{"id":30996,"date":"2008-11-25T01:01:01","date_gmt":"2011-05-19T03:05:14","guid":{"rendered":""},"modified":"2011-05-19T03:05:14","modified_gmt":"2011-05-19T03:05:14","slug":"the_bailout_s_cost_in_perspective2","status":"publish","type":"post","link":"https:\/\/admin.rushlimbaugh.com\/daily\/2008\/11\/25\/the_bailout_s_cost_in_perspective2\/","title":{"rendered":"The Bailout\u2019s Cost in Perspective"},"content":{"rendered":"
\n

RUSH: All right, Barry Ritholtz, a financial blogger, has run the numbers on the bailout, and he cites a guy named Jim Bianco of Bianco Research who crunched inflation-adjusted numbers and compared some previous federal government expenditures to the current total of the bailout. Now, depending on where you look, the total bailout money to date is either $6 trillion or $7.4 trillion. These guys, they just ran it up to $4.6 trillion, and it\u2019s more than that now. It\u2019s at least two trillion more than that. Now, the current national debt is like $7 trillion. Maybe it\u2019s higher than that. But regardless, that\u2019s irrelevant here. This current bailout, calculated only up to $4.6 trillion, has cost more than all of the following government expenditures combined. Are you ready? The Marshall Plan. The Louisiana Purchase. The race to the moon. The S&amp;L crisis. The Korean War. The New Deal. The invasion of Iraq. The Vietnam War. And NASA. <\/p>\n

All of those combined, in inflation-adjusted dollars, equal $3.92 trillion in today\u2019s dollars. This bailout is more than all of those combined. Now, would you like to hear the inflation-adjusted dollar amounts for each of these line items? The Marshall Plan, back when we did it, cost $12.7 billion — and it rebuilt Europe after World War II, for those of you who voted for Obama. If we did the Marshall Plan today, it would cost $115.3 billion. We rebuilt European for $115.3 billion in today\u2019s dollars; and we have just spent, according to these guys, $4.6 trillion on bailouts of the US financial industry. The Louisiana Purchase, in today\u2019s dollars, would cost $217 billion. Now, for those of you who voted for Obama, the Louisiana Purchase was Thomas Jefferson. That\u2019s how we got New Orleans and much of the territory all the way to the Left Coast, and it gave us the Lewis and Clark expedition, which Jefferson ordered to go find out what the hell we just bought. <\/p>\n

The race to the moon, in today\u2019s dollars, would have cost $237 billion. That\u2019s more than the Marshall Plan and Louisiana Purchase in today\u2019s dollars. The S&amp;L crisis. We bailed out the S&amp;Ls and fixed that. In today\u2019s dollars, it would cost $256 billion. Back then it was $153 billion. The Korean War, $54 billion back in the fifties. Today\u2019s cost would be $454 billion. The New Deal. Today\u2019s dollars, estimated to be $500 billion, if we did the New Deal today. That\u2019s half a trillion. We have spent $4.6 trillion. The New Deal was half a trillion in today\u2019s dollars. We have spent $4.6 trillion, and probably more than that, at least six or seven. The invasion of Iraq, $597 billion in today\u2019s dollars. The Vietnam War. Back in the era of the Vietnam War, it cost $111 billion. To do it today would cost $698 billion. And NASA. This is not the race to moon. This is the whole NASA budget. Over the years, $416.7 billion. In today\u2019s dollars, it\u2019s $851.2 billion. Maybe this is an annual cost here for NASA — yeah, it\u2019s an annual. <\/p>\n

So, all of these add up to $3.92 trillion: Marshall Plan, New Deal, Louisiana Purchase, race to the moon, S&amp;L crisis, la la la la, and we have spent $4.6 trillion. The only thing that comes close is World War II, and even that cost less than what we have spent. But at least in World War II, we were producing something, and everybody was working, and there was a tangible result, and that is we were able to stop Hitler. We did a great thing in World War II. Again, I have to emphasize, this is using a figure of $4.6 trillion as the bailout today. It is far, far more than that. <\/p>\n

BREAK TRANSCRIPT<\/p>\n

RUSH: This is Peter in San Mateo, California. Hi, Peter, you\u2019re on the EIB Network. Nice to have you with us.<\/p>\n

