Widgetized Section

Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone

Rethinking the stimulus

By
February 2, 2009

President Obama’s economic adviser, Lawrence Summers, said that any stimulus bill should be targeted, timely and temporary.

The 647-page, $819 billion bill that passed the House — close to what the Congress spends to run the government in a normal year — sprawls all over the place, defers major spending to a time when we hope the recession has run its course, greatly expands the federal government’s role in health care, education and energy, and much of the bill is not likely to be temporary.

President Obama asked that the bill not include earmarks, but in a distressing sign that the Democrats won’t listen to him on spending any more than the Republicans listened to George W. Bush, the bill is loaded with special interest provisions for everybody from the people who repair yachts to the makers of TSA uniforms.

And the Senate version of the bill promises to be even larger. There is no plan in either bill on how to pay for all this spending, other than adding the cost to the national debt, and there is no plan on how to wind it down when the economy starts recovering.

If, as forecast, the current quarter is the low point of the recession — and we all hope it is — much of the stimulus is already tardy; $290 billion of the package won’t be spent until 2011 or later

Some of the provisions set significant and expensive precedents. At a cost of $40 billion, the government would allow unemployed workers to enroll in Medicare in certain circumstances and it would pay 65 percent of the COBRA benefits for others. For laid-off workers 55 or older it would subsidize those benefits until the worker was eligible for Medicare. It will be politically difficult to let this provision expire in two years and we may be backing into a costly new entitlement program.

The bill more than doubles spending on the Department of Education but without any enforcement to guarantee we get something for all that money in terms of higher test scores and better graduation rates. And, armed with $21 billion, the federal government will be a major force in school construction and repair, another benefit that will be politically difficult to take back in the future.

A key part of the plan is a $500 per worker, $1,000 per couple cut in the payroll tax, which will cost the Treasury $145 billion, but the cut will come to about $20 a week, hardly enough to send strapped citizens out to buy cars and appliances. And it doesn’t begin until June.

Perhaps it’s too late in the game to stop this juggernaut, but the Congress should take a deep breath and then go back and carefully reconsider whether all this spending is needed or even desirable. And somebody should be asking: What if it doesn’t work? What are we left with then?

2 Responses to Rethinking the stimulus

  1. AustinRanter

    February 2, 2009 at 1:37 pm

    After the Nov 2008 election we still have a “self-will-run-riot” government. They don’t have to stop their MO just because our nation (in concert with other nations) has serious problems.

    Congressional members didn’t win their elections because they were poor citizens fighting a cause to help the common person. They all had huge money machines backing them. They most likely had a subtantial personal wealth that is somewhat above the middle class working folks. They all make near 200,000 a year plus plenty of perks in Congress. The president makes about 400,000 a year. So, they aren’t in jeopardy losing much of anything.

    Soooooooo, here we little people are…watching the Washington fatcats hand out large sums of money to their benefactors…and we don’t have a clue as to where all of the money is, or if the average citizen will reap any benefit from these so-called bailout funds.

    KY Jelly, anyone?

  2. woody188

    February 2, 2009 at 4:32 pm

    “If, as forecast, the current quarter is the low point of the recession — and we all hope it is — much of the stimulus is already tardy”

    LOL, are these the same forcasters that didn’t see the crash coming? Realistically speaking we are going to be in recession until at least 2010, and that is being optimistic. I’ve heard up to 10 years on the other end of the spectrum. Remember we are coming off a 30-year old period of bubble increases, so 10 years in decline is not unrealistic.

    “A key part of the plan is a $500 per worker, $1,000 per couple cut in the payroll tax, which will cost the Treasury $145 billion, but the cut will come to about $20 a week, hardly enough to send strapped citizens out to buy cars and appliances. And it doesn’t begin until June.”

    Yup, we need at least a 25% payroll tax cut. Remember this saves business and employees because business has to match what employees pay in taxes. But as always we are thrown scraps and told it’s Fillet Mignon.

    If we really want to save the economy we need to cut taxes on individuals by a minimum of 25%, stop outsourcing/off-shoring/illegal immigration/work VISA’s, and demand balanced budgets at all levels of government. Of course none of these things are being discussed, so we are doomed to a “Greatest Depression” that is going to make the 1930’s look like a day at Disney Land.