Lobbyists and pork-barreling politicians are opportunists, always trying to hitch their wagons to the latest political trends. A few years ago, the issue was national security. A few months ago, the fashionable political trend was “infrastructure.” Now, suddenly, it is “economic stimulus.”
The Bush-Pelosi stimulus plan calls for giving millions of people $600 each. This is going to do practically nothing about the recession we are entering, but both Republicans and Democrats want to look like they are doing something, anything, about the economy.
The problem is that the Bush-Pelosi plan left the Senate out of the planning — and boy are senators pissed. In the State of the Union address, Bush warned people — he did not mention the senate by name — not to change the plan because any major changes might kill it. But still, senators are plotting to have their say — meaning, load up the plan with pork.
Ageing decreases the function of various bodily systems, including the reproductive system. cialis without prescription uk Smoking and drugs congests blood arteries, while drinking desensitizes penis, thus leading to erection woes in the bedroom, pfizer viagra samples pharmaceutical companies have come up with the solution called anti-impotence pills. Here are few of them: Ginkgo biloba: It is highly effective viagra india prices (84%) in treating anti-depressant related sexual dysfunction. levitra buy generic Kamagra-reliable ED drug This is the name of prominent, reliable, functional and widely recommending medicine for male sensual problem. So no surprise that, yesterday, ten senators (some reports say 22) sent a letter to Pelosi and other Congressional leaders advocating “a targeted investment in transportation infrastructure as part of any stimulus package.” They propose $17.3 billion worth of projects that, they say, are “ready to go,” meaning the engineering and design work is done. Although the cover letter discusses “transportation” projects, the projects listed in an attachment are all transit projects.
The senators’ cover letter says that “every dollar spent” by the federal government on transportation “generates about $5.70 in economic activity.” Such numbers come from “input-output analyses” that are just one step away from fabrications. Someone using this technique could show that digging holes and burying money in the ground will generate $5 in economic activity for every dollar buried. This particular number is especially laughable with regard to transit, which is an increasingly unproductive industry.
Even a $5 billion transportation package is not enough for Minnesota Representative Jim Oberstar, who wants a $15 billion transportation stimulus package. (Note that this link is to a construction industry web site.)
The big problem with spending general funds on transportation — highways or transit — is that such subsidies separate users from producers. Transit agencies are unresponsive to transit users’ needs because the agencies get most of their funding from general funds or gas taxes. Highway agencies were more responsive to drivers’ needs when the agencies were funded exclusively or mainly out of gas taxes and other user fees. The more we fund transportation out of general funds the more we will see bridges to nowhere and empty light-rail trains.
both Republicans and Democrats want to look like they are doing something, anything, about the economy
Not only that, but there’s pretty much no easier way to raise approval rating than to cut taxes and/or give out rebates.
I guess we’re supposed to feel better off if we go buy $600 worth of thneeds.
It’s been awhile since Randal and I agree. A-men bruddah. Deukmejian in CA did this very thing, which p*ssed away the surplus and did nothing for the state.
DS
This is not a tax cut, if it was, only the people that paid taxes would be receiving a refund. This is a tax shift because many of the people receiving the money will not have paid the taxes.
This is the classic robbing of Peter to pay Paul to buy votes for politicians.
A lot like transit robbing auto and truck taxes to build transit boondoggles!
How funny is it that one of the signers of the letter is Sen. Ted Stevens, famous for the “bridge to nowhere” and this.
A shrewd observed remarked (I cannot remember where) that this tax rebate really amounts to a loan from the federal government to you, since you will eventually have to repay the additional debt that gets piled up, most likely in the form of higher taxes.
No surprise that the Alaska delegation has multiple signatories on the letter (Murkowski and Stevens — where’s Don Young?). Also, Oberstar is legendary for pork-barreling in Minnesota (and for pretention), so it is no surprise that his name is affixed.
The economic impact claims sounds like standard, industry rent-seeking boilerplate. It would be good to have an upcoming post on the use (and misuse) of input-output and other regional economic models in the selling of public mega-projects (e.g. sports stadia). They are as mysterious as transportation models, and their forecasts seem to carry as much weight in policy debates, even when they are dead wrong.
A shrewd observed remarked (I cannot remember where) that this tax rebate really amounts to a loan from the federal government to you, since you will eventually have to repay the additional debt that gets piled up, most likely in the form of higher taxes
It shouldn’t take a shrewd observer to realize this: it should be obvious. It seems that most people don’t really care about national debt. They view it as a problem that will have to be addressed later, by someone else. It’s indicative of the kind of short-sighted thinking that planning is (theoretically) supposed to improve upon.
