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Friday, January 23, 2009

The Stimulus: Pork, Deficits, Voter Reallignment...and Maybe a Few Jobs

When we look back, we may find that the Congressional Budget Office report on the stimulus package played a critical role in changing the dynamic of the debate on the stimulus. The CBO report found that most of the money allocated in the stimulus won't be spent for at least two years. Such an analysis, makes this stimulus indefensible. After all, if the money isn't even being spent, how in the world will it stimulate anything? What we are finding now is the beginnings of a lot of criticism of this stimulus. This criticism may lead to a slowing down of the process. That would be a welcomed relief because right now this stimulus is a giant mess. All it will do is create needless pork, massive deficits, voter reallignment. Meanwhile, it's job creating stimulus is marginal.

Beyond the problems highlighted in the CBO report, much of this stimulus is nothing but pork with no stimulating value whatsoever. Here is how David Brooks described it.

The committee staff took the kernel of President Obama’s vision — infrastructure programs to create jobs — and surrounded it with an undisciplined sprawl of health, education, entitlement and other spending. There’s money for nurse training, Medicare, Head Start, boatyard support, home weatherization and so on. Eleven of the programs in the bill account for the vast majority of the actual job creation. The rest may be worthy or not, but they have little to do with stimulus. The total package is so diffuse, it costs $223,000 to create a single job.

So, out of more than fifty programs appropriated, only eleven appear to be ones in which jobs maybe created. As such, to call this a stimulus bill is to be rather misleading. Instead, this is much more a bill to fund the pet projects of liberals. We have Pell Grants, after school education, food stamps, alternative energy, stem cell research, etc. Most of these programs won't create many jobs. They will, however, fund many of the liberal's favorite causes.

Brooks' criticism is mild compared to the shocking discoveries laid out by Donald Lambro.

-- Government-run programs at the federal, state and local level. This stimulus bill will pour billions into 150 different federal programs, from the money-losing Amtrak rail service to the Transportation Security Administration.

-- $15.6 billion goes into Pell Grants to increase each student grant by $500, though the added money ends in two years. This may be a worthy thing to do, but it's not going to create any new jobs.

-- $54 billion will go to 19 programs that the Office of Management and Budget has rated as "ineffective" or "results not demonstrated."

-- Much of the money will go to federal programs that still have unspent funding in their accounts. For instance, the bill will pump another $2 billion into the Army Corps of Engineers' water-construction program that still has $1.5 billion in unobligated funds.

The Department of Housing and Urban Development's homeless-assistance program would get $1.5 billion despite an unobligated balance of $1.5 billion.

The General Services Administration has $3.3 billion of unspent funds, but GSA would get another $7.7 billion from the stimulus package.

-- Billions will be dished out under this so-called stimulus bill mostly to protect or create government jobs -- including money to renovate federal buildings, and $600 million for the government to buy brand-new cars and vans.

Not only do we have billions in pork, but many of these billions are going to go to branches that haven't even spent money that has been allocated yet. That's indefensible, and of course, it goes without saying, that it won't create one single job. In fact, if Obama were serious about short term stimulus, he could start by mandating that each of these departments spend the money they have been allocated first. This is frankly a boondoggle unlike any other. It is a liberal orgy of spending on pet projects and government bureaucracies that they have supported for decades.

Of course, if the spending isn't troubling enough, it's the so called tax cuts that are downright scary. Here is how Dick Morris described these so called tax cuts.

The most pernicious of his proposals will be the massive Make Work Pay refundable tax credit. Dressed up as a tax cut, it will be a national welfare program, guaranteeing a majority of American households an annual check to “refund” taxes they never paid. And it will eliminate the need for about 20% of American households to pay income taxes, lifting the proportion that need not do so to a majority of the voting population. Unlike the Bush stimulus checks, this new program will be a permanent entitlement, a part of our budget that can only go up and never down. Politically, it will transform a majority of Americans from taxpayers, anxious to hold down government spending, into tax eaters, eager to reap new benefits.

So, what these PERMANENT tax credits will do is create a permanent welfare class. That's because as a result of these tax credits more than half the population won't pay any federal income tax at all. Right now, it is about a third of all Americans that are in this category and this number will rise by about twenty percent. As such, more than half of all Americans will be the beneficiaries of the very big government that Obama is expanding. That provides Obama and the Democrats a permanent majority for the very policies that they are pushing in this stimulus. Only more people knowing about the findings of the CBO will stop this train wreck from becoming law and permanent fixture on our political landscape.


Anonymous said...

This is the rest of the Wall Street Journal article with the response by Democrats to the CBO's findings which you [conveniently] omitted.

Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi, said the CBO report creates a "false impression" by not taking "into account the fastest-spending provisions of the bill," such as measures that would release tens of billions of dollars to help pay for jobless benefits and health care for the poor, and tax cuts for middle-class families. "These provisions will go out quickly to give the economy a jolt," he said.

The House Appropriations Committee Wednesday began looking at the infrastructure-investment section of the bill, a key part of the broader recovery plan. The committee is one of several House panels acting this week on main provisions of the broader plan. Thursday, the Ways and Means and Energy and Commerce panels will consider the proposed, $272 billion tax-relief package for individuals and businesses, and additional spending proposals for jobless benefits and other programs.

House Democratic leaders intend to fold the major pieces of the stimulus package moving through committee this week into a single bill, which is expected to be debated on the House floor as soon as next week. Mr. Obama and Democratic leaders have said they would like to enact the bill by mid-February.

House Appropriations Committee Chairman David Obey (D., Wis.) said the CBO, in its report, "conveniently focused on the areas of the bill that are traditionally the slowest spending," rather than tax cuts or spending on health benefits, which put money in people's pockets right away.

Democrats are seeking to change some parts of the bill in response to the CBO report. The bill initially gave states 90 days to spend money on infrastructure projects or risk losing the funds, but the CBO concluded that states couldn't move that fast. Democrats have replaced that provision with a new one that would give states a bonus if they spend the money within 120 days.

"I happen to think CBO's estimate is off-the-wall, but we're trying to respond to it nonetheless," Mr. Obey said.

mike volpe said...

I don't remember linking to a WSJ article in the first place. That the Democrats dispute the CBO findings is not surpising. The CBO is, however, non partisan whereas Dems are partisan.

Anonymous said...

I doubt Obama's stimulus bill will be passed as is - Congress is still debating over it.

However, something has to be done quickly because time isn't on our side.

It's unfortunate that the stimulus bill requires massive planning. But given the situation, that massive planning has to be rushed.

Greg Alterton said...

"House Appropriations Committee Chairman David Obey (D., Wis.) said the CBO, in its report, "conveniently focused on the areas of the bill that are traditionally the slowest spending," rather than tax cuts or spending on health benefits, which put money in people's pockets right away."

David Obey also said yesterday when the House passed the "stimulus" bill, "Another week that we delay is another 100,000 or more people unemployed. I don't think we want that on our consciences," said Rep. David Obey, D-Wis

He must really think we're stupid to believe that this "stimulus" package can turn the economy around in one week. Or maybe HE'S that stupid.

There are some aspects of the "stimulus" bill that appear sound: increases in unemployment benefits, increases in transfer to states, tax cuts for some Americans. But that doesn't hide the fact that the House bill is also loaded with pork, none of which has a direct relationship to stimulating the economy or creating jobs. This is why describing this package as a "stimulus" bill is at best a misnomer, at worse a clever piece of propaganda.