Obama Spending Plan Will Throw Good Money After Bad

Joe Bell

President-elect Barak Obama went to Capitol Hill promoting his economic stimulus package proposal, which includes up to $775 billion in new spending. The plan includes tax cuts (which will make up roughly 40 percent of the package); tax credits and rebates to taxpayers, including individuals who pay Social Security and Medicare payroll taxes but do not pay income taxes; more than $100 billion in tax reductions to companies to create jobs and invest in expansion; and about $200 billion to help states meet the cost of Medicare. Congress should not pass any new spending bills, period. It doesn’t matter if they’re called “spending bills” or “stimulus bills” or “Uncle Bill.” America’s economic dilemma does not have its roots in a government that spends too little but in a government that spends too much.

On January 3, the Washington Post stripped this complex issue to its most fundamental: “The government’s hunger for cash began growing exponentially as the nation slipped into recession in the wake of a housing foreclosure crisis a year ago. Washington has since approved $168 billion in spending to stimulate economic activity, $700 billion to prevent the collapse of the U.S. financial system, and multibillion-dollar bailouts for a variety of financial institutions, including insurance giant American International Group and mortgage financiers Fannie Mae and Freddie Mac. Despite those actions, the economic outlook has continued to darken.”

Obama and the Democrats, apparently convinced that the billions already allocated was not enough, are considering hundreds of billions of dollars more in new spending to arouse the economy. The Post reported that Congress is not forecasting tax increases or spending reductions to cover the cost of the new spending, which means Washington will have to borrow the money.

Are there any politicians in Washington, regardless of party affiliation, who are aware that spending can be cut as well as increased? It’s a serious question because while the Democrat’s urge to spend is well known, the Republicans have also been eager to squander the people’s money. President George W. Bush’s fourth budget, for FY 2005, weighed in at a gargantuan $2.34 trillion. Economist Stephen Moore pointed out the Bush budget called for more spending in one year than Washington spent between 1787 and 1900.

It is time to remind President-elect Obama that during his campaign he vowed his administration would be fiscally responsible.

On September 22, 2008, during a campaign stop in Wisconsin, Obama said, “I am not a Democrat who believes that we can or should defend every government program just because it’s there. We will fire government managers who aren’t getting results, we will cut funding for programs that are wasting your money and we will use technology and lessons from the private sector to improve efficiency across every level of government.”

Less than four months after pledging to be a new type of Democrat, one who is committed to a smaller federal government, Obama proposes a massive spending package. What happened? Instead of calling for hundreds of billions of dollars in new spending why is the soon-to-be-president not working with his economic team to find places where government managers are not getting results and where programs waste money? If government spent less it would not need to drain resources from families that need their paychecks and from enterprises that create wealth. Step number one of any plan to stimulate the economy should be to reduce government spending and force Washington to take a smaller portion of the people’s purse.

The Obama proposal should be defeated. The national debt is about $10.5 trillion. The money to fund any new stimulus package will have to be borrowed. Roughly 40 percent of the debt that is held by private investors will mature in a year and when the loans are due the Treasury will be forced to borrow more money to repay them. This will all happen at a time, the Washington Post reports, when Washington “launches perhaps the most aggressive expansion of U.S. debt in modern history.”

Making matters worse, history screams the lesson that government spending schemes don’t work. Despite evidence to the contrary, today’s Democrats believe government is the answer to the nation’s ills. On April 4, 2008, the Boston Globe reported that Senator Hillary Rodham Clinton said, “I believe we should appoint a cabinet-level position that will be solely and fully devoted to ending poverty as we know it in America, a position that will focus the attention of our nation on this issue. The president would ask the poverty czar, ‘What have you done today to end poverty in America?’”

For decades the federal government has labored to end poverty. It took then-presidential candidate Clinton to stumble upon the missing piece of the puzzle – America needs a Secretary of Poverty. Such thinking is nonsense, yet it endures in the Obama proposal. More government spending has rarely helped America meet its challenges. The reverse has often been the case.

In 1979 President Jimmy Carter created the Department of Education. DOE employs about 5,000 bureaucrats at a cost of about $70 billion a year yet American students lag behind those in other nations in math and the sciences. On November 17, 2007, the International Herald Tribune reported a study by the American Institutes of Research found “the highest-performing nations were Singapore, Taiwan, South Korea, Hong Kong and Japan. American students lagged far behind those nations, but earned scores that were comparable to peers in European nations like Slovakia and Estonia ...”

Politicians who advocate federal spending as a cure for the sagging economy frequently reference the Great Depression. Michael Medved points out in his new book, “The 10 Big Lies About America,” history demonstrates that presidents who reduced spending during hard times rejuvenated the economy faster than FDR’s New Deal. When Warren G. Harding became president in 1921 he inherited a recession from the Wilson administration. By July of that year the economy was gaining momentum. Harding cut government spending by 40 percent and the economy responded. Medved wrote that when the next president, Calvin Coolidge, cut taxes further it “produced the long period of growth and rising living standards associated with the Roaring Twenties.”

The Obama administration will not spend America’s economy back to health. Obama should do what he said he would do during his campaign. There is often a difference between what “the candidate” says and what “the official” does but there will be no difference between the failure of past federal spending and future federal spending to cure the economy. The key is to do what has historically worked – lower taxes and reduce spending. Will Washington politicians ever read some history and get that message?

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Joseph Bell has hosted a radio talk show and is a former editorial writer/columnist for several Connecticut newspapers. A former liberal Democrat, Bell has not been on the conservative side of the aisle for very long. He voted for Clinton/Gore in 1992. Abandoning the convictions that he had held and defended through adolescence and into adulthood was not easy. Sincere soul-searching and a commitment to distinguish fact from fiction compelled him to accept that liberal ideology was bankrupt.

jbellopedresponse@hotmail.com