50 De-Stimulating Facts
Chapter and verse on a bad bill.

By Stephen Spruiell & Kevin Williamson

Senate
Democrats acknowledged Wednesday that they do not have the votes to
pass the stimulus bill in its current form. This is unexpected good
news. The House passed the stimulus package with zero Republican votes
(and even a few Democratic defections), but few expected Senate
Republicans (of whom there are only 41) to present a unified front. A
few moderate Democrats have reportedly joined them.

The idea
that the government can spend the economy out of a recession is highly
questionable, and even with Senate moderates pushing for changes, the
current package is unlikely to see much improvement. Nevertheless, this
presents an opportunity to remove some of the most egregious spending,
to shrink some programs, and to add guidelines where the initial bill
called for a blank check. Here are 50 of the most outrageous items in
the stimulus package:


VARIOUS LEFT-WINGERY
The
easiest targets in the stimulus bill are the ones that were clearly
thrown in as a sop to one liberal cause or another, even though the
proposed spending would have little to no stimulative effect. The
National Endowment for the Arts, for example, is in line for $50
million, increasing its total budget by a third. The unemployed can
fill their days attending abstract-film festivals and sitar concerts.

Then there are the usual welfare-expansion programs that sound nice but
repeatedly fail cost-benefit analyses. The bill provides $380 million
to set up a rainy-day fund for a nutrition program that serves
low-income women and children, and $300 million for grants to combat
violence against women. Laudable goals, perhaps, but where’s the
economic stimulus? And the bill would double the amount spent on
federal child-care subsidies. Brian Riedl, a budget expert with the
Heritage Foundation, quips, “Maybe it’s to help future Obama cabinet
secretaries, so that they don’t have to pay taxes on their nannies.”

Perhaps
spending $6 billion on university building projects will put some
unemployed construction workers to work, but how does a $15 billion
expansion of the Pell Grant program meet the standard of “temporary,
timely, and targeted”? Another provision would allocate an extra $1.2
billion to a “youth” summer-jobs program—and increase the
age-eligibility limit from 21 to 24. Federal job-training
programs—despite a long track record of failure—come in for $4 billion
total in additional funding through the stimulus.

Of course, it
wouldn’t be a liberal wish list if it didn’t include something for
ACORN, and sure enough, there is $5.2 billion for community-development
block grants and “neighborhood stabilization activities,” which ACORN
is eligible to apply for. Finally, the bill allocates $650 million for
activities related to the switch from analog to digital TV, including
$90 million to educate “vulnerable populations” that they need to go
out and get their converter boxes or lose their TV signals. Obviously,
this is stimulative stuff: Any economist will tell you that you can’t
get higher productivity and economic growth without access to reruns of
Family Feud.

Summary:
$50 million for the National Endowment for the Arts
$380 million in the Senate bill for the Women, Infants and Children program
$300 million for grants to combat violence against women
$2 billion for federal child-care block grants
$6 billion for university building projects
$15 billion for boosting Pell Grant college scholarships
$4 billion for job-training programs, including $1.2 billion for “youths” up to the age of 24
$1 billion for community-development block grants
$4.2 billion for “neighborhood stabilization activities”
$650 million for digital-TV coupons; $90 million to educate “vulnerable populations”

POORLY DESIGNED TAX RELIEF
The
stimulus package’s tax provisions are poorly designed and should be
replaced with something closer to what the Republican Study Committee
in the House has proposed. Obama would extend some of the business tax
credits included in the stimulus bill Congress passed about a year ago,
and this is good as far as it goes. The RSC plan, however, also calls
for a cut in the corporate-tax rate that could be expected to boost
wages, lower prices, and increase profits, stimulating economic
activity across the board.

The RSC plan also calls for a 5
percent across-the-board income-tax cut, which would increase
productivity by providing additional incentives to save, work, and
invest. An across-the-board payroll-tax cut might make even more sense,
especially for low- to middle-income workers who don’t make enough to
pay income taxes. Obama’s “Making Work Pay” tax credit is aimed at
helping these workers, but it uses a rebate check instead of a rate
cut. Rebate checks are not effective stimulus, as we discovered last
spring: They might boost consumption, a little, but that’s all they do.
Finally, the RSC
proposal provides direct tax relief to strapped families by expanding
the child tax credit, reducing taxes on parents’ investment in the next
generation of taxpayers. Obama’s expansion of the child tax credit is
not nearly as ambitious. Overall, his plan adds up to a lot of forgone
revenue without much stimulus to show for it. Senators should push for
the tax relief to be better designed.

Summary:
$15 billion for business-loss carry-backs
$145 billion for “Making Work Pay” tax credits
$83 billion for the earned income credit


STIMULUS FOR THE GOVERNMENT
Even
as their budgets were growing robustly during the Bush administration,
many federal agencies couldn’t find the money to keep up with
repairs—at least that’s the conclusion one is forced to draw from
looking at the stimulus bill. Apparently the entire capital is a
shambles. Congress has already removed $200 million to fix up the
National Mall after word of that provision leaked out and attracted
scorn. But one fixture of the mall—the Smithsonian—dodged the ax: It’s
slated to receive $150 million for renovations.

