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March 29, 2011

How big is the federal budget disaster?

Lee DeCovnick
The devastating images from Japan are seared into our collective memory. With 10, 901 dead and another 17, 038 still missing, the human toll is almost beyond comprehension. The 9.0 magnitude earthquake and resulting tsunami that ravaged Japan has become the most expensive natural disaster in recorded history.

From Fox News:

Japan's Cabinet Office on Wednesday estimated the catastrophe...could cause losses between 16 trillion yen ($198 billion) and 25 trillion yen ($309 billion). That figure compares with estimates from the World Bank and Goldman Sachs for losses of $235 billion and $200 billion, respectively.

The $309 billion price tag would make Japan's earthquake the costliest on record, surpassing the $125 billion that the Insurance Information Institute estimates Hurricane Katrina cost the Gulf coast in 2005. It would also top the $100 billion in damage caused by the 1995 Kobe quake in Japan.

Uh... hold on a minute. Something seems wrong with these numbers.  Do I understand this correctly; all those coastal cities and towns that were leveled, the tens of thousands of cars and homes that were pulverized, all the stores, shops, factories, warehouses, schools, freeways, roads, ships, aircraft, trains, port facilities and infrastructure reduced to rubble and it will only cost as much as US Federal deficit for a couple of months?

First a quick look at the Congressional Budget Office report for February, 2011. Two sentences stand out.

[The] CBO estimates that the deficit in February 2011 was $223 billion, which is very similar to the deficit recorded in February 2010.

[The] CBO estimates that the federal government incurred a budget deficit of $642 billion for the first five months of fiscal year 2011, $10 billion less than the shortfall recorded in the same period last year.

Shocking and inconceivable, how else to describe the monumental scale of the Federal deficit as measured by the devastation from Japan? Hundred of billions of dollars each month, the accumulated treasure of great empire is being hemorrhaged into oblivion, without purpose, thought or rationality. Why would anyone spend a nation into more debt then could ever be repaid? The GOP House is far too complacent, eager only to symbolically nibble at the edges of this crushing burden. Meanwhile our Socialist Administration, content to bleed this nation into second-class status, gleefully ticks off each day that brings our nation $4.1 billion dollars closer to insolvency, instability and the end of our Constitutional Republic. 

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