South Carolina Gov. Mark Sanford has been highly critical of the Obama administration for spending too much on the economic stimulus. Recently, Sanford cited a statistic compiled by the Bloomberg news service that "our government has now 'spent, lent, or committed' $12.8 trillion in its attempt to blunt the recession."
It's a figure Sanford used in a commentary for Human Events , a conservative publication, and again in a letter to the editor of the State Journal-Register in Springfield, Ill.
It is taken from a March 31, 2009, Bloomberg story that begins, "The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s."
At the bottom of the story is a chart breaking down how the number was derived. The lion's share — $7.7 trillion — comes from money lent or committed by the Federal Reserve for such things as credit discounts, debt purchases and bailouts of several financial institutions. Another $2 trillion relates to the FDIC, including liquidity guarantees and the purchase of risky bank assets.
And lastly is the money the federal government is spending through the two stimulus packages (the $168 billion stimulus under President George W. Bush and the $787 billion stimulus under President Barack Obama), as well as the $700 billion Troubled Assets Relief Program, or TARP, used to buy toxic assets, the mortgage-backed investments that triggered the nation's financial crisis.
Economists caution that the government is not necessarily "out" all of that money.
In the case of TARP money, for example, "the estimates are that we will get most of the money back," said Jim Horney, director of federal fiscal policy at the left-leaning Center on Budget and Policy Priorities. And in the case of collateral extended to the Federal Reserve and FDIC, "that's basically pledging to back up the operations of those organizations. We're pledging this money as collateral for that organization."
It doesn't mean the money will ever be spent. And in the case of things like auto company bailouts, for example, the federal government got company stock and it's too early to know how much the government will get back on that. But presumably some. "At the end of the day, a large portion of that won't end up getting spent," Horney said.
We had initially set out to fact-check Sanford for comment he made in a May 13, 2009, Fox Business Network interview when he said, "This stimulus package, this federal effort ... at some point you know we spent about 20 percent of world GDP on this thing. You look at about $13 trillion last year and it's almost like you know Soviet-era grain quotas are saying you will produce this amount of grain in Kazakhstan, never mind the realities of what is going on, on the ground."
He's right that $13 trillion represents about 20 percent of the world GDP, but he left out the all-important qualifiers for the $13 trillion number, that it is money "spent, lent or committed," instead characterizing all of it as money the federal government "spent."
Economists hopped all over him for that one.
"If you are talking about an FDIC line of credit, there's a huge difference between that and spending X amount of dollars," Horney said. "Calling it spending is just wrong."
The comment even drew rebuke from the conservative American Enterprise Institute.
"Saying $13 trillion has been spent is definitely misleading," said Alan Viard, a resident scholar at AEI. "It's not fair to combine all that with the word 'spent.'"
The actual amount spent by the federal government to slow the recession is closer to $2 trillion, he said.
Sanford spokesman Joel Sawyer acknowledged that Sanford left out the "spent, lent or committed" qualifiers in the Fox interview. In TV interviews, he said via e-mail, "questions come fast and furious and it's easy to leave out some words." But, he said, it'd be unfair to judge Sanford on that lone response when he had twice cited the statistic correctly, in writing. We agree, although we'll be watching carefully to make sure Sanford includes the proper caveats.
Economists may disagree with this $13 trillion figure. There are many ways to calculate the amount the United States has pledged to stem the recession. But we think the Bloomberg calculation is one legitimate way. And we think it was certainly fair for Sanford to cite it, so long as he includes those all-important qualifiers. And on two occasions at least, he did. So we rate his comment True.