The stimulus
package is packed with approximately $7 billion worth of federal
building projects, including $34 million to fix up the Commerce
Department, $500 million for improvements to National Institutes of
Health facilities, and $44 million for repairs at the Department of
Agriculture. The Agriculture Department would also get $350 million for
new computers—the better to calculate all the new farm subsidies in the
bill (see “Pure pork” below).

One theme in this bill is
superfluous spending items coated with green sugar to make them more
palatable. Both NASA and NOAA come in for appropriations that properly
belong in the regular budget, but this spending apparently qualifies
for the stimulus bill because part of the money from each allocation is
reserved for climate-change research. For instance, the bill grants
NASA $450 million, but it states that the agency must spend at least
$200 million on “climate-research missions,” which raises the question:
Is there global warming in space?

The bottom line is that there
is a way to fund government agencies, and that is the federal budget,
not an “emergency” stimulus package. As Riedl puts it, “Amount
allocated to the Census Bureau? $1 billion. Jobs created? None.”

Summary:
$150 million for the Smithsonian
$34 million to renovate the Department of Commerce headquarters
$500 million for improvement projects for National Institutes of Health facilities
$44 million for repairs to Department of Agriculture headquarters
$350 million for Agriculture Department computers
$88 million to help move the Public Health Service into a new building
$448 million for constructing a new Homeland Security Department headquarters
$600 million to convert the federal auto fleet to hybrids
$450 million for NASA (carve-out for “climate-research missions”)
$600 million for NOAA (carve-out for “climate modeling”)
$1 billion for the Census Bureau


INCOME TRANSFERS
A
big chunk of the stimulus package is designed not to create wealth but
to spread it around. It contains $89 billion in Medicaid extensions and
$36 billion in expanded unemployment benefits—and this is in addition
to the state-budget bailout (see “Rewarding state irresponsibility”
below).

The Medicaid extension is structured as a
temporary increase in the federal match, but make no mistake: Like many
spending increases in the stimulus package, this one has a good chance
of becoming permanent. As for extending unemployment benefits
through the downturn, it might be a good idea for other reasons, but it
wouldn’t stimulate economic growth: It would provide an incentive for
job-seekers to delay reentry into the workforce.

Summary:
$89 billion for Medicaid
$30 billion for COBRA insurance extension
$36 billion for expanded unemployment benefits
$20 billion for food stamps


PURE PORK
The
problem with trying to spend $1 trillion quickly is that you end up
wasting a lot of it. Take, for instance, the proposed $4.5 billion
addition to the U.S. Army Corps of Engineers budget. Not only does this
effectively double the Corps’ budget overnight, but it adds to the
Corps’ $3.2 billion unobligated balance—money that has been
appropriated, but that the Corps has not yet figured out how to spend.
Keep in mind, this is an agency that is often criticized for wasting
taxpayers’ money. “They cannot spend that money wisely,” says Steve
Ellis of Taxpayers for Common Sense. “I don’t even think they can spend
that much money unwisely.”

Speaking of spending money
unwisely, the stimulus bill adds another $850 million for Amtrak, the
railroad that can’t turn a profit. There’s also $1.7 billion for
“critical deferred maintenance needs” in the National Park System, and
$55 million for the preservation of historic landmarks. Also, the U.S.
Coast Guard needs $87 million for a polar icebreaking ship—maybe global
warming isn’t working fast enough.

It should come as no surprise
that rural communities—those parts of the nation that were hardest hit
by rampant real-estate speculation and the collapse of the
investment-banking industry—are in dire need of an additional $7.6
billion for “advancement programs.” Congress passed a $300 billion farm
bill last year, but apparently that wasn’t enough. This bill provides
additional subsidies for farmers, including $150 million for producers
of livestock, honeybees, and farm-raised fish.

Summary:
$4.5 billion for U.S. Army Corps of Engineers
$850 million for Amtrak
$87 million for a polar icebreaking ship
$1.7 billion for the National Park System
$55 million for Historic Preservation Fund
$7.6 billion for “rural community advancement programs”
$150 million for agricultural-commodity purchases
$150 million for “producers of livestock, honeybees, and farm-raised fish”


RENEWABLE WASTE
Open
up the section of the stimulus devoted to renewable energy and what you
find is anti-stimulus: billions of dollars allocated to money-losing
technologies that have not proven cost-efficient despite decades of
government support. “Green energy” is not a new idea, Riedl points out.
The government has poured billions into loan-guarantees and subsidies
and has even mandated the use of ethanol in gasoline, to no avail. “It
is the triumph of hope over experience,” he says, “to think that the
next $20 billion will magically transform the economy.”

