2009-2-7 14:56:00
David Brooks, a columnist for the New York Times wrote in the Feb 5th edition:
"In the first major episode of his administration, the stimulus package, the conventional policies so far have won. The Obama administration sent a series of stimulus principles to Capitol Hill and allowed the 'Old Bulls' in the House and Senate to write legislation. They produced sprawling bills that gathered dozens of traditional liberal ideas. The resulting bills would have been no different if Nancy Pelosi had been elected president, or Harry Reid, or any other conventional Democrat."
Obama preached that change was coming, but the major change so far has little to do with Obama's intelligence but merely the fact that he has encouraged orthodox old time party members to go on a partisan spending spree. One Senator estimates that the bill only contains about 7% spending that could stimulate the economy in the short term. Obama is stressing the importance of long term spending but does this make sense at this point in time.
If a man is drowning do you spend only 7% of your energy in saving him and 93% on arranging a cruise he will take next year? This indeed sounds silly -- but no more than this spending bill. Either Obama is lacking intelligence here or he is willfully arranging a cruise for himself at the expense of the downing citizen.
Another thing that bothers me and many others is that we have before us a 647 page spending bill and Obama has not found one item on even one page he wants eliminated. This is disappointing to those who believed him when he promised as a candidate to come down hard on "earmarks and pork."
The bill composed of a big bag of earmarks and much of it is pork, or spending that is not important to the time. It is designed to bring home the bacon to the congressperson's district.
Here's the first line in a local story in Boise today:
"The Treasure Valley could lose up to a third of a $9.6 million federal earmark for a Downtown transit center because local officials still haven't decided where to put it." (Idaho Statesman Feb 7, 2009)
This was spending earmarked for us in 2005 and we still haven't figured out what to do with it. I can just see a future headline as a result of the current stimulus bill:
"The Treasure Valley could lose up to half of a $40 million federal earmark for a Downtown homeless center because local officials still haven't decided where to put it."
Idaho and other states currently have difficulty in spending the earmarks they already have. Just imagine the stagnate unproductive money that will be just sitting there under the new stimulus bill.
Can you imagine the bureaucrats in Mississippi getting $600,000,000 to improve an old Indian trail. Imagine that by 2011 they have only managed to spend $200,000,000 and they have already gold plated the drinking fountains. Here's a possible dialog:
"Gentlemen we have been very creative in managing to spend $200,000,000 on this old dusty trail but we have to figure out how to spend the additional $400,000,000 or the government will take it back. Any ideas?"
Answer: "We could all throw a brainstorming session in the finest motel in Hawaii. We could stretch the work out for two months."
Bureaucrat: "That would only take a couple million. What are we going to do with the $398 million left over?"
Answer: "We could build some statues of famous American Indians."
Bureaucrat: "That's only a few more million. Think people; what can we do?"
Answer: "Let's just say all the leftover money is going toward environmental and global warming studies in the area and this will buy us time to funnel the money as we please. Of course, we will use it wisely on behalf of the taxpayer."
Bureaucrat: "Of course. And that is a good idea. I think we can go with that."
Some Democrats who have put together the massive spending project have issued the challenge to come up with something better. Republicans have pretty much been shut out from coming up with something better. The best their barking can manage to achieve is the trimming off of maybe a couple percent off the bill.
Here's what would be better than this bill.
Do nothing.
Why?
Because doing nothing is better than doing something harmful that will take around a trillion dollars from the private sector, increase inflation, make money less available to the people and saddle our children with massive debt and interest.
Another thing that would be better is to take Milton Friedman's idea and just drop the trillion dollars from helicopters for the public to pick up and spend.
If some type of spending is insisted upon then it should be directed to where the problem actually started: the banks and the housing market.
If money is spent it should be spent in renegotiating the worst of the housing loans. In normal times there is about a 6% default rate so we should just take the worst of the bad loans and let them default. The economy handled this in the past and it can in the future.
Next we take the rest of the loans in trouble meet the banks half way. They lower their interest a little and the government offers the homeowner some assistance in making payments. This assistance is attached to his home as a lean. If the house is ever sold for a profit then the government can take its money back out of the proceeds. If it is not sold for a profit then the government forfeits the money.
There are over 80,000 bad loans out there. If we let the worst 20,000 go and help the 60,000 then for less than two billion dollars we can provide $30,000 each in loan payment assistance. That's about one fifth of one percent of the cost of this stimulus project and would probably do as much good to the economy.
A second thing that can be done is to stimulate the construction industry. New home construction declined around 40% in 2008 and is expected to further decline this year. Rather than invest close to a trillion dollars in long term partisan political projects it would be much more advantageous to invest in new home construction and remodeling. The are a number of things that could be done here from offering low interest loans to matching down payments up to $40,000.
The final thing the government could do is this. If it has to go into deficit spending -- do not borrow the money but use our Constitutional right to print it ourselves. This way we create the money at zero interest rather than borrow it. We already spend over $200 billion a year on interest soon to be $300 billion. To expand this expenditure is disaster waiting to happen.
The bottom line is that a real stimulus could be in the works for only a fraction of the cost of the current boondoggle proposed by Obama and his Democrat majority. A person of average intelligence should be able to understand this.
Copyright © 2009 by J.J. Dewey, All Rights Reserved