Americans have been trying to tell Washington for the past week that the “stimulus bill” is not the change they were asking for last November. Unfortunately, the President and Congress are not listening. The Senate is poised to pass a “stimulus” bill tomorrow that 62% of Americans flatly reject as “too much spending and too little tax cuts”. While the details of this plan have been debated to the point of exhaustion, including here in the Foundry, not enough people are debating the fundamental changes to the American way of life that will occur if this bill is passed. Even if the economy gets better overnight, we are still welcoming a new era of Government control over our lives.
Hello Welfare: The “stimulus” bill effectively ends welfare reform as we know it. In fact, the House version contains $264 billion (32%) in new means-tested welfare spending. This represents about $6,700 in new welfare spending for every poor person in the U.S. But this welfare spending is only the tip of the iceberg. The bill sets in motion another $523 billion in new welfare spending that is hidden by budgetary gimmicks. If the bill is enacted, the total 10-year extra welfare cost is likely to be $787 billion.
Goodbye Federalism: One thing that is certain, if this bill passes; it will fundamentally change the balance of power between the federal government and state governments. If a Governor has spent years balancing his state budget only to have the federal government now double certain state funds in time of “emergency”, they will never be able to restrain state spending again. Plus, it rewards fiscally irresponsible states with the tax dollars of Americans in states that have sound budgets; i.e. robbing Indiana to pay Illinois.
Spending does not suddenly become stimulating if it is funded by Washington instead of state governments. Either way, all spending “injected” into the economy must first be taxed or borrowed out of the economy. It is a zero-sum transfer that does not create any new demand, regardless of which level of government is doing the taxing, borrowing, or spending. In this case, the economic positive of states adding $200 billion to the economy will be negated by Washington first having to borrow $200 billion out of the economy.
Hello Government-Controlled Health Care: The experts at Heritage often refer to the “Tipping Point” of Health Care. We are getting dangerously close to the federal government controlling more of health care spending than the private sector. The President guaranteed this happening by expanding SCHIP last week. The “stimulus” bill will make it happen even faster. Government controlled health care has been on the liberal agenda for years, but the public’s negative response to it in 1992 derailed the plans. Now, we are witnessing a stealth attack at this issue, without public debate. Health care has fallen off the left’s agenda for the rest of 2009, because liberals have already scored two major victories without the public even noticing.
Veiled under this massive economic stimulus proposal are profoundly controversial and far-reaching health care provisions that would set the country on a path toward more fiscal irresponsibility, mounting unfunded entitlement liabilities, and less control of families over their personal health care decisions. If Congress wants to enact such provisions, it should do so not tagged on a fast-tracked stimulus bill but with a full and public debate so that the American people understand the impact of these health care decisions on their lives.
Goodbye Jobs: This bill highlights a tired Washington ideology that Congress can actually “create” jobs rather than stimulate their creation. This ideology can now be labeled as a habit. By focusing the relatively small jobs portion of the bill on infrastructure, the Congress assumes that these are the jobs that need filling. In fact, these are the jobs that Union bosses want Congress to create because they can drive up labor rates on these types of projects. But jobs are not easily transferable, which means that many of the now unemployed would not benefit from construction jobs. They would benefit from tax cuts that spur businesses to increases wages and hire more workers. Efforts to use infrastructure spending failed to lift the U.S. economy out of the Great Depression. Infrastructure projects are slow to implement, frequently starting after an economic recovery has already begun.
Hello Big Government: The House and Senate versions of the ‘stimulus’ bill will irreversibly make government bigger, and not surprisingly, it will double the size of the departments that should be looking to make cuts. The Senate ‘compromise’ actually increases the Energy Department’s take with little notice. Currently, the Department of Energy has a roughly $28 Billion annual budget. The ‘stimulus’ gives them a $40 Billion bonus, before Congress even starts debating their next budget, which will also surely increase.
Since the 1970s, federal per-student spending has more than tripled while student test scores and graduation rates have remained flat. Despite this, the House version of the ‘stimulus’ bill doubles the size of the Department of Education. These policy courses are irreversible, because it is unlikely that in one year or two, Congress will heroically vote to cut their budgets in half.
The Titanic: The debate over President Obama’s ‘stimulus’ plan has been relatively short and focused on spending. It is right to examine this spending. But we must also examine what our government will look like when the economy recovers, and considering the course we are on now, we should rename this bill, “The Titanic”.