Taxpayers will pay much more for the fiscal stimulus than previously revealed – over $1.17 trillion according to the Congressional Budget Office (CBO).
Most sources have assessed the cost of the stimulus package at approximately $825 billion. But the CBO reports those estimates do not include the cost of the money that must be borrowed to pay for the plan. [Editor's Note: To view the CBO letter reporting on the total cost of the stimulus plan, go here now.]
Rep. Paul Ryan, R-Wisc., asked the CBO - the research arm of Congress - to calculate the “money cost” of borrowing the funds needed to fulfill the stimulus projects being sought by congressional Democrats and President Obama. Like every other borrower, the government must pay back borrowed principal plus the interest on its debt.
The CBO responded with a Jan. 27 letter from CBO Director Douglas W. Elmendorf estimating the cost of borrowing the money would be $347.1 billion – or about 42 percent of the cost of the projects. That would push the total cost of the stimulus package to over $1.17 trillion.
“Such [interest] costs … are not counted for congressional scorekeeping purposes for such legislation,” Elmendorf stated in his letter to Rep. Ryan.
The true cost may climb even higher, however, because the CBO’S calculations are all based on its low-end estimate that the base cost of the stimulus package will be just $815.9 billion, compared to the $825 figure commonly used. Congressional Republicans told Newsmax on Tuesday the actual base cost of the still-evolving stimulus package is about $836 billion.
The higher the cost, the more expensive the program is to finance, and the greater the total debt burden on future taxpayers.
Ryan has been an outspoken critic of the stimulus plan. In a recent Wall Street Journal commentary he warned: “The last several months are a foreshadowing of a new era of government activism, rather than an unfortunate but necessary (and anomalous) emergency action. We will soon shift from a market-based economy to a political one in which the government picks winners and losers and extends its reach and power in unprecedented ways.”
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