Friday, February 6, 2009

Pork Stimulus Politics versus Reality


As I write these words, it looks as if the Senate will pass a somewhat diminished version of President Obama's stimulus package. That will then have to be reconciled with the version passed by the House, probably involving much horse-trading and the reinsertion of many wasteful projects approved by the House but deleted by the Senate: then both Houses will have to vote on the compromise proposal. I suspect that 'the fix is in', and the bill will proceed to President Obama for signature.

This is a complete and unmitigated disaster for the Republic.

I repeat: a complete and unmitigated disaster.

I'm not being partisan in saying this. I certainly don't speak from a Republican perspective. The Republican Party has mis-spent its way through power for years, behaving like drunken sailors on a spree - using our money. They were rightly punished for their profligacy at the ballot box last November. However, the Democratic Party has used its new dominance to pass a 'stimulus package' that's a left-wing politician's wet dream. It throws billions upon billions of dollars at every policy priority they haven't been able to fund during the years of Republican dominance, without any investigation as to whether this spending will actually benefit the Republic as a whole. No, that's irrelevant. What's important is to load down the left-wing establishment with as much pork as it can digest - more, if possible - as a sign to the hated Republicans that they're no longer in charge, and can't do a thing about it.

The irony, of course, is that Republican Senators could have stopped this monstrosity, if they'd all actually been Republicans. Far too many of them have strayed from their party's principles, ignored its base, and become no more than RINO's - Republicans In Name Only. The defection of some of their number - doubtless 'bribed' by the promise of stimulus spending for their States - has ensured that the Democrats will be able to push through this national nightmare.

And a nightmare it promises to be. The money for the stimulus package does not exist. I repeat: it does not exist. It's going to be paid for by 'borrowing', which means Treasury bonds, which means hundreds of billions more added to our national debt - already at astronomically high proportions. Our children and our childrens' children will be paying for this, long after we're dead and gone . . . and they'll curse us for the profligate spendthrifts we are. The cartoon below, e-mailed to me by Andy C., sums it up perfectly.




The Congressional Budget Office, a non-partisan financial analysis service of the House and Senate, has pointed out that the stimulus package will not, in the long term, achieve what it's (allegedly) designed to do.

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. The House bill] would have similar long-run effects . . .


The left-leaning National Public Radio is unusually frank about the effects of the stimulus package.

When congressional leaders began to assemble the mammoth economic stimulus bill, top Democrats and the Obama administration decided that there would be no earmarks: no "special projects," no pork-barrel spending. In so doing, they gave up some control over how the money is spent, leaving the decision to public servants around the country.

"Someone has to decide how money gets spent. It's either going to be Congress or the executive branch or states or municipalities," says Fred Wertheimer of the congressional watchdog group Democracy 21.

Lawmakers had good reasons for stripping earmarks from the bill, Wertheimer says, because "they are simply going to become huge targets for attacking the credibility of the package, and they may very well end up as abusive earmarks."

It was a wise political decision, he says. But pulling earmarks out of the bill changes the balance of power in the government. If members of Congress aren't writing into the bill how the money will be spent, then someone else must make those decisions — or, in this case, a lot of people.

"Because there is so much money here, and in so many different forms, there is no single pathway for the money to go out to states and localities," says Sarah Binder of the Brookings Institution.

When this bill passes, a Niagara Falls of money will flow out of Washington and into the accounts of state highway commissioners, governors and legislatures, local school boards, county executives — even mayors, Binder says.

"It raises a whole host of questions about how efficiently money can be spent, how effectively it will be spent, how quickly money can be spent, just because there's no set process here for determining how money will get out the door to create jobs or, as the president said, to save jobs," she says.

U.S. Rep. David Obey (D-WI), the chairman of the House Appropriations Committee, helped write the bill and says he doesn't like being asked about earmarks.

"We simply made a decision, which took about three seconds, not to have earmarks in the bill," he says. "And with all due respect, that's the least important question facing us on putting together this package."

Leaving out the earmarks does mean Congress will have less control over how the money is spent. But, Obey says, "So what? This is an emergency. We've got to simply find a way to get this done as fast as possible and as well as possible, and that's what we're doing."

