Saturday, February 14, 2009

Generational Theft

President Obama, addressing Congress:
All of you are committed to building a more responsible, more accountable government, and part of what that means is making sure that we're spending precious tax dollars wisely and cutting costs wherever possible. During this period of economic emergency, families are tightening their belts. So should Washington... Those of us who manage the public's knowledge will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can they restore the vital trust between the people and their government.

The $787 billion ($3 trillion plus by the time we finance it) "stimulus" bill just passed by the House at Obama's request is the exact opposite of everything Obama said - it is not responsible, accountable, wise, or doing "business in the light of day." The Democrats promised to release the bill at least 48 hours in advance of voting on it. They broke that promise and not a single representative had read the 8 inch thick, 1071 page bill before they voted on it. Zero Republicans voted for it and 7 Democrats voted against it. They are trying to rush this through so opponents can't share what's actually in the bill with the public before it's too late. Unfortunately, the Senate will pass it later this week and Obama will sign it.

Obama and the Democrats seem to be arguing that if only we flush enough taxpayer money down the toilet, our economy will come back. Just a few items:

  • $300 million for "streamlined" golf carts
  • $8 billion for high speed rail connecting LA and Las Vegas (construction will begin in about 5 years, after the environmental impact study)
  • $180 million for "diplomatic and consular services"
  • $30 million to protect the habitat of an endangered mouse in San Francisco
  • $2.2 billion to ACORN - the leftist "community organizers" who systematically engage in voter fraud.
Very little of the money will do anything to stimulate the economy when we need it - now. Most infrastructure projects won't get going for a few years. Mostly the bill is a once in a lifetime Christmas list for Democrats and a way to make government much, much bigger (and the individual much smaller). This bill will add to our already crippling national debt and could cause crushing inflation. Many critics have called it "generational theft" - this money will be repaid by our children and grandchildren.

Obama claims this bill will "create or save" 3.5 million jobs. This comes to somewhere between $225k and $275k in tax payer money per job created, even if he's right. In addition, the bill lays the framework for socialized medicine and increases federal government interference in the doctor-patient relationship. It does away with President Clinton's welfare reform that led to dramatic reductions in dependency on welfare and child poverty.

But haven't huge stimulus packages worked before? No. They failed during the Great Depression, they failed in Japan in the 90's, and Bush's mini (in comparison) package also failed. Consider Henry Morgenthau, FDR's Treasury Secretary, and his analysis of the New Deal: "We have tried spending money. We are spending more than we have ever spent before and it does not work. ... I say after eight years of this administration we have just as much unemployment as when we started ... And an enormous debt to boot!"

The economy will turn around. It's just a question of how long it will take. Most of the spending will start kicking in after the economy is picking up again, and will then cause massive inflation. Inflation has to be fought by tightening the money supply, which will slow the economy back down. Oh, and did I mention that our projected deficit for a two-term Obama presidency is $8.4 trillion?

A better plan would cut the payroll tax or the corporate tax rate (among the highest in the world). This bill will only hurt our economy, erode individual liberty, and increase the tyranny of big government.


Rick D said...

All good points-upon reading portions of the bill (unlike those who passed the bill), I had to chuckle at most of it. "Making Work Pay Credit" provides individuals with a $400 income tax credit (sometime in 2010 when you file your next years return). "New American Opportunity Tax Credit" allows one to claim up to $2,500 income tax credit for qualified tuition in 2009. Subject to change based on an upcoming study by Congress, that may require students to perform community service as a condition of taking their tuition credits. "First-time Homebuyers Credit" provides $8,000 to a new first-time homebuyer, phased out at income over $75,000; who have not owned a home in the last 3 years. (Has congress heard that banks are not offering more loans to low-income families whom would not regularly qualify for a home.)
My personal favorite: "partial exclusion of unemployment compensation" under the recovery act up to $2,400 of unemployment benefits are excluded from gross income as well as extending the benefits. (More motivation to get back to work) All of these credits are planning pointers upon completing your 2009 return sometime in 2010. I am sure this will spur on the economy in the near future.

Kyle Hommes said...

I think we should sell Florida. It has to be worth trillions and if global warming continues, it is supposed to be under water soon anyway. That's my stimulus idea.

Jon Vander Plas said...

Rick, exactly right- spending does not equal stimulus. A lot of the spending will encourage people NOT to work - the welfare provisions, unemployment, etc.

Kyle, your idea, while outlandish, is better than Obama's. I would move there - no state income tax, great weather, plus maybe they could adopt the US Constitution and actually follow it.