Monday, February 2, 2009

With the nation in serious economic difficulty, there is general agreement that a strong, sensible stimulus package is necessary. That’s quite different from the bloated, slapdash spending bill, dressed up in disguise as a swanky stimulus bill, that the House passed last week and that the Senate, with some minor costume changes, is considering this week.

The bill will cost over $1.17 trillion, according to the Congressional Budget Office - $825 billion is the advertised price, but the finance charge in the form of the cost of borrowing the money will add $347.1 billion, according to the CBO. And that’s before the Senate acts on additional spending schemes, including a Senate Finance Committee vote to add another $70 billion or so to adjust the alternative minimum tax. That makes the $198 million senators are adding as payments to Filipinos who fought on the U.S. side in World War II seem like chump change.

As it stands the bill fulfills, at least to a degree, the wish lists of virtually every liberal in Washington and the 50 states. Less than 5 percent of the funds go to repairing the nation’s deteriorating infrastructure - which was one of the original goals of the stimulus bill that President Obama sought to “put people to work rebuilding our crumbling roads and bridges.”

Instead, as a sampling: There’s $75 million to help people stop smoking, $2.25 billion for national parks (whose chief lobbyist, as we have reported, is the son of House Appropriations Committee Chairman David Obey, D-Wis.), $20 billion for quicker depreciation and write-offs for equipment, $15 billion for college scholarships, $50 million for the National Endowment for the Arts, $335 million to treat and prevent sexually transmitted diseases, $600 million to buy a new fleet of cars for federal employees and government agencies, $650 million for coupons to help consumers convert TV sets from analog to digital, $400 million to research global warming, $2 billion to help subsidize child care, $1 billion for Amtrak, $4.19 billion for a Neighborhood Stabilization Program (much of which might go to ACORN, the discredited activist organization that the FBI is investigating for vote fraud), and on and on.

While tax credits specifically are denied to nonresident aliens, the legislation allows payment of checks to undocumented immigrants filing tax returns using an alternative number to the normal Social Security number. Some of the aforementioned projects may be commendable, but the package is hardly much of a stimulus change we can believe in. It’s less stimulating than a kiss from your sister, or brother, as the case may be.

Little wonder that a Rasmussen Reports poll last week found only 42 percent of Americans think the House-passed bill is a good idea. Also, 46 percent fear the government may overreact and do too much, compared to 42 percent who think it may do too little. Over-juicing the economy can lead to runaway inflation, economists warn. Indeed, more than 300 free-market economists took out an ad against the stimulus package. Even some Democrats are now objecting that the bill contains too few highway and mass transit projects. The package is a far departure from the three “T” guidelines President Obama’s chief economic advisor, Lawrence Summers, called for last year: Make the stimulus timely, targeted, and temporary.

Instead, the Democrats seem determined to add their perennial to-do list to what was to be a temporary stimulus, and as a result there are permanent spending commitments (health and entitlement spending, educational grants, etc.) with no permanent funding mechanism. There’s no sense of priorities or targets; everything is thrown in as a priority.

The dangers to the American free enterprise system under the current proposal should not be discounted. The plan would exempt more than half of all Americans from paying federal income taxes (the current fraction is about one-third), with the voting majority getting refundable tax credits - a form of welfare check reminiscent of the Roman bread and circuses. With the government acquiring preferred stock in almost all of the nation’s major banks, nationalization, further governmental controls over the marketplace, and a shift toward a European-style socialist democracy may not be far behind, Dick Morris and Eileen McGann warn on

House Republicans had several proposals that, in the Land of Pelosian Rule, went nowhere, including a substitute package made up entirely of tax cuts for individuals and businesses. Morris and McGann made a useful suggestion that Republicans can only battle the onslaught against the basic free-market, private-enterprise system by drafting a “free-enterprise” amendment to add to the stimulus package, spelling out “what the government may not do in influencing the policy of private banks.” That’s fine for financial institutions, but the GOP also needs to have a coherent answer to the current all-spending-all-the-time package. A wiser alternative, not just naysaying, is needed. The amount of the package may not change significantly, but the focus and direction might.

Everett Dirksen, GOP Senate leader in the ‘50s and ‘60s, purportedly had a quip about congressional spending: “A billion here, a billion there; pretty soon it’s real money.” Less than a half-century later the line needs updating to “a trillion here, a trillion there.”

At least spend it soberly, not making the proverbial drunken sailor look like a teetotaler.

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