That doesn't mean Congress will be responsible if the money is spent badly, he says. "The person who spends the money badly will be responsible. We are simply trying to build as many protections in as possible," Obey says. "We have more oversight built into this package than any package in the history of man. If money is spent badly, we want to know about it so we can hold accountable the people who made that choice. And guess what? Regardless of what we do, there will be some stupid decisions made."

As it stands now, says David Walker, a former U.S. comptroller general, the bill appears to have no mechanism for directing spending. It's left up to those state and local officials, who may or may not have the ideas or the means to spend it appropriately. And that will lead to "a series of disappointments that it's too late to do anything about," Walker says.


Do please note the unmitigated gall of Rep. Obey. I've highlighted his pertinent remarks in bold italic print. He's saying that we, your representatives, will throw your money, and the money of future generations, at the problem - but we're not responsible for how it's spent. What colossal arrogance! What incredible chutzpah! And what ideological blindness to reality!

Think about it, readers. If I were to come to you and tell you, quite casually, that I'd committed your prosperity, and the future prosperity of your children, to be spent (on my approval) to accomplish something, but that I wouldn't be responsible for my decision if things went wrong . . . how would you react? I suspect tar and feathers would be a mild response from most of those in my area! Yet this buffoon quite seriously says precisely that, and expects to get away with it - and, what's worse, he probably will! After all, who's going to hold him accountable?

The answer, of course, is that we, the voters of America, must hold our elected representatives accountable. Only by voting for good politicians, and against bad ones, can we change things in Washington: and that's not going to happen as long as we vote along party lines. There are good politicians and bad in both major parties, and in some smaller parties, and standing as independents. We need to break free of party alignment, and vote for the best person for the job, irrespective of whether or not we agree with all of their ideology. Competence trumps concepts, and reality trumps ideology, every time - if we do our part, and ensure that competent politicians, with an adequate awareness of reality, are elected to office.

President Obama has already demonstrated that his call for 'hope, not fear' is a fraud. He's pulled out the ancient and time-worn 'scare tactic' to get the stimulus package through Congress and the Senate, despite its many shortcomings, thereby proving that he's just another 'machine politician'. As Charles Krauthammer has pointed out:

"A failure to act, and act now, will turn crisis into a catastrophe." -- President Obama, Feb. 4.

Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill.

And so much for the promise to banish the money changers and influence peddlers from the temple. An ostentatious executive order banning lobbyists was immediately followed by the nomination of at least a dozen current or former lobbyists to high position. Followed by a Treasury secretary who allegedly couldn't understand the payroll tax provisions in his 1040. Followed by Tom Daschle, who had to fall on his sword according to the new Washington rule that no Cabinet can have more than one tax delinquent.

. . .

And yet more damaging to Obama's image than all the hypocrisies in the appointment process is his signature bill: the stimulus package. He inexplicably delegated the writing to Nancy Pelosi and the barons of the House. The product, which inevitably carries Obama's name, was not just bad, not just flawed, but a legislative abomination.

It's not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It's not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It's the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus -- and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress's own budget office says won't be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

. . .

The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington. By the time the stimulus bill reached the Senate, reports the Wall Street Journal, pharmaceutical and high-tech companies were lobbying furiously for a new plan to repatriate overseas profits that would yield major tax savings. California wine growers and Florida citrus producers were fighting to change a single phrase in one provision. Substituting "planted" for "ready to market" would mean a windfall garnered from a new "bonus depreciation" incentive.

After Obama's miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell -- and that this president told better than anyone.

I thought the awakening would take six months. It took two and a half weeks.


Just in case some want to fault me for quoting Krauthammer, a right-wing commentator, allow me to remind you that I've also quoted NPR, on the left, and the centrist Congressional Budget Office. All sides are in agreement; this stimulus package stinks to high heaven. It won't accomplish what its partisans promise, and it'll cripple this nation with a hideously high national debt for generations to come.

And that's not all. You think this 'stimulus package' is the only one? Think again. It's likely to be only the beginning of a trend. As David Smick points out:

This week, the Obama administration launched an angry campaign (and rightly so) targeting the greed of the financial services industry.

The big bank executives -- with their French private aircraft purchases, Las Vegas boondoggles and multibillion-dollar bonuses (despite having just received taxpayer bailout funding) -- appear politically tone deaf. Now the Treasury Department is proposing a $500,000 salary cap on senior executives of banks receiving taxpayer funding.

