That means higher taxes down the road. The chart below (hat tip: Fundmastery) illustrates the difference between Federal spending and the average household income. While Federal spending increased 221% since 1970, the median income increased only 32%:

In case anyone wonders why this is important, just look at the chart again and consider what this will look like in 10 years. If government spending continues growing far faster than household incomes, then government taxes will have to consume an increasing percentage of those incomes. Yikes.

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If you’re wondering just how wisely $787 billion of your tax money will be spent in the stimulus package, this will strike you as somewhat troubling:

On February 14, with the passage of the American Recovery and Reinvestment Act, Congress shoveled $787 billion of stimulus money out the door. Now they’re using Google to find out where it went.

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This pretty much tells the sorry tale:

The nearby chart shows how the bill will increase the 2009 budget deficit, which is already the largest in modern history. … analysts at the Strategas Group estimate the deficit could hit nearly $2 trillion, or 13.5% of the U.S. economy.

We aren’t deficit scolds, but these levels are uncharted territory, especially if any economic recovery is weak because the spending doesn’t stimulate. The new spending means new federal debt in the trillions of dollars over the next few years, which will test the limits of America’s credit-worthiness.

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The blog Suitably Flip, noting that “It’s difficult to visualize a million dollars, much less a million million dollars,” offers a graphical look at how the cost of the currently proposed stimuls package compares to previous government programs:

Big enough to dwarf any government program in history, even after adjusting for inflation. It’s bigger than the New Deal and the Iraq War combined. The interest alone will be costlier than the Louisiana Purchase or going to the moon. The $18 billion in bonuses paid legally by private Wall Street firms in 2008 – decried by the President as “shameful” – is vanishingly small in comparison (smaller even than the bill’s incremental food stamps expenditures).

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While most economists forecast a 5.4% decline in the nation’s gross domestic product (GDP), a measurement of the country’s total output of goods and services, the growth indicator contracted less than market observers feared.

The 3.8% decline, despite beating predictions, is still the worst drop in 27 years — the most since the first quarter of 1982.

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