The economic-stimulus bill being fashioned by the Obama administration and Congress fails in many cases to meet the standards for stimulus spending, the former head of a congressional watchdog agency said Monday.
“There’s no question there are a number of items on the table that do not meet the ‘timely, targeted and temporary’ criteria” for true stimulus spending, said David M. Walker, who served as comptroller general and head of the Government Accountability Office (GAO) from 1998 to 2008.
“At $825 billion and counting,” the stimulus package is “still evolving. It’s a moving target,” Mr. Walker said.
Taxpayers should be concerned whenever the federal government prepares a stimulus plan to spend nearly $1 trillion over two years, “especially if it is not temporary or reversible,” Mr. Walker told reporters and editors of The Washington Times.
Many of the programs listed in a White House fact sheet issued Saturday had an air of permanence.
Mr. Obama wants to provide newly uninsured Americans who lose their jobs a new tax credit to keep their health insurance. He also wants to expand the Medicaid program for low-income workers and raise food-stamp benefits for 30 million recipients. The stimulus plan would expand the child tax credit for 16 million children. It also would increase spending on Pell Grants, create a $2,500 American Opportunity Tax Credit for college students and double funding for the Early Head Start program.
Mr. Walker expressed skepticism about the $500-per-person and $1,000-per-couple “Making Work Pay” tax credits, which the administration wants to distribute to 95 percent of workers.
“Ninety-five percent is not ‘targeted,’” Mr. Walker said.
Referring to a recent report by the Congressional Budget Office, Mr. Walker expressed concern that most of the money for infrastructure projects funded by the stimulus bill will not be spent until after 2010.
He was also concerned about wasteful spending.
“You want to make sure when you start shoveling, it doesn’t smell,” he said.
Mr. Walker criticized the Troubled Asset Relief Program (TARP), the $700 billion financial bailout that Congress approved in October, for not being sufficiently transparent and for lacking a gatekeeper.
“There’s already been waste and abuse in [TARP],” he said.
The United States should learn from other countries that have faced similar challenges, including Sweden, which temporarily nationalized several large banks in the early 1990s, he said. Mr. Walker said he would consider the Swedish model. He also said the federal government should consider creating a “bad bank,” where many of the toxic securities on bank balance sheets could be parked.
During the past three years, first as the head of GAO and now as the president of the Peter G. Peterson Foundation, Mr. Walker has visited 43 states warning Americans about the $56.4 trillion in unfunded liabilities wrapped around the necks of taxpayers.
“President Obama‘s words have been encouraging” so far on this issue, Mr. Walker said. The question is how the president will deliver.
“Taxes are going up,” Mr. Walker asserted. “There’s something called math.”
Mr. Obama has said he will hold a Fiscal Responsibility Summit in February. Mr. Walker said he hopes the summit will produce “a consensus to create an extraordinary process,” which could result in the establishment of a Fiscal Future Commission whose proposals would require a congressional up-or-down vote with few amendments.