Friday, January 30, 2009

The silver lining to the faux-stimulus bill

It looks to me like the "stimulus" bill that passed the House is rapidly losing support. That's not surprising, since it was so absolutely awful. If this disgraceful display of politics run wild does not cast serious doubt on the seriousness of Congress and the intelligence of our new president, nothing will. And that is the good news, because only something this bad can mobilize support for something that does make sense. The Senate needs to do its job now, and recast this effort to help the economy using reason, experience and logic, rather than pure partisan politics. Above all, our senators need to focus on the fact that simply handing out money to favored constituents and creating vast new spending programs that will take years to deploy is the worst possible way to stimulate the economy. True stimulus needs to focus on changing people's incentives to work, invest, and take risk. That means tax cuts, not tax rebates, and any changes should apply to anyone or any company that pays taxes.

If we're lucky, the debate in the Senate might last long enough that we discover that a stimulus bill is not really necessary after all.

Ben Stein reminds us just how awful the current bill was:
Eight hours of debate in the HR to pass a bill spending $820 billion, or roughly $102 billion per hour of debate.

Only ten per cent of the "stimulus" to be spent on 2009.

Close to half goes to entities that sponsor or employ or both members of the Service Employees International Union, federal, state, and municipal employee unions, or other Democrat-controlled unions.

This bill is sent to Congress after Obama has been in office for seven days. It is 680 pages long. According to my calculations, not one member of Congress read the entire bill before this vote. Obviously, it would have been impossible, given his schedule, for President Obama to have read the entire bill.

For the amount spent we could have given every unemployed person in the United States roughly $75,000. We could give every person who had lost a job and is now passing through long-term unemployment of six months or longer roughly $300,000.


Jon S. said...

Scott, I thought this quote from the estimable Barney Frank may be worth a separate post by you all on its own. In a nutshell, it perfectly captures how the House Democrats (okay, almost all Democrats) think:

"I never saw a tax cut fix a bridge. I never saw a tax cut give us more public transportation. The fact is, we need a mix," Frank said."

Scott Grannis said...

Very good point. I would add that I have never seen a politician make good business decisions.

Jon S. said...

And of course, it's a complete shibboleth that infrastructure -- in whatever shape it may be in, and it's not nearly as bad nationwide as we're always told it is -- is the responsiblity of the federal government. As I and others have pointed out before on this site, the federal percentage of total infrastructure spending is about 15%. Total infrastructure spending as a % of GDP is about the same as it ever was.

The entire debate completely misses the big picture: under our system of federalism, this kind of state and local spending -- with some exceptions, of course - is not the responsibility of Uncle Sam. If states need money for bridges and roads, let them cut spending in other areas (or raise taxes, it's up to them, even though spending ought clearly to be the first thing to look at).

Americans are happy to help their fellow countrymen out in emergencies, but I see no reason why Scott should help fund $1.5-2 billion in MTA capital improvements, or why I should help pay for $335 million to expand John Wayne Airport.

Scott Grannis said...

Another excellent point. I agree 100%. If infrastructure is really so bad, why haven't state and local governments already addressed it? Probably because it's not that bad in the first place. Whatever gets "fixed" with all this spending is probably not going to be very important, and probably less "stimulative" than spending the money on something else.