WSJ: You won't believe what's in that stimulus bill.

Discussion in 'Economics' started by JBfinancial, Jan 28, 2009.

  1. "Only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus."

    A 40-Year Wish List
    You won't believe what's in that stimulus bill.

    "Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."

    So said White House Chief of Staff Rahm Emanuel in November, and Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.
    [Review & Outlook] AP

    We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

    In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.
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    Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren't likely to help the economy immediately. As Peter Orszag, the President's new budget director, told Congress a year ago, "even those [public works] that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."
    [Review & Outlook]

    Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?

    Here's another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?

    Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.
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    As for the promise of accountability, some $54 billion will go to federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as "ineffective" or unable to pass basic financial audits. These include the Economic Development Administration, the Small Business Administration, the 10 federal job training programs, and many more.

    Oh, and don't forget education, which would get $66 billion more. That's more than the entire Education Department spent a mere 10 years ago and is on top of the doubling under President Bush. Some $6 billion of this will subsidize university building projects. If you think the intention here is to help kids learn, the House declares on page 257 that "No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools." Horrors: Some money might go to nonunion teachers.

    The larger fiscal issue here is whether this spending bonanza will become part of the annual "budget baseline" that Congress uses as the new floor when calculating how much to increase spending the following year, and into the future. Democrats insist that it will not. But it's hard -- no, impossible -- to believe that Congress will cut spending next year on any of these programs from their new, higher levels. The likelihood is that this allegedly emergency spending will become a permanent addition to federal outlays -- increasing pressure for tax increases in the bargain. Any Blue Dog Democrat who votes for this ought to turn in his "deficit hawk" credentials.

    This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living -- or dead -- Democratic interest group. As Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit.
  2. 4XQs


    WSJ is so far to the right that they're now making themselves look plain ridiculous. Of course any kind of govt spending is going to create economic activity and thus contribute to GDP aka "growth" - the holy mantra of economy over the last century.

    WSJ have an agenda, which is why I on principle never buy or subscribe to their right-wing shit. Yes, I miss out on stories that I'd otherwise like to read, but it doesn't affect my income in any way.
  3. Interesting, I'm gonna look up this whole bill.
  4. This must be "hope" and "change" that I was brainwashed with.
  5. A panel of 24 of the nation's leading civil engineers, analyzed hundreds of studies, reports and other sources, and surveyed more than 2,000 engineers to determine what was happening in the field.[/I]

    Aviation: D+

    Bridges: C the percentage of the nation's 590,750 bridges rated structurally deficient or functionally obsolete = 27.1%.

    Dams : D Since 1998, the number of unsafe dams has risen by 33% to more than 3,500.

    Drinking Water: D America faces a shortfall of $11 billion annually to replace aging facilities and comply with safe drinking water regulations. Federal funding for drinking water in 2005 remained level at $850 million, less than 10% of the total national requirement.

    Energy (National Power Grid) : D The U.S. power transmission system is in urgent need of modernization. Growth in electricity demand and investment in new power plants has not been matched by investment in new transmission facilities. Maintenance expenditures have decreased 1% per year since 1992. Existing transmission facilities were not designed for the current level of demand, resulting in an increased number of `bottlenecks' which increase costs to consumers and elevate the risk of blackouts.

    Hazardous Waste : D Federal funding for `Superfund' cleanup of the nation's worst toxic waste sites has steadily declined since 1998, reaching its lowest level since 1986 in FY05.

    Navigable Waterways : D Of the 257 locks on the more than 12,000 miles of inland waterways operated by the U.S. Army Corps of Engineers, nearly 50% are functionally obsolete.

    Public Parks & Recreation : C Many of our nation's public parks, beaches and recreational harbors are falling into a state of disrepair. Much of the initial construction of roads, bridges, utility systems, shore protection structures and beaches was done more than 50 years ago.

    Rail : C For the first time since World War II, limited rail capacity has created significant chokepoints and delays. This problem will increase as freight rail tonnage is expected to increase at least 50% by 2020.

    Roads : D Poor road conditions cost U.S. motorists $54 billion a year in repairs and operating costs--$275 per motorist. While long-term Federal transportation programs remain unauthorized since expiring on Sept. 30, 2003, the nation continues to shortchange funding for needed transportation improvements.

    Schools : D The Federal government has not assessed the condition of America's schools since 1999, when it estimated that $127 billion was needed to bring facilities to good condition. Other sources have since reported a need as high as $268 billion.

    Transit : D Transit use increased faster than any other mode of transportation--up 21%--between 1993 and 2002. Federal investment during this period stemmed the decline in the condition of existing transit infrastructure. The reduction in federal investment in real dollars since 2001 threatens this turnaround.

    Wastewater : D Aging wastewater management systems discharge billions of gallons of untreated sewage into U.S. surface waters each year. The EPA estimates that the nation must invest $390 billion over the next 20 years to replace existing systems and build new ones to meet increasing demands. Yet, in 2005, Congress cut funding for wastewater management for the first time in eight years. The Bush administration has proposed a further 33% reduction, to $730 million, for FY06.

    America's Infrastructure G.P.A.

    = D

    Total Investment Needs = $1.6 Trillion

  6. ers811


    It's like watching a nice car get crash tested.... but the car is our country, and we aren't learning anything from it -- we already know the script. The testers are just too stupid to care.

    Makes me sick to my stomach.
  7. Nice Red Herring. What does that have to do with what is in the bill?

    Keep clinging to Hope and Change....a good slogan will make everything better.

  8. Asking civil engineers how much infrastructure we need is like asking dentists how much tooth work you need.

    "um ..... plenty!"
  9. cokezero


    I don't understand isn't this what the bill is supposed to be - to throw money from a helicopter? They can't really throw it away from a helicopter and have to somehow spend it and the bill seems to be a pretty comprehensive a-bit-of-everything spending list?
  10. Fair enough.

    So you feel US infrastructure is triple A worthy or should we ask Moodys that?:D
    #10     Jan 28, 2009