So how much has our financial catastrophe cost taxpayers? Even leaving aside the damage to investment portfolios, job losses, home foreclosures and diminished business prospects, the financial depression of 2008 has been immensely costly for taxpayers. The Treasury Department has had to issue more than three times as much debt than it anticipated even as late as last July.
This afternoon the Treasury announced its renewed estimates for borrowing. From October through December of this year, the Treasury expects to borrow $550 billion from investors, a whopping $408 billion increase over the amount it estimated it would borrow in July.
During the July – September 2008 quarter, Treasury borrowed $530 billion. In July, the Treasury estimated it would borrow only $171 billion over the period. Overall, borrowing for the second half of the year was over $1 trillion dollars. The estimate for had been merely $313 billion.
Why has borrowing skyrocketed? You already know the answers. The government is spending money hand over fist to prop up the financial system at the same time it collects less from depressed taxpayers.
The government also expects to borrow $368 billion in the first quarter of next year. Let’s hope the government is getting better at these estimates. If it’s as bad at estimating future borrowings as it was in July, we’re looking at a government that might need to borrow more than $2.5 trillion over the next two quarters, which would mean that the Treasury would be borrowing more than one-third of total Gross Domestic Product.
That’s obviously unrealistic, and we’re sure the new numbers reflect a better perception of the costs and risks faced by our environment. Because by now these guys who are cooking up these numbers must have learned something about risk, right?
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