Economics

$800 Billion or $1.7 Trillion?

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The easy shorthand for the "American Reinvestment and Recovery Act" worked out by Congress and headed for President Obama's desk is to say it's an $800 billion pile of hot steaming stimulus (well, $789 billion, to be inexact). But it may end up costing $1.7 trillion over the course of its lifetime. Why? USA Today notes:

These increases are supposed to be only for a limited period, generally this year and next. In budget-speak, however, they raise the "baseline" amounts allocated for these programs. Any attempt to bring the new baselines back down to pre-stimulus levels will undoubtedly be greeted with howls about "cuts" that would hurt the poor, the infirm, students, researchers and police. (Already, some House Democrats are complaining about "cuts" made in the pie-in-the-sky levels of spending contained in their original version of the stimulus bill.)…

If 30 tax breaks and spending increases in the House stimulus bill were extended—and each one has its own constituency and lobbyists—the Congressional Budget Office estimates that would add $1.7 trillion to federal deficits over 10 years.

More here.

And a note about those "tax breaks": As Reason columnist Veronique de Rugy has pointed out, most of them are refundable credits or give-backs rather than actual cuts in rates. That is, you pays your taxes and then get a check back from the government later on when you eventually file your returns. Which not only makes them less useful as "stimulus," it also makes them virtually indistinguishable from spending programs.