But here's how Washington really works. The reason for Obama's public campaign is that soon officials are likely to hand the banks a taxpayer-funded bailout potentially worth trillions of dollars. Therefore, what's happening here is the creation of old-fashioned political cover.

The administration needs this cover because it faces a horrible choice. At issue is how the Treasury arrives at a price for the banks' toxic assets in any bailout package that entails taxpayer funding.

Here's the catch: If officials value the toxic assets at too low a price, all bank stocks will collapse. The world then would declare the large U.S. banks insolvent. America would face financial Armageddon.

On the other hand, valuing the toxic assets at an artificially high price (at the taxpayers' expense) may save the banks but invites a political firestorm at a time when average folks are hurting. Thus the need for cover.

Essentially, the administration is offering the bankers an implicit deal. Even though senior executives from banks receiving government assistance will face limits on their salaries, the value of their personal shareholdings in their companies -- where for most executives the big money is -- could potentially be restored if bank stocks rise in response to the bailout. In many cases, those shareholdings are now all but worthless paper.

President Obama is being forced to provide a bank bailout because of the banks' dirty little secret: Their off-balance-sheet financial exposure is far larger than publicly acknowledged -- according to various banking analysts, their liability to losses is from four to 16 times their stated on-balance-sheet exposure to bad assets.

Thus, a bailout, with those assets stuffed into a so-called "bad bank" owned by the taxpayer, could require potentially trillions of taxpayer dollars.

. . .

The world faces a multitude of financial bubbles. These include credit card, emerging market and commercial real estate debt, along with widespread derivatives exposure including those notorious credit default swaps.

An even larger bubble could develop -- a bond market bubble -- as a result of other governments following America's lead in implementing large fiscal stimulus packages. That is because governments worldwide will soon be borrowing from the credit markets all at the same time.

. . .

Maybe our new president is wise to engage in some political taking-of-cover. He would also be wise to avoid repeating the mistakes of the previous administration. After all, it won't be long before Obama, through no fault of his own, will politically "own" the financial crisis.


Do our politicians truly care? Like hell they do. They're going to use this stimulus package - and those that'll certainly follow it in future - to feather their supporters' nests, shore up their voter base for the next election, and entrench themselves in their positions of power . . . and to hell with the Republic they serve, and the Constitution they swore to uphold when taking their oaths of office.

Makes you sick, doesn't it?

Peter

3 comments:

Anonymous said...

Peter,

Recommend you go to American Thinker and check out Nancy Pollock's article on the Cloward/Piven strategy of economic recovery.
Very eye-opening. A bit of further Googling will reveal that the new President has some personal background with Cloward/Piven.
The more folks who take the time to do some history reading on this strategy, the better the chance we can save the Republic.
By the way, your piece is right on the mark.

Farmgirl said...

Ok I'm going to go out on a limb here, and comment on a political post (hear the gasps!)

I'm also going to go out on a limb because I'm not an economist, nor do I know everything about history. This is my opinion, and only my opinion, so take it as such.

We need the WPA back. No, we're not at the same point we were in the Depression, but perhaps some stimulus in the form of actual jobs doing real things would keep us from it.

Perhaps those of us in my area know the impact that the WPA had more than the city folk... we see the products of that labor every day. Stone bridges on the smaller highways that were put together by the backbreaking labor of men just trying to feed their families. A park encircled and outlined by the same stone, with a tower built to honor Pike...

So maybe, our government should just take some of the money wasted on ten thousand dollar hammers, and hire some folks to fix shit, rather than stuffing more money, that's not backed by anything, into the hole that our economy is going down.

Of course, that's assuming those lilly-soft hands in the cities would deign to pick up a shovel or hammer, and actually sweat for a day's pay.

Anonymous said...

The problem with a modern WPA is the differences in skills. In the 1930s, hiring farmers and their teams of horses or mules to repair roads, dig sewer trenches, or using the CCC to construct cabins in National Parks worked because those were the skills people had and the way construction was done. You can't hire fifteen guys from the local labor pool to build a road today - too much special equipment is used.
The other difficulty is who is out of work. What sort of jobs will hedge-fund managers and other white-collar workers accept? And who has jobs for them, aside from the Federal government?
So while a modern WPA sounds good, I'm not certain how much benefit it would bring.
LittleRed1