As Washington begins to re-float the idea of another “stimulus,” USA Todayadvises: “Don’t just stand there – do nothing.”
As the economic recovery falters, pressure is mounting on policymakers to do something —anything — to boost growth, preferably before Election Day.
In response to this clamor for another short-term stimulus, here’s one piece of advice: Don’t just stand there — do nothing. More government borrowing and spending would accomplish little but provide lawmakers yet another rationale for delaying the day of reckoning.
But for now, with depression off the table and about 30% of the $814 billion stimulus still in the pipeline, it’s time for government to start following the lead of its people and businesses. Instead of passing a minor stimulus that would be almost meaningless in the context of global economic trends, Washington should focus on the big picture. The national debt stands at $13.4 trillion, or $104,000 for every U.S. household. And even that is just a prelude to the horrific numbers projected over the next two decades as the result of surging expenditures on health care and retirement.
Acting to slow the growth in benefit programs such as Social Security and Medicare would not only forestall economic Armageddon down the road, it also might actually be the best thing for the economy now. It would restore confidence among investors that the nation is not heading for a major credit crisis or a period of hyperinflation.
According to Rasmussen, 47% of likely voters say they are more worried government will do “too much” in reacting to the nation’s economic problems; 44% are more worried government will do too little.
According to Ipsos/Reuters, 49% off Americans would prefer to extend all the 2001 and 2003 tax cuts; 31% would only extend the tax cuts for people earning less than $200,000; and 15% would allow all of the tax cuts to expire.
According to Rasmussen, 38% of likely voters say last year’s stimulus helped the economy. 36% now say it hurt the economy. 21% say it had no impact.
There is little doubt Americans are feeling anxious and uncertain about the U.S. economy. According to a CBS poll, 83% of Americans think the economy is in “bad” shape; 37% even say it’s in permanent decline. Economists are uneasy as well. As we pointed out last week, GDP growth for the second quarter of 2010 was just revised down to a dismal 1.6%.
So begins a new push for a second stimulus. Laura Tyson, a professor at University of California-Berkeley’s business school, advocates for one in The New York Timestoday. Tyson argues the first stimulus worked well, but because it’ll run out soon, Congress must pass another. She then lays out a laundry list of spending initiatives Congress should pass.
Tyson believes the nation’s debate about economic policy has focused too much on reducing the deficit and too little on reducing unemployment.
As we’ve noted before, Harvard economist Robert Barro has explained why government “stimulus” spending is a bad deal for American taxpayers and is not an effective means for creating jobs. In February he explained, “[V]iewed over five years, the fiscal stimulus package is a way to get an extra $600 billion of public spending at the cost of $900 billion in private expenditure.” In other words, the federal government was trading $9 for $6 dollars. A month earlier he suggested Congress concentrate more on “incentives for people and businesses to invest, produce and work. … [W]e should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis.”
Economists in a new survey by the National Association for Business Economics (NABE) seem to agree more with Barro than Tyson. Those surveyed do not think a second stimulus would help growth. 58% are against allocating more federal money. NABE President Lynn Reaser sums up the survey: “The near-term focus should be the promotion of economic growth…Respondents also do not believe another stimulus package is necessary but think the various tax cuts should be extended beyond their scheduled expiration at year-end.”
In preparation for Vice President Biden’s visit today to Manchester, New Hampshire to discuss the American Recovery and Reinvestment Act (aka the “stimulus”) and “mark a Recovery Act milestone,” below are some facts to consider:
New Hampshire’s share of the $862-billion “stimulus” bill received: $395,322,052
This is 0.5% of the $85.7 billion that has been received by states. (Last updated: 8/24/2010)
New Hampshire’s unemployment rate was 5.5% when the “stimulus” was enacted in February 2009; for July 2010, the rate was 5.8%.
New Hampshire’s 5.8% unemployment rate is lower than the national average of 9.5%.
New Hampshire lost 5,400 jobs between February 2009 when the “stimulus” was enacted and July 2010.
For FY2011, New Hampshire is on track to overspend by $365 million. (Last updated: 7/15/2010)
New Hampshire’s number of foreclosed homes was 739 when the “stimulus” was enacted; that number has since grown to 835.
Example of “stimulus” spending:
$145,000 of federal stimulus funds were used to buy iPod Touch’s for sixth graders at Somersworth Middle School in New Hampshire. Superintendent Karen Soule said the devices are important to district’s mission of making students more “technology literate.”
Ants: small creatures that usually go unnoticed unless they make their way into your kitchen or picnic basket. But why would Congress spend $1 million worth of your ‘emergency economic stimulus’ to fund studies of the pesky little things?
Half a million dollars went to Arizona State University to study the genetic makeup of ants to determine distinctive roles in ant colonies $450,000 went to the University of Arizona to study the division of labor in ant colonies.
