by Frank James
For those of you with a lot of time on your hands, here's a copy of the 647-page "American Recovery 5 and Reinvestment Act of 2009" the House is scheduled to vote on tonight. The spending and tax relief contained in the bill adds up to $825 billion, give or take a few billion.
A Wall Street Journal editorial provides some examples of what conservatives are opposed to in the bill.
A snippet:
We've looked it over, and even we can't quite believe it. 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.
Meanwhile, the Drudge Report is running a big headline, without flashing red police light, that reports that the bill contains $335 million for sexually transmitted disease programs.
Meanwhile, there are Democrats who aren't crazy about the stimulus plan either. Here's a lengthy excerpt from a Washington Post story:
In testimony before the House Budget Committee yesterday, Alice M. Rivlin, who was President Bill Clinton's budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.
"Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away," said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that "money will be wasted because the investment elements were not carefully crafted."
For some House Democrats, the problem is less a matter of balancing the short and long term than a shortage of focus and will on the part of the administration. Their disappointment centers on the relatively small amount devoted to long-lasting infrastructure investments in favor of spending on a long list of government programs. While each serves a purpose, the critics say, they add up to less than the sum of their parts, and fall far short of the transformative New Deal-like vision many of them had entertained.
The bill to be voted on today includes $30 billion for roads and bridges, $9 billion for public transit and $1 billion for inter-city rail -- less than 5 percent of the package's total spending. Administration officials have said they did not push for more infrastructure spending because of concerns about how many projects are "shovel ready" -- a view that House members say is held most strongly by Lawrence H. Summers, Obama's chief economic adviser.
Even though most House Democrats say they will back the plan, many reject the administration's argument, saying that infrastructure projects could easily be expedited, that the economy will need additional infusions for years to come and that the real reason for shunning infrastructure was to make room for tax cuts. Obama, with a public mandate to do something big, is missing a rare opportunity to rebuild the country, they say.
"Every penny of the $825 billion is borrowed against the future of our kids and grandkids, and so the question is: What benefit are we providing them? What are we doing for the country? It's the difference between real investment that will serve the nation for 30, 50 years and tax cuts, and that's a very poor tradeoff," said Rep. Peter A. DeFazio (D-Ore.). "I go to my district and people say, 'Yeah, I can use 10 extra bucks a week, but I would rather see more substantial investment.' We've gone through a couple bubbles that were borrowing and consumer-driven. We want a recovery that's solid and based in investment and productivity, and that points us at building things that will serve us decades to come."
So there's plenty in the bill that partisans on both sides don't like.
As people assess the proposal, they should consider what economic experts have said about what makes stimulus plans effective.
Last year, the Tax Policy Center, a joint effort by the non-partisan Brookings Institute and Urban Institute published a useful web primer on what makes a good stimulus.
An excerpt:
Fiscal stimulus can raise output and incomes in the short run when the economy is operating below its potential. To have the greatest impact with the least long-run cost, the stimulus should be timely, temporary, and targeted. It should be timely so that its effects are felt while economic activity is still below potential; when the economy has recovered, stimulus becomes counterproductive. It should be temporary to avoid raising inflation and to minimize the adverse long-term effects of a larger budget deficit. And it should be well targeted to provide resources to people who most need them and will spend them: for fiscal stimulus to work, it is essential that the funds be spent, not saved...
...The most effective fiscal policy options to stimulate the economy are those that would increase spending quickly and be short-lived. Those criteria can be met by policies that temporarily boost the purchasing power of households who are most likely to increase their spending quickly in response. Extending unemployment insurance beyond its normal twenty-six-week limit, raising food stamp benefits, or issuing refundable tax credits, all on a temporary basis, would likely provide the greatest fiscal stimulus in the shortest time...
...Policies that boost investment, such as direct spending on public infrastructure or tax incentives for businesses, are likely to have a smaller impact on the economy than policies designed to increase consumer spending. In particular, the available evidence suggests that the stimulus they provide would be small, not well-timed, or both.
