Wednesday, January 28, 2009

Are you ready to be "stimulated"?

A 40-Year Wish List - You won't believe what's in that stimulus bill.

"Never let a serious crisis go to waste. What I mean by that is it's an
opportunity to do things you couldn't do before." – Rahm Emanuel

So said White House Chief of Staff Rahm Emanuel in November, and
Democrats in Congress are certainly taking his advice to heart. The
647-page, $825 billion House legislation is being sold as an economic
"stimulus," but now that Democrats have finally released the details we
understand Rahm's point much better. This is a political wonder that
manages to spend money on just about every pent-up Democratic proposal
of the last 40 years.

We've looked it over, and even we can't quite believe it. There's $1
billion for Amtrak, the federal railroad that hasn't turned a profit in
40 years; $2 billion for child-care subsidies; $50 million for that
great engine of job creation, the National Endowment for the Arts; $400
million for global-warming research and another $2.4 billion for
carbon-capture demonstration projects. There's even $650 million on top
of the billions already doled out to pay for digital TV conversion

In selling the plan, President Obama has said this bill will make
"dramatic investments to revive our flagging economy." Well, you be the
judge. Some $30 billion, or less than 5% of the spending in the bill, is
for fixing bridges or other highway projects. There's another $40
billion for broadband and electric grid development, airports and clean
water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate
only $90 billion out of $825 billion, or about 12 cents of every $1, is
for something that can plausibly be considered a growth stimulus. And
even many of these projects aren't likely to help the economy
immediately. As Peter Orszag, the President's new budget director, told
Congress a year ago, "even those [public works] that are 'on the shelf'
generally cannot be undertaken quickly enough to provide timely stimulus
to the economy."

[Review & Outlook]

Most of the rest of this project spending will go to such things as
renewable energy funding ($8 billion) or mass transit ($6 billion) that
have a low or negative return on investment. Most urban transit systems
are so badly managed that their fares cover less than half of their
costs. However, the people who operate these systems belong to
public-employee unions that are campaign contributors to . . . guess
which party?

Here's another lu-lu: Congress wants to spend $600 million more for the
federal government to buy new cars. Uncle Sam already spends $3 billion
a year on its fleet of 600,000 vehicles. Congress also wants to spend $7
billion for modernizing federal buildings and facilities. The
Smithsonian is targeted to receive $150 million; we love the
Smithsonian, too, but this is a job creator?

Another "stimulus" secret is that some $252 billion is for
income-transfer payments -- that is, not investments that arguably help
everyone, but cash or benefits to individuals for doing nothing at all.
There's $81 billion for Medicaid, $36 billion for expanded unemployment
benefits, $20 billion for food stamps, and $83 billion for the earned
income credit for people who don't pay income tax. While some of that
may be justified to help poorer Americans ride out the recession, they
aren't job creators.

As for the promise of accountability, some $54 billion will go to
federal programs that the Office of Management and Budget or the
Government Accountability Office have already criticized as
"ineffective" or unable to pass basic financial audits. These include
the Economic Development Administration, the Small Business
Administration, the 10 federal job training programs, and many more.

Oh, and don't forget education, which would get $66 billion more. That's
more than the entire Education Department spent a mere 10 years ago and
is on top of the doubling under President Bush. Some $6 billion of this
will subsidize university building projects. If you think the intention
here is to help kids learn, the House declares on page 257 that "No
recipient . . . shall use such funds to provide financial assistance to
students to attend private elementary or secondary schools." Horrors:
Some money might go to nonunion teachers.

The larger fiscal issue here is whether this spending bonanza will
become part of the annual "budget baseline" that Congress uses as the
new floor when calculating how much to increase spending the following
year, and into the future. Democrats insist that it will not. But it's
hard -- no, impossible -- to believe that Congress will cut spending
next year on any of these programs from their new, higher levels. The
likelihood is that this allegedly emergency spending will become a
permanent addition to federal outlays -- increasing pressure for tax
increases in the bargain. Any Blue Dog Democrat who votes for this ought
to turn in his "deficit hawk" credentials.

This is supposed to be a new era of bipartisanship, but this bill was
written based on the wish list of every living -- or dead -- Democratic
interest group. As Speaker Nancy Pelosi put it, "We won the election. We
wrote the bill." So they did. Republicans should let them take all of
the credit.

This information was obtained from the Online Wall Street Journal at

A copy of the House bill is here if you care to peruse the 647 page
bill. Let’s get stimulated!!!

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