2/4/09

Money Where Your Mouth Is

Clive Crook has an interesting column about the actual cost of the Troubled Assets Relief Program, otherwise known as Tarp, and the economic stimulus bill. Surprisingly, it's lower than you might think. "The Congressional Budget Office estimated the true cost of the first $250bn disbursed from the Tarp at $60bn."

According to Crook, this is a result of a combination of careful, to-the-letter calculation and hyperbole:
The stimulus continues to be advertised as an $800bn-plus package. This figure represents the direct and cumulative effect of the measure on the budget deficit between now and 2019. It takes no credit for revenue feedbacks as a result of higher activity: it is not an economic forecast of the change in the deficit. This is the biggest number you could plausibly cite based on what is actually proposed. The emphasis on it is a curious combination of rectitude, there are rules about the way this accounting is done, and boastfulness – look at the size of my stimulus. Since voters think, when it comes to budget deficits, smaller is better, the boasting is misplaced. No other government would call this an “$800bn stimulus”.
You Can read Crook's analysis of the Congressional Budget Office's review of the stimulus package at his blog, here.

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