American Recovery and Reinvestment Act of 2009 gets defanged by the CBO Report ver 2.0
While on a typical blogging junket, I found an article on the notably Left-leaning blog, The Political Animal. Decent, Lefty blog as Lefty blogs go, but that isn’t the point. They have an article posted, CBO PESSIMISTIC, FINDS NEED FOR STIMULUS . This particular article somehow supports the theory that we need a “stimulus,” now! Well, quite interested in their outlook and conclusion, I went to the source for myself, the CBO (Congressional Budget Office). However, I found information quite to the contrary, just posted today.
Excerpt from McClatchy, via The Political Animal.
McClatchy-The nation’s current recession is likely to be the longest since World War II, and by some measures could be the worst since the Great Depression, a new Congressional Budget Office forecast said Tuesday.
Without a major economic stimulus plan, “the shortfall in the nation’s output relative to its potential would be the largest — in terms of both length and depth — since the Depression of the 1930s,” said new CBO Director Douglas Elmendorf in testimony prepared for the House Budget Committee.
The analysis is sure to add important momentum to the effort to enact an $825 billion stimulus by mid-February.
Fair enough, the highly regarded CBO stated we need an economic stimulus, there are just a few problems with this claim. But before we get into the CBO data, I would like to address a situation that is conveniently overlooked by most proponents of the the Highway Robbery Bill of 2009. We won’t see the money till late 2010.
From the McClatchy article cited on The Political Animal.
CBO already gave House Democrats good news Monday night, estimating that about 64 percent of the funds would go into the economy by Sept. 30, 2010.
The problem here is that some experts figure we will be coming out of the by 2009 and feeling the effects of recovery by 2010. Will things get worse? Yes, they will, financial constriction is an inevitable result of a massive recession. Unemployment will more than likely reach 10%, if not higher, consumer and business spending will be dramatically reduced for quite awhile, and the housing market will hit rock-bottom. This is the simple reality of it. However, how will an infusion of government capital, after the recession is over, help quell its effects now? It won’t.
Onto the CBO data, from Congressional Budget Office, Douglas W. Elmendorf, Director’s Blog.
Click on image to enlarge.
You will notice Division B-Revenues and Division B-Net Impact on the Deficit, this correlates the estimated government revenues versus the increase in the stimulus package will incur on the deficit, we are consistently in the red. Over ten years, $815.8 billion is added to the deficit, while government revenues are down -$211.8 billion.
Of course it could be argued that you don’t cut taxes while engaging in such massive government spending. And if you argued that point you would be correct, nevertheless, there is no need to cut taxes and spend like a drunken sailor. Nor, is there any need to increase taxes and spend like a drunken Airman. Well targeted tax cuts on issues such as capital gains, corporate taxes, consumer payroll taxes, social security, while engaging in less government spending , leaving interest rates alone, and better monetary controls sparks enormous economic growth.
The next obvious question is why would he government do this? The answer is it is nothing more than political positioning by the White House, Far Left Senators, Progressive Representatives, and frightened-spineless Republicans who wish to further their power through a massive increase in the size of government.
Whether you consider yourself a Republican, Conservative, Democrat, or Progressive, I suggest you get over it. If you think Madhoff pulled off the greatest scam ever, you haven’t seen the Federal government in action.