quite as quickly as you'll have to pay off the rest of the new loan, which was generously given to you by people here and overseas that expect to make a nice profit.

You still owe an extra $1,895.

But you feel better because, well, maybe Millie and Bert will drop dead before you have to give them back their dough.

You'd be doing a lot better, of course, if you could just go down into the basement and print money. But no responsible person -- much less, country -- would do that.

Why am I writing this stupid column?

Because the numbers above -- when expressed in billions and trillions -- represent the indebtedness of the US.

And I'm also writing this because irresponsible people on Wall Street and in Washington think we aren't in hock enough and believe we should try again to stimulate the economy by increasing our debt even more.

The stock market even had the audacity to rally earlier this week on this "good" news.

Last year at this time, this country's outstanding debt was $10.024 trillion. Today, the number stands at $11.917 trillion.

If you are honest, the increase in debt -- or indebtedness -- for that single year would be an incomprehensible $1.895 trillion.

Officially, Washington won't admit to anything like that.

The official deficit figures are due out any day, but we passed the $1 trillion annual deficit mark in July -- two months shy of the fiscal year's end.

The government's deficit, when nipped and tucked by accounting tricks, could be as "little" as $1.4 trillion.

To put this insanity in perspective, annual deficits of "just" $200 billion used to be unheard of.

And that kind of spending happened mostly during major wars. Plus, those were the days when America wasn't financing its profligate spending with the help of foreign investors who could turn unfriendly at any moment.

Why is the government's deficit smaller than the number you get when you do the math yourself?

Partly because of accounting tricks related to the Troubled Asset Relief Program (TARP).

But mainly because $197 billion of the new money was borrowed last year alone from the Social Security trust fund. And -- like the $197 we got from Aunt Millie and Uncle Bert -- maybe that system will drop dead before that loan needs to be repaid. In all, our government now owes $4.41 trillion to Social Security, which -- despite all the accurately dire predictions -- is still taking in more money each year than it is paying out.

I won't even get into what's happening in the government's basement, which is also known as the US Treasury, where money is being printed and then lent to ourselves.

That's called "quantitative easing" and this brilliant idea is the product of Federal Reserve Chairman Ben Bernanke's years in academia thinking about such theoretical nightmares.

The Obama administration was clearly shaken by the ugly report on employment last Friday, although it should have been expecting it. And, as I said in my last column, there are more bad reports coming.

That shock led in recent days to reports that Washington would somehow come up with what will be the third economic stimulus plan, if you include the one passed earlier this year by Congress and signed by the president as well as the relative pittance that former President Bush gave to taxpayers last year. But where is the money going to come from for another giveaway?

Look at the numbers! The nation's debt was unmanageable at last year's levels and is unbelievably large when the past 12 months' borrowings are included.

Health care reform now? Forget about it.

Let's spend our time worrying about the possibility that the dollar might be replaced as the world's main currency.

That's already leading to the debasement of our currency and a rampage into gold as a safe haven.

Geez, I'm glad our calculators don't go as high as trillions or we might actually be worried. If you want to look at the official numbers your self, go to the Trea sury's Web site: http:// www.treasurydirect.gov/ NP/BPDLogin?application=np

The figures are right there in all their ugliness.

john.crudele@nypost.com

http://www.nypost.com/p/news/business/o ... QXi1JjEHbO