January 28, 2009

The De-Stimulus Package Of 2009

You've heard the news by now -- the President's $820 billion proposed "stimulus" package passed through the House of Representatives today, with functionally no committee analysis, scanty debate on the floor, and zero -- that's right, zero -- Republican floor support. Each and every Republican in the House voted against the bill.

I'm relieved. I actually get to applaud Republicans for once for fighting the good fight.

I know, some of you left-leaning Readers are aghast that I would say such a thing. But come on. It's nearly a trillion dollars that has barely been analyzed by anyone. Alice Rivlin, Bill Clinton's budget director, thinks that Congress has acted too hastily and has urged that the immediate stimulus be separated from the long-term infrastructure buys and rejiggering of government, so the second set of spending priorities gets done intelligently.

The Director of the CBO, who theoretically serves all of Congress but in practice needs to please the majority more than the minority, has staked out a very skeptical position on the stimulus bill, because he simply cannot believe that the money can be spent fast enough to constitute an effective economic stimulus, knowing what we do about how government agencies spend money:
Lags in spending stem in part from the need to draft plans, solicit bids, enter into contracts, and conduct regulatory or environmental reviews. Spending can be further delayed because some activities are by their nature seasonal. For example, major school repairs are generally scheduled during the summer to avoid disrupting classes, and construction and highway work are difficult to carry out during the winter months in many parts of the country.

Brand new programs pose additional challenges. Developing procedures and criteria, issuing the necessary regulations, and reviewing plans and proposals would make distributing money quickly even more difficult—as can be seen, for example, in the lack of any disbursements to date under the loan programs established for automakers last summer to invest in producing energy-efficient vehicles. Throughout the federal government, spending for new programs has frequently been slower than expected and rarely been faster.
As Steve Verndon notes, this guy must be some kind of a right wing hack.

Even Democrats in the House like Peter DeFazio of Oregon are concerned that this is 100% pure deficit spending, demonstrating, in the spirit of our new-found bipartisanship, that the ability to see the insanity of paying for a present ambitious domestic spending agenda for the next thirty years is not limited to Republicans -- who, it must be admitted, have not exactly staked out a principled history for themselves as we-really-mean-it budget hawks over the past ten years or so.

And then there's the question of what, exactly, all this money is going to buy. If I'm supposed to give my political support to this bill, I've been asked to do it on the premise that it will jump-start the economy and create jobs. I'm far from convinced that this is what will happen. The Wall Street Journal sounded off on that today, noting that this doesn't look so much like an economic stimulus package but a wish list of liberal social welfare programs forty years in the making:
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 coupons.

... 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.

.. 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.
The WSJ notes that even if the relatively modest business tax cuts are included, only 12% of the bill provides "something that can plausibly be considered a growth stimulus." Now, I'm not really all that bothered by funding the NAE or the program that everyone seems to have been talking about, sex education and distributing condoms. But these, too, are not things that are going to have a very significant impact on the economy as a whole or help create jobs.

Are these all unbiased sources of analysis? Of course not. But then again, the country has had about ten days to look at the bill, and less than half of that to analyze it in any real detail. Partisan, or at least slanted, analysis is about all that there is.

So, we are left with several important questions, as the Senate considers its own version of the bill and the two houses of Congress meet to reconcile what they've done.
  1. Is it even possible to stimulate the economy at all by massive deficit spending?
  2. If it is possible to do that, will spending money on increased unemployment benefits, sex education for high school students, and upping Amtrak's subsidy do it?
  3. If this kind of spending will stimulate the economy, will it be done in an expeditious enough fashion to do anyone any good?
The answers to that, as far as I can tell are 1) no one really knows, 2) doubtful, and 3) even more doubtful. Which brings me to a final question. Are you most pissed off that:
A) The government is deficit-spending $820,000,000,000 of your money and your children's money in the first place?
B) The government is spending that money on stuff that isn't going to do anyone any good, thus lighting that money on fire?
C) The government is doing it without even bothering to have a decent debate about it first?
D) You've been lied to about why the government is doing it?
My vote is "E," all of the above.

2 comments:

zzi said...

E with an *

*it's going to be more than 820 billion when it's all over.

nice article with good examples

Transplanted Lawyer said...

Oh hell yes you're right about that. This is just the "stimulus." They haven't yet begun to tackle the real budget yet.