Stimulus bill unaffordable, bad policy



Column by Margaret Schmidt

I do not understand the economics of spending money you don’t have.

The government’s plan and assumed role to spend its way out of the recession via the American Recovery and Reinvestment Act of 2009 has defied logic from the very start.

Here’s a clear interpretation of the ARRA: In its indigestible, 1,071-page glory, the Stimulus Bill is little more than a vehicle for a shamefully expensive and unprecedented expansion of federal bureaucracy.

What is there to misinterpret? Instead of cutting wasteful government spending through a comprehensive analysis of the budget, as was suggested by 2008 Republican presidential candidate John McCain, the Democrats chose to create new, ill-defined programs backed by nonexistent funds.

President Barack Obama preyed on the deepening vulnerabilities of the hurting public to advance his unaffordable agenda at the expense of our generation. A year later, it is no wonder that the Stimulus Bill continues to receive a “bad rap.”

Sure, there may be modest (and that’s a generous adjective) relief in the short-term. The stock market’s certainly healthier than it was a year ago. We’ve got these highway signs beside construction projects touting the success of our taxpayer dollars at work, and indeed some of these overdue projects will create jobs. And the bill included $288 billion in tax relief.

But the improved stock market, tax relief and aid for the vulnerable and visual reminders of our cities’ infrastructural rejuvenation does nothing to assuage my fears about our country’s economic future.

New highway signs don’t placate my concerns. They remind me the Stimulus Bill committed my generation (and potentially the next) to $507 billion in government spending at a time when the government is broke.

Let’s evaluate the accomplishments of the ARRA a year later.

The White House boasts to having saved or created anywhere from 640,000 to 1 million jobs. But everyone should question the determinability of these figures, little more than estimations, yielded by some unknowable means.

More jobs are being created and saved in the public sphere than in the private sphere. Recent USA Today analysis found the average federal worker is making $71,206, compared to an average income of $40,331 in the private sector. That’s not a recipe for growth.

Since passage of the Stimulus Bill, unemployment has soared. (The administration’s forecast that the unemployment rate would peak at 8 percent and decline in the summer was a little off.)

Some suggest while it may be morally compelling to take action in dire cases, extending the period of time during which people receive unemployment benefits is a sure way to increase the unemployment rate, because those who have long been unemployed may wait until the benefits are about to expire to seek work.

Moreover, economist Lawrence Katz contends an extended period of receiving benefits gives people more time to wait for the possibility of rehire by their former employee.

While the theories are not universally applicable, these findings are supported by the fact that following the implementation of ARRA, unemployment rose from 7.6 percent to a terrifying 10.2 percent by October 2009, despite a decrease in new unemployment benefit claims.

This is not to say all of the benefits and social-welfare measures taken in the ARRA were not timely or necessary. Americans were and are struggling in the wake of an economic devastation second only to the Great Depression. But certain measures, despite their intentions, can hinder recovery.

The ARRA, so ironically named, is a glaring hindrance to recovery with an unjustified price tag. Stimulation from the ARRA has and will continue to be too costly, meager and slow to justify the tremendous addition to our debt.

The Congressional Budget Office has predicted that our national debt will reach $15 trillion by the end of 2020. Servicing the debt, which is expected to triple in cost over the next ten years, will even further inhibit economic growth. In the meantime, we can enjoy modest tax breaks and an improved South Limestone now, but a serious reckoning lies ahead.

This generation is unfairly saddled with the unenviable task of paying off a gigantic debt. Collectively bearing such a colossal burden is difficult to personalize or comprehend. But financing the economic experiments of the current administration and Congress will undoubtedly take a personal toll, straight from our bank accounts.

A country $12.4 trillion in debt isn’t free. Let’s not fool ourselves. The reality is this:  Once the biggest lender nation in the world, America is now the biggest borrower. The ARRA was a huge mistake, and eventually we will have to come to terms with the question Washington refuses to answer — how are we going to pay for it?