It’s too bad because they actually had the deficit down in the $160 bln range last year. If they could hold spending to simply growing it at the rate of inflation, we’d have a surplus in the next fiscal year. I would have thought the prez could get some mileage out of simply declaring that he’d veto any budget not in balance. He could say that we’re only $160 bln away (not a big number in the context of a 2 trillion plus budget), and say that Congress could get there any way they want except tax increases nad cutting war funding. I think that would have went over well with the public, whhich probably has no idea how close the federal budget was to balance in fiscal ’07. He could have left office with a balanced budget, which would have been a nice trick to pull off after the really outsized deficits in 2003 and 2004. Not his style I guess, and the new majority has no problem tacking on debt just like the last Congress. Oh well…
I would have thought the prez could get some mileage out of simply declaring that he’d veto any budget not in balance
Whatever happened to the “Contract With America” and its balanced budget amendment?
I guess Republicans only care about balancing the budget and being “fiscally responsible” when there’s a Democrat in the Oval Office.
Actually there are severe and continuous Republican budget cuts. Ask anyone. The media incessantly reports on how the budget has been sliced to nothing by the Republican budget cutters. At least those are the reports interspersed with those bemoaning how the Republicans have spent profligately. But seriously, if you ask the average citizen who watches the 6:00 news they’ll be quite well educated on how every important program has been severely cut. And yet the budget grows like mushroom year-by-year. We all know that education spending has been sliced to the bone, the marrow really, and yet the education budgets keep growing at double digits year by year. One of those things I guess. Also the Republicans eliminate regulations. By now there must be no regulations left at all. And yet the Federal Register grows year by year adding volume after volume of regulations. Just one of those paradoxes.
It’s almost like the Republicans are so scared of being beaten on for phantom budget cuts, that they spend money hand over fist, although there’s rarely much in the way of a PR benefit in it for them.
It shouldn’t take a shrewd observer to realize this: it should be obvious. It seems that most people don’t really care about national debt. They view it as a problem that will have to be addressed later, by someone else.
The GF, a very shrewd gal near the pinnacle of her profession (likely D4P has seen a news article about her or her work), asks simply: honey, what are you going to spend your tax rebate on?
She doesn’t want to hear my protestations on buying votes and repaying later – she yanks my chain by emulating what 80% of the populace will ask, without thinking of anything else. I get funny looks when I say I’m going to buy a foreign currency doing well against the dollar.
Anyway, this is an election year. Stupidity reigns in the land of the distracted and underinformed.
DS
D4P,
The problem with national debt is that no one has an incentive to really reduce it. Congress is elected to short terms (even Senators only get 6 years) and debt reduction is essentially a long-term problem. Any credit to be attributed, assuming there is any, would accrue to the next officeholder. The exception is congressmen getting re-elected, which is also uncertain. They know they can earn more notoriety by passing short-term, but high-profile measures (tax rebate, high-profile infrastructure project).
Figurative “contracts” are easily broken in Congress. Many conservatives, such as Gingrich, and more recently Greenspan, have argued that most of the principles underlying this contract have essentially been broken. Deficit spending is far easier than it seems, whether a Democrat or a Republican is in office. Since the national debt is such a low-profile item for most voters, getting away with deficit spending is not much of a punishable defense. Reagan financed his run-up in defense spending during the 1980s with deficits. Republicans often argue that we can “grow our way out of recession.” Some say this because they truly believe it, despite recent evidence to the contrary. Others say it because it soothes most of the objections to deficit spending. How many of us are willing to undertake the effort to empirically test these assumptions?
When Republicans propose spending reductions, they are often targeted at unpopular programs (e.g. foreign aid and anything that might fall under the broad title “welfare.” Nevermind that the largest items in the federal budget continue to be Medicare/Medicaid, Social Security and national defense (with debt interest close behind). Failure to address these programs means that there will never be any meaningful reductions in federal spending. Election-year politics, it goes without saying, also have something to do with it.
Eddie, you’re mostly right about Bush’s budget-balancing options. Remember though, that, even several years ago, CBO’s projections indicated that the deficit would slowly decline through roughly 2007-08, but would then rebound. This trend will only be accelerated by the recent economic slowdown.
This is a great idea, How about a check for all every month.
Howard in Australia managed to run surplusses and pay off Australia’s national debt. Cut taxes too. Pretty impressive stuff.
How about getting rid of payroll taxes and letting the people spend their hard earned money to stimulate the economy? While yer at it, keep the Federal Reserve from tinkering with the economy and creating artifical bubbles. Stop devaluating the currency, too.
The war in Iraq has cost a lot of money too. As for “infrastructure” when the politrickers talk, this mostly about building new roads never mind fixing existing ones and restoring the privately built transit lines that the politrickers trashed in the past for the sake of building more roads.