I’m not arguing against it. I think a defensible case can be made for increased deficit spending in response to an economic downturn.

However, I urge every American to be acutely aware of the __SCOPE__ of what we are talking about. Because the scope of current actions truly dwarves the deficit spending that only some people have complained about or bothered to understand in the past.

Some folks might be eager to continue to ignore warnings against deficit spending, because concerns about it in the past seldom led to the kinds of dire predictions the drain circlers made. When the fed gov’t was spending 2, 3, 5% more than it collected, that practice was semi-sustainable when accompanied by similar economic growth. To put it into terms everyone can understand, that’s like spending $102, $103, or $105 dollars when you only have $100. As long as your next paycheck covers the past overspending, you stay afloat, give or take.

But right NOW, we’re overspending by a ton. Reporting on the number, 1.2 trillion, doesn’t help folks understand. You have to understand it by comparing what we are spending to what we are collecting. Last year we collected about 2.66 trillion and budgeted to spend 2.9, and then we added another 0.7 for the bailout, so we collected 2.6 and spent 3.6. Boiled down, that’s roughly like spending a bit over $4 for each $3 we have.

So today, suppose (to make the numbers easy) the 2009 receipts end up at 3 trillion, and we spend that extra 1.2 trillion, which is the current forecast, not including the potential Obama stimulus package. That puts us at 4.2 trillion. Then add in the stimulus package’s expected cost of about 750 billion or 0.75 trillion. Let me emphasize where that gets us:

We’re in the ballpark of spending $5 for every $3 we collect

Deficit spending at that scope will become utterly unsustainable after 2 or 3 years or so. I don’t know the number. But IMO it’s nearly impossible for us to sustain that level of overspending without triggering currency devaluation and serious inflation. Unless things are so bad everywhere that Earth’s economy functions like the current absurd global conspiracy.

So again, to sum up, I am not arguing against deficit spending in the current environment. I am cautioning that with the already spent bailout and the impending new package, we need to figure that we can probably afford no more than one more swing. Maybe zero or two.