If one accepts these criteria, a lot of the spending in the package seems questionable, like the infrastructure spending and, yes, the money for STD prevention.
Rivlin's concerns may be coming to pass. This may be a case of haste making waste.
Comments
There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.
Funny...I understand the government will make around 12 billion by auctioning some of the spectrum to companies offering more wireless services.
There seems to be three sides to every story. I'm waiting for the third story.
Posted by: bill r. | January 28, 2009 11:21 AM
The Wall Street Journal.
That guardian of investor protection.
Remember all those hard hitting investigative pieces they ran warning about
"securitization" fraud, Madoff, etc.?
NOT.
For their information, their darlings in WS have no profits to show. So stop b----hing about Amtrack. At least that one is a step in the direction of improving public transit.
Why would any one pay attention to an editorial page controlled by Rupert Murdock??
Particularly in a paper that failed miserably in covering the frauds that led to the debacle?
Posted by: ornery | January 28, 2009 11:57 AM
Talk about a mis-aplication of policy. The experts at the Tax Policy Center wrote their criteria for normal recessionary cycles, not a permanent loss of middle-class earning and spending power.
There is a huge backlog of shovel-ready projects that would:
1. create permanent new capacity for the middle-class to earn and spend
2. multiply that spending right here in America
- 45 million uninsured that would ALSO get the healthcare industry growing again (though this bill only partially tackles this)
- 10 year shortage of teachers that would ALSO get kids get better educated
- 10 year backlog of school construction that would ALSO kids get better educated
- 5-10 year backlog of new broadband in rural areas AND America that would ALSO generate more commerce, education, entertainment
- 2-5 year backlog of wind/solar projects that would ALSO reduce our dependence on foreign oil
MOST of this money goes through small-medium size businesses creating jobs AND preventing government bureaucracy.
Sure, even these “fast” ideas will take most of 2009 to get the money flowing but that wil be badly needed if we are at 10% unemployment by then?
At least they did not suggest tax cuts for business. What business is going hire workers when their sales are dropping. Most of those tax cuts will just get parked for better days ...at the expense of our grandchildren. (Tax cuts ARE ONLY stimulative in a growing economy - so we should delay most tax cuts till the economy starts growing again)
Posted by: Young Atheart | January 28, 2009 2:47 PM
Four hundred million for global-warming research and 2.4 Billion for carbon capture demonstration projects?
And we're suppose to lay down for this?
Paulo
Posted by: Paulo | January 28, 2009 2:57 PM
Haste make waste and PORK.
Posted by: Inky | January 28, 2009 3:00 PM
Amtrak: hard to believe they can't turn it around. I just got back from a daylong business trip to a city just over an hour away and Amtrak charged $200+ for the ticket. No special class, either. But it did arrive on time, which is saying something for domestic travel of any sort.
National Endowment for the Arts: $50 Million is far down from their highest appropriation approaching $150 Million. Those are matching grants which require co-sponsors, etc. Furthermore, the arts outdraw sports audiences in this country, so if one takes into account all the tourist $$$ generated, the NEA is a good investment.
Posted by: Kenny Bunkport ✌ | January 28, 2009 3:19 PM
How many Congressmen have even READ the bill (let alone understand it)? Has OBAMA read the bill (let alone understand it)?
For that matter, has Frank James read the bill?
Obama orders people to vote for a bill nobody has even read. One doesn't have to be "partisan" to notice that this whole exercise is a political sham.
Posted by: "Dissent is Patriotic" | January 28, 2009 3:40 PM
It is always funny to hear the two (and yes three) sides to these issues. Republicans, short sighted, always want money now!! They don't care at all about long term projects and only use that as a counter when discussion anything but tax cuts. Tax do not spur spending-I saved mine and will do it again if given the chance, as did most people. Furthermore last time I checked 1500 dollars is NOTHING these days. One months rent, food, transportation, entertainment-ONE MONTH!! After that, what...back to normal...that is not a plan. We are in this mess because everyone hates to put in the time and patiences that is required to acheive anything, especially wealth. Putting this country in the right direction requires patience and the understanding that almost every part of our infrastructure needs, energy needs, education needs have been off course for much of the past 10-20 years. You can't just turn those around overnight. Does anyone even know what carbon capturing demonstrations means? Why is this important? Maybe a bit of research by the cynics would be a good idea before commenting. Look past the horizon, not at it!!