CALLER: Rush, thank you for taking my call. Very quickly here, the nation in World War II was actively persuaded to buy War Bonds. One of my professors from Stanford, Professor Elmer Fagan cautioned FDR and [Hans] Morgenthau that after World War II we\u2019d face a major inflationary period because of the debt. Well, Morgenthau and Roosevelt argued that it doesn\u2019t make any difference how large the debt is, we owe it to ourselves; and Fagan argued, it is crucial who owns the debt, the savings bonds. Namely, the holders of the debt had a high propensity to spend rather than save after the war. The result: inflation; too much money chasing too many things, homes, cars, appliances, and furnishings. That was a very instructive period, and it was remarkable because Fagan parted ways with Roosevelt and Morgenthau over this issue of what would happen after the war when all of this debt, all of these savings bonds were going to be redeemed and the inflationary period we would have. I\u2019m not going to try and outguess what\u2019s going to happen in the future here, but I think this was a very instructive period of how people didn\u2019t really know their economics and think it through.<\/p>\n

RUSH: Okay, give us the modern-day scenario. What\u2019s going to happen after this? ‘Cause there\u2019s no World War II here.<\/p>\n

CALLER: That\u2019s true. All of these debts that are out there, all of these loans and everything are going to have to be paid back at some point.<\/p>\n

RUSH: Who says?<\/p>\n

CALLER: Well, of course if they want to wave a magic wand and put it aside, but this economy has just gotten upside down.<\/p>\n

RUSH: But I thought Obama\u2019s going to fix this with his infrastructure program.<\/p>\n

CALLER: (laughing) Yeah, and the moon\u2019s blue, too. <\/p>\n

RUSH: Well, we gotta fix the crumbling roads, the crumbling bridges and the crumbling schools, and the crumbling states and the crumbling mountains. There\u2019s a lot crumbling and we\u2019re gonna fix it. I\u2019m jazzed. Okay, well, Peter, thanks for the phone call out there. I appreciate it. So I guess we are to expect hyperinflation after awhile with all this. Either that, or a very bad deflationary cycle, and it… (interruption) Snerdley just asked if foreign governments are buying all this debt don\u2019t we have to pay it back? Theoretically, yeah, you have to pay everything back. But I call your attention to the national debt, which never gets reduced. Every year\u2019s budget deficit gets added to the national debt. But this, what\u2019s happening here is unprecedented, and it has never happened before. There isn\u2019t the money to pay it back. There\u2019s not going to be the money to even service annual debt payments. We\u2019re going to have an annual budget deficit of $1.3 trillion, maybe more, in one fiscal year — a budget deficit. They\u2019re gonna continue to buy the debt, but they\u2019re not buying the debt in order to get it back. At some point, maybe, but it\u2019s just like the federal government is telling Big Three auto, ‘You want the money, here\u2019s what you gotta do for it.\u2019 <\/p>\n

The big danger here in having all this foreign debt owned by the ChiComs is the leverage they hold and whatever other foreign countries. It\u2019s the policy leverage that they hold, and it is the threat of calling the debt, ‘Okay, we need the money. You give us the money.\u2019 That\u2019s the threat that\u2019s always hanging over you. You deal with loan sharks. Now, one of the reasons all these countries have been buying foreign debt is because we\u2019ve been the economic leader of the world and they\u2019ve had an interest in our economy being strong and so forth even while they compete with us. It\u2019s a little bit more complicated than all this, but look, folks, pay this back? Pay it back? Wait \u2019til you see what\u2019s going to happen to the federal budget once we start nationalizing health care, once we start raising taxes. Pay it back? I just saw that Citibank deal. The government\u2019s taking an ownership stake in Citibank now. So they\u2019re taking an ownership. Barney Frank wants to own 80% of the auto industry — and while this hasn\u2019t been stated, it wouldn\u2019t surprise me if someday (if that ever happened, for example) that he would suggest the federal government just give the ownership of the auto industry to the unions. <\/p>\n","protected":false},"excerpt":{"rendered":"

RUSH: All right, Barry Ritholtz, a financial blogger, has run the numbers on the bailout, and he cites a guy named Jim Bianco of Bianco Research who crunched inflation-adjusted numbers and compared some previous federal government expenditures to the current total of the bailout. 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