Many of
the renewable-energy projects in the stimulus bill are duplicative. It
sets aside $3.5 billion for energy efficiency and conservation block
grants, and $3.4 billion for the State Energy Program. What’s
the difference? Well, energy efficiency and conservation block grants
“assist eligible entities in implementing energy efficiency and
conservation strategies,” while the State Energy Program “provides
funding to states to design and carry out their own energy efficiency
and renewable energy programs.”

While some programs would spend
lavishly on technologies that are proven failures, others would spend
too little to make a difference. The stimulus would spend $4.5 billion
to modernize the nation’s electricity grid. But as Robert Samuelson has
pointed out, “An industry study in 2004—surely outdated—put the price
tag of modernizing the grid at $165 billion.” Most important, the
stimulus bill is not the place to make these changes. There is a
regular authorization process for energy spending; Obama is just trying
to take a shortcut around it.

Summary:
$2 billion for renewable-energy research ($400 million for global-warming research)
$2 billion for a “clean coal” power plant in Illinois
$6.2 billion for the Weatherization Assistance Program
$3.5 billion for energy-efficiency and conservation block grants
$3.4 billion for the State Energy Program
$200 million for state and local electric-transport projects
$300 million for energy-efficient-appliance rebate programs
$400 million for hybrid cars for state and local governments
$1 billion for the manufacturing of advanced batteries
$1.5 billion for green-technology loan guarantees
$8 billion for innovative-technology loan-guarantee program
$2.4 billion for carbon-capture demonstration projects
$4.5 billion for electricity grid


REWARDING STATE IRRESPONSIBILITY
One
of the ugliest aspects of the stimulus package is a bailout for
spendthrift state legislatures. Remember the old fable about the ant
and the grasshopper? In Aesop’s version, the happy-go-lucky grasshopper
realizes the error of his ways when winter comes and he goes hungry
while the industrious ant lives on his stores. In Obama’s version, the
federal government levies a tax on the ant and redistributes his wealth
to the party-hearty grasshopper, who just happens to belong to a
government-employees’ union. This happens through something called the
“State Fiscal Stabilization Fund,” by which taxpayers in the states
that have exercised financial discipline are raided to subsidize
Democratic-leaning Electoral College powerhouses—e.g., California—that
have spent their way into big trouble.

The state-bailout fund
has a built-in provision to channel the money to the Democrats’ most
reliable group of campaign donors: the teachers’ unions. The current
bill requires that a fixed percentage of the bailout money go toward
ensuring that school budgets are not reduced below 2006 levels. Given
that the fastest-growing segment of public-school expense is
administrators’ salaries—not teachers’ pay, not direct spending on
classroom learning—this is a requirement that has almost nothing to do
with ensuring high-quality education and everything to do with ensuring
that the school bureaucracy continues to be a cash cow for Democrats.

Setting
aside this obvious sop to Democratic constituencies, the State Fiscal
Stabilization Fund is problematic in that it creates a moral hazard by
punishing the thrifty to subsidize the extravagant. California, which
has suffered the fiscal one-two punch of a liberal, populist Republican
governor and a spendthrift Democratic legislature, is in the worst
shape, but even this fiduciary felon would have only to scale back
spending to Gray Davis–era levels to eliminate its looming deficit.
(The Davis years are not remembered as being especially austere.)
Pennsylvania is looking to offload much of its bloated
corrections-system budget onto Uncle Sam in order to shunt funds to
Gov. Ed Rendell’s allies at the county-government level, who will use
that largesse to put off making hard budgetary calls and necessary
reforms. Alaska is looking for a billion bucks, including $630 million
for transportation projects—not a great sign for the state that brought
us the “Bridge to Nowhere” fiasco.

Other features leap out: Of
the $4 billion set aside for the Community Oriented Policing
Services—COPS—program, half is allocated for communities of fewer than
150,000 people. That’s $2 billion to fight nonexistent crime waves in
places like Frog Suck, Wyo., and Hoople, N.D.

The great French economist Frédéric Bastiat called politics “the great fiction through which everybody endeavors to live
at the expense of everybody else.” But who pays for the state bailout?
Savers will pay to bail out spenders, and future generations will pay
to bail out the undisciplined present.

In sum, this is an $80
billion boondoggle that is going to reward the irresponsible and help
state governments evade a needed reordering of their financial
priorities. And the money has to come from somewhere: At best, we’re
just shifting money around from jurisdiction to jurisdiction, robbing a
relatively prudent Cheyenne to pay an incontinent Albany. If we want
more ants and fewer grasshoppers, let the prodigal governors get a
little hungry.

Summary:
$79 billion for State Fiscal Stabilization Fund


http://article.nationalreview.com/?q=YjcyODIyZGM2MGU1ZDdkNDgxZDc3OTNjYjM4ZDY1ODI