Posted by: Matthew Van Someren | January 28, 2009 4:04 PM
You are on the beach and come upon someone who is not breathing. Do you immediately try to apply CPR or wait for a team of experts and or hope the person will recover on its own.
Unemployment is at a record level, businesses failings, housing, automobile industry in die condition.
Yeah, lets sit around and play political games and listen to those gripe who in no small part through us in the deep end of the pool.
Posted by: geek | January 28, 2009 4:36 PM
You have a reoccurring growth in your throat blocking your airway and you require treatment as well as immediate surgery. Do you allow the doctor to remove the growth and tell you come back when it grows back and we'll take it out again, knowing that this is cureable but only with long term treatment.
Short sighted, focusing only on the parts that fit your argument-typical
Posted by: Matthew Van Someren | January 28, 2009 5:50 PM
The devil is in the details. If it were just a matter of stimulating the economy, don't you think the bill would be short and sweet? But instead there are ridiculous amounts of funding being aimed at programs that have absolutely NO IMPACT on the economy. The National Endowment for the Arts is a nice idea, but do people need jobs or to see the ballet? And I am an art teacher, so you know this is serious. Likewise, Headstart is a good program, but we have so many social welfare programs already in place and we need something to allow businesses the breathing room to grow jobs. Mark my words, if the Congress doesn't go through this bloated bill with a fine toothed comb, some of these porky actions will come back to haunt them. I predict a short and bittersweet honeymoon. God help us.
Posted by: Ellen K | January 28, 2009 6:17 PM
Why did the pugs allow Bush and Paulson to blindly give the bankers an unchecked free pass to loot the American purse? Pugs are such hypocrites. Paulson and Bush cried "the sky is falling" 12 weeks before Bush left office. The bankers knew their free pass to the theft of America was going to be over once Bush was out the door. The sight of Paulson and Bush are repugnant. The Reps and Senators who voted to allow the theft need to be voted out of office. Americans are getting really tired of the lies and theft by "officials". I'd still like to see the books that Paulson was "working" from. What snakes.
Posted by: Vivian | January 28, 2009 6:24 PM
Instead of spending this money on big business and utilities and doing nothing but giving the middle class taxpayers a credit of $1000.00 we should be looking at the facts. That will not stimulate the economy for middle class, it is a joke.
Here is how I believe we could stimulate this economy:
This proposal would have a two year cap.
a.) Give all taxpayer filing married joint returns $100,000.00 voucher to purchase a home. Married filing seperate $25,000.00, single filings $50,000.00. This voucher can be used to purchase a home and thus, the houses sitting empty would be sold and off the market. For those that are in default it would pay down the debt.
b.) Same filing strategy for $10,000.00 new vehicle purchase.
c.) $5000.00 voucher for weatherization for the home they live in.
d.) $5000.00 voucher toward medical insurance or medical attention.
On making job programs:
a.) Bridges & Roads, given they are falling apart.
b.) Give all business a taxcredit of %5 for hiring %10 of a new workforce. Full time only.
c.) All welfare receipients in the U.S. should have to volunteer 10 hours a week towards working with the state and federal government to help pay for their free money. There is no reason that we keep throwing help to them, they do not help the taxpayers in anyway. We pay for their child care expenses, housing, utilities,etc. They need to give back as well. Examples they could be helpful at: Taking care of middle class homes, cleaning, painting, watching a child. VA hospitals, reading a book, helping them dress, a mentor. Cleaning up the sidewalks from garbage, planting trees, cutting grass. Anything but sitting on the couch collecting taxpayers money.
Connie Kuhns
Posted by: Connie Kuhns | February 8, 2009 11:58 AM