The President this week stated that there would be a "catastrophe" if the so-called "stimulus" bill isn't passed immediately. But the only "catastrophe" I see coming is the bill itself. Yesterday the WSJ referred to "The Stimulus Tragedy," and it seems an apt descriptor for what we're seeing emerge from Capitol Hill.
From the WSJ:
...Mr. Obama chose to let House Democrats write the bill, and they did what comes naturally: They cleaned out their intellectual cupboards and wrote a bill that is 90% social policy, and 10% economic policy. ... It is designed to support incomes with transfer payments, rather than grow incomes through job creation.
This captures the essence of the bill. 90% social policy and 10% economic policy is exactly the scenario, along with payoffs to Leftist supporters such as the entertainment industry. As we pull the covers back on the bill, we find (as expected in a spending bill of this magnitude) numerous egregious examples of spending that will result in little or no economic benefit. This bill makes the "Bridge to Nowhere" look like a masterpiece of civil engineering and governmental wisdom.
Despite the high-schoolish taunts of our Buffoon-in-Chief, make no mistake: this is a liberal spending bill with little or no economic stimulative value. The Democrats cannot pass their leftist policies through normal legislative channels, so they are burying the spending in this bill. Congress is not accelerating recovery, they are accelerating the leftist philosophical train-wreck that they have been desiring for decades.
The Left employed the term "voodoo economics" when referring to Reagan's supply-side stimulus of the 1980s. We really should coin a new term for this package - I propose "kindergarten economics", since the proposals are so childishly ridiculous. The WSJ focuses on the economic silliness that is being employed:
So there it is: Mr. Obama is now endorsing a sort of reductionist Keynesianism that argues that any government spending is an economic stimulus. This is so manifestly false that we doubt Mr. Obama really believes it. He has to know that it matters what the government spends the money on, as well as how it is financed. A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP.
But that same dollar can't be conjured out of thin air. The government has to take that dollar away from someone else -- either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative.
The Journal actually hearkens back to the Reagan days in their writeup:
We should add how different this is from the 1980s or even the 1960s. Democrats added business tax cuts to the Reagan package of 1981, while Jack Kennedy's chief economist (Walter Heller) promoted marginal rate tax cuts on stimulus grounds in the 1960s. Yet Mr. Obama, on Thursday, dismissed any such tax cuts as "the same tired arguments and worn ideas that helped to create this crisis." That's rhetoric for a campaign, not for a President hoping to rally bipartisan support.
Permit me to sidetrack for a moment and focus on that last sentence - what we have seen over the last month or so is nothing more than a full-time re-election campaign. Obama's re-election efforts began on November 5th, 2008. The use (abuse) of his campaign mailing list, his dismal inauguration speech, and his "same tired arguments" blather is campaign fodder. As Rush Limbaugh often states, the Left, and Obama in particular, are not interested in governing - they are interested in gaining and retaining power, and that is what we see in Obama's rhetoric and in his actions.
But back to the "stimulus". The WSJ states "The biggest gamble with this stimulus is what it means if the economy doesn't recover." That does not concern me as much as the question "what if the economy recovers quickly?" Several economists have been making the case for doing nothing. It is quite possible (and in my opinion, quite probable) that the economy would recover without any legislation for "stimulus." But what if the package passes and recovery occurs? Does correlation necessarily equal causation? Of course not. But the media will certainly portray it as such. And the O becomes (more of) a savior than he's been portrayed already. This may be the ultimate "damned if you do, damned if you don't" situation. (I should note: I am by no means rooting against recovery - I am anticipating the press spin that will occur if recovery is rapid)
The WSJ sums it up: The tragedy of the Obama stimulus is that we are getting so little for all that money.