Feb 15 2009

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Stimulus Scocery

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The US Special Forces have nothing on Nancy Pelsosi.

In three weeks President Obama and Congressional Democrats wrote and approved the largest spending bill in recorded history. The 1,071 page behemoth appropriates more money in one bill than the combined US national debt from 1789-1978.1

The procedural basis used to pass the bill was breathtaking in its brazenness. There were no traditional subcommittee or full committee hearings or amendments, no mark-ups, no public testimony. And on the House side, there was no intention of involving the Minority.

The bill was simply brought to the floor; the product of the biggest backroom deal in history that married liberal dogma and special interest favors under the umbrella of economic stimulus.

While notionally assembled to fix the ailing economy, the bill’s largest provisions direct truly massive and unrestrained spending on traditional liberal priorities in health, education, infrastructure and the environment, in a virtual bonanza of government-directed transfer payments, with at best, indirect or dubious impact on economic recovery.

Adding to the sense of legislative cloak and dagger, the details of the final package negotiated by the House and Senate were treated like virtual State secrets by the Congressional leadership. The final bill, whose volume rivaled the pages of War & Peace, was released at 11pm the evening before the vote. This all but guaranteed that few if any of the Members would have read the complete document before the vote.

As Joe Biden would say, “Let me say that again.”

On the most consequential spending bill in American history, most lawmakers didn’t know what they were voting for.  The cunning of Democratic leaders is only matched by the utter irresponsibility of Members who allowed this charade to occur in the first place. Forget the obvious contempt this shows for actual voters.

As Obama & Co., backslap and fist-bump their way through champagne toasts on the bill’s passage and a significant legislative victory, there is real potential for longer term damage here.

First, by rushing passage of something so large without adequate review or analysis, there is real risk of waste. Obama himself has said so.

It is a useful reminder that getting it right is just as important as getting it now.

Moreover the haste and secrecy that defined this effort rarely leads to optimum results. Consider, for instance, that no one has yet explained the metrics (or folly) of a “saved” job under the program. Also, the lack of a uniting intellectual or economic framework for the legislation, and the absence of mechanisms or protocols for fiscal restraint and accountability, are a sure fire recipe for a crisis of credibility down the road.

Second, Obama and the Democrats pulled out the rhetorical heavy artillery when challenged on the bill. The President of hope began spinning tales of irreversible economic catastrophe as unexpected resistance to his plan emerged. Apparently hope is only an effective motivator until fear is a better substitute.

Obama and the Democrats were also deliberate and successful in holding the public narrative of the Stimulus bill to an “either/or” choice. The narrative successfully caricatured opponents of the bill as opponents of economic recovery, impugning the motives of critics, which was disingenuous at best and dishonest at worst.

Indeed, the tactics and methods employed in this legislative exercise were clearly at odds with the pledges of candidate Obama.

Remember, Obama promised to transcend partisan politics and went so far as to mock it in his Inaugural address. However, with the exception of a superficial charm offensive with the GOP, there was no dedicated or tangible effort to incorporate GOP ideas. At the House retreat in Williamsburg, Obama was virtually snide and insulting in discussing GOP views. In the end, just enough was done to secure the votes of the trio of Senate Republican “Banditos” to get past the 60 vote threshold required for Senate passage.

Additionally, candidate Obama promised open, transparent and accountable government. However, adding insult to the sham legislative process, a personal presidential earmark miraculously turned up in the final House-Senate compromise bill; a not insubstantial $10 billion for high speed trains.2

What is this if not a mockery of Obama’s pledge?

Many will simply attribute all of this to “inside baseball” or parlor intrigue in the nation’s capital. Obama won the election and has a right to implement his program. But there are genuine reasons for citizen concern.

In this one vote, taken just three weeks into his term, Obama and the Democrats have added 20% of the “Bush debt” – acquired over eight years – to the national debt.  Moreover, we have been told that this spending package is only a down payment for what is to come.

Follow on Obama financial commitments are a freight train racing toward the $56 trillion unfunded liability that the federal government faces with Boomers retiring and accessing Medicare, Medicaid and Social Security. As you consider the gargantuan spending that is anticipated and required, consider a tangible and chilling fact; in 2008, the nation paid $451 billion in interest on the national debt. That is equivalent to the GDP of Sweden.3

At some point, you simply have to ask, who is going to pay for all of this?

The cosmic gamble inherent in Obama’s stimulus package is that if the economy doesn’t revive, debt will increase as tax collections will continue to fall amid a continuing slump.
Insidiously, the flood of misspent dollars dumped by the government will be chasing too few goods, sparking the terror of consumer savings, earnings and confidence– inflation.

And as interest rates rise to contain inflation, fresh and fragile bank lending, to the extent it has been restored, will be snuffed out as loans are priced out of the market in a mirror image of the “stagflation” of the 1970s.

For all these reasons, Obama’s next legislative steps cannot mimic his first. Despite the intoxicating sense of power he and the Democrats have, it is now or never on making good on his promises of a different kind of politics.

To do otherwise, quoting the President, risks catastrophe.

1. Department of the Treasury

2. Washington Post, 2-15-09

3. CIA Factbook


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