My latest in the American News:
Those who defend President Obama's stimulus spending spree have two arguments. Naturally they argue that the spending will stimulate the economy. Second, they assure us that the administration promises to tackle our enormous budget deficits once the economic crisis is over.
First, will it stimulate? Columnist Robert Samuelson, a proponent of aggressive stimulus by the government, believes with this bill “partisan politics ran roughshod over pragmatic economic policy.” The law's spending is back-loaded so as to have little immediate effect. Almost a third of all spending occurs after 2010. Also, many of the bill's provisions, such as the tax provisions, have been shown to have little to no economic impact.
The package's grants to the states come with various strings. Samuelson argues Congress would have been much wiser giving the states money in block grants to spend as needed.
In 2004, Robert Rubin, treasury secretary during Bill Clinton's presidency, co-authored a paper that argued large deficits would “reduce future national income,” seriously damaging the long-term health of the economy. Yet, as former Comptroller General David Walker notes, the stimulus bill was the first spending bill in the history of the United States government to have zero equity. All $800 billion was borrowed.
Contrary to the goals of “transparency” and “accountability” urged by some, this bill was negotiated behind closed doors with no minority input. Citizens should wonder why interest groups saw the finalized bill before the House Minority Leader. While it is not uncommon for members of Congress to vote on a bill they haven't read (members are very busy), it is unheard of to hold a vote on a bill that no one has read. This is transparent and accountable government?
Consider: The Democrat leadership in Congress is touting a $400 billion omnibus spending bill for discretionary spending. This represents an 8 percent increase over last fiscal year and is in addition to the stimulus package. The bill has more than 8,500 earmarks in it. The Obama administration has voiced support for this bill. James Madison warned against “parchment barriers,” limits on government written on paper. Paper promises are easily broken. So pardon me if I don't take the administration's promises of future budget restraint seriously.
In its recent budget, the administration is predicting trillion dollar annual deficits for two more years and then, if an extremely rosy economic scenario comes to pass, it projects a $500 billion deficit for 2012. These are unprecedented peacetime deficits in raw numbers and as a percentage of the economy. This is also before the massive spending on health care that Obama has promised, which his budget pays for with funds “to be determined.” So Obama doesn't even account for this spending. To paraphrase Herbert Hoover, I am sure that fiscal discipline is just around the corner.
How will this spending be paid for? Taxes on the rich? The Wall Street Journal notes that in the year 2006 (the last year we have IRS data), it would have taken the confiscation of the wealth of everyone who makes more than $75,000 to pay for Obama's fiscal year 2010 spending. If Obama gets all he wants, back-breaking taxes will inevitably come to the middle class to pay for the debt he is running up.
With strong Democratic majorities in Congress, Obama is likely to get precisely what he wants. That is, unless some moderate Democrats stand up to oppose him. So far, precious few, certainly no Democrat member of Congress from South Dakota, have had the courage to stand for fiscal discipline.
Robert Samuelson's point about the strings that came with state aid is echoed by this news from David Freddoso. Apparently many localities are now chafing under the requirements of the "stimulus" money. They are forced to spend on low priorities can can't spend on what they really need.
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