A Trillion Here, A Trillion There

Brad Delong points to this article at Vox EU referring to the Fed's attempts to control the crisis in the finance industry. I will post some U.S. bugdet numbers for comparison's sake. My point is: if the federal government were to spend a trillion dollars on a military mission to "save our way of life," you better believe we would hear about it. (Ok, maybe not, our media suck.)

Just take a look at this:

[...]

These new programs are very different from the ones that had been in place prior to the crisis.... By changing the level of the monetary base (really commercial bank reserve deposits at the central bank) Fed officials keep the market-determined federal funds rate near their target.... Given the quantity of assets it owns, the Fed can decide whether it wants to hold Treasury securities, foreign exchange reserves, or a variety of other things.... By the end of March 2008, the Fed had committed more than half of their nearly $1 trillion balance sheet to these new programs:

• $100 billion to the Term Auction Facility,
• $100 billion to 28-day repo of mortgage-backed securities,
• $200 billion to the Term Securities Lending Facility,
• $36 billion to foreign exchange swaps,
• $29 billion to a loan to support the sale of Bear Stearns,
• $30 billion so far to the Primary Dealer Credit Facility.

Changes in the composition of central bank assets are intended to influence the relative price a financial assets -- that is, interest rate spreads. So, by changing its lending procedures, Fed officials hoped that they would be able to reduce the cost of 3-month interbank loans and the spread between U.S. agency securities and the equivalent maturity Treasury rate. At this writing, these programs have met with only modest success.

[...]

Now, here are a few budget numbers from 2007 courtesy of Wikipedia:

• $586.1 billion (+7.0%) - Social Security
• $548.8 billion (+9.0%) - Defense^[2]
• $394.5 billion (+12.4%) - Medicare
• $294.0 billion (+2.0%) - Unemployment and welfare
• $276.4 billion (+2.9%) - Medicaid and other health related
• $243.7 billion (+13.4%) - Interest on debt
• $89.9 billion (+1.3%) - Education and training
• $76.9 billion (+8.1%) - Transportation
• $72.6 billion (+5.8%) - Veterans' benefits
• $43.5 billion (+9.2%) - Administration of justice
• $33.1 billion (+5.7%) - Natural resources and environment
• $32.5 billion (+15.4%) - Foreign affairs
• $27.0 billion (+3.7%) - Agriculture
• $26.8 billion (+28.7%) - Community and regional development
• $25.0 billion (+4.0%) - Science and technology
• $23.5 billion (+0.8%) - Energy
• $20.1 billion (+11.4%) - General government

I don't want to argue the specifics of these numbers (military spending is actually higher than stated here). I'm also not saying that our government should refrain from action, though I think the Bear Stearns bailout was misguided and that homeowners, not hedge funds, should be getting the billions.

My point is that we are going through a national emergency simply by definition of the proportion of our government's emergency spending on a single problem.

But Pennsylvanians are bitter.