The immense wasteful spending highlighted in Senator Coburn’s and Senator McCain’s “Summertime Blues” report even made the author think twice about spending:
“I had no idea that so much expertise concerning ants resided in the major universities of my state,” said McCain. “I say that with an element of pride, but I’m not sure it’s deserving of these taxpayers’ dollars.”
Washington promised the stimulus would improve economic conditions and create jobs. The study of ants, whether it’s genetic makeup or division of ant colonies, will not stimulate the economy. This is just another egregious example of Washington’s irresponsible waste at a time when America can least afford it.
In preparation for President Obama’s visit today to Seattle, Washington to discuss the American Recovery and Reinvestment Act (aka the “stimulus”) and Washington’s plan for the road ahead, below are some facts to consider:
Washington’s share of the $862-billion “stimulus” bill received: $2,686,849,584
This is 3.1% of the $85.7 billion that has been received by states. (Last updated: 8/10/2010)
Washington’s unemployment rate was 8.1% when the “stimulus” was enacted in February 2009; today it is 8.9%.
Washington’s 8.9% unemployment rate is lower than the national average of 9.5%.
Washington lost 68,600 jobs between February 2009 when the “stimulus” was enacted and June 2010.
For FY2011, Washington is on track to overspend by $2.1 billion. (Last updated: 7/15/2010)
Washington’s number of foreclosed homes was 3,076 when the “stimulus” was enacted; that number has since grown to 5,072.
Example of “stimulus” spending:
A highway beautified by fish art in Washington was financed with $10,000 in stimulus funds. 12 silvery Chinook salmon decorated a landscaping median on Canal Drive in Washington. I’m sure the salmon fish art is beautiful, but spending $10,000 for metal fish smells a little fishy.
This summer, White House officials have been traveling all over the country on a “Recovery Summer” tour. The general purpose of the tour is to tout the American Recovery and Reinvestment Act (aka the “stimulus” bill) as essential in saving and creating “millions” of jobs and encouraging economic growth. However, with a stalled economy and growing unemployment, we decided to take a closer look. We’ve compiled a fact sheet for each of the 50 states and the District of Columbia and have found a very different story than that being told on the “Recovery Summer” tour.
Click here to view the fact sheets and see how your state’s economy has performed since the “stimulus” was enacted.
Joke-telling robots, expensive walking tunnels, Blackberries for smokers, and training American prostitutes to drink responsibly. What do these things have in common? They’re all questionable government spending projects in a time when our economy is struggling and people can’t get jobs.…or, maybe we just made them up.
Put yourself to the test. Click below to watch our man-on-the-street video. See if you can outwit the Rebel Economist before she stumps you. So what is it: REAL or FAKE?
Want to learn more about the projects featured in the video, the waste in your state and hundreds more examples? (Even better: want to do something about it?) Try our Spending #FAIL Map, which allows you to choose the spending projects of your (dis)liking, share the facts with others on Facebook, and call and tweet your member of Congress.
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Source List:
Location: Chicago, Illinois
Project Cost: $712,883
Northwestern University received $712,883 to develop a model of machine-generated humor. The project will “create intelligent comedic performance agents and deploy them both on- and off-line for the enjoyment and illumination of everyday citizens.”
A project to build a tunnel for turtles to pass under a Florida highway has received $3.4 million in stimulus funds. The millions are, as reported, still not enough to completely finance the project.
Almost $1 million in stimulus funds were used to give out free BlackBerry smartphones to people trying to stop smoking. The phones will reportedly make it easier for those trying to quit to access a support network.
A five-year $2.6 million grant (2008) will help a Wayne State University School of Medicine researcher establish and evaluate whether an alcohol and HIV intervention center can assist in reducing the spread of HIV/AIDS among sex workers in China.
While the issue of government spending is serious, we thought we’d have some fun exposing some questionable spending projects when our economy is struggling <ahem, looking in your direction $712,000 joke-telling robot>.
Our interactive Spending #FAIL Map allows you to see select spending projects of your (dis)liking in your state and many more, share the facts with others on Facebook, and call and tweet your member of Congress.
Give it a go by clicking here or the image below. You decide: are these projects a good use of your taxpayer dollars? Do they help the economy and jobs?
We’ll be updating and expanding the map continuously so it continues to be a useful tool for you. Still want more? Check out our 50 state fact sheets and jump straight to your state’s fiscal and economic cheat sheet.
This week, the House of Representatives interrupted its “August Recess” to rush back to Washington to pass yet another ‘emergency’ bailout; this time, a $26-billion spending package the nation cannot afford, to supplement pay for state workers the states cannot afford.
Even the states themselves are beginning to share their concern with this unsustainable cycle of continued ‘emergency’ federal bailouts:
According to today’s Wall Street Journal, this latest state bailout will force many states to spend more – not less – and drive them further down a path of unsustainable spending.
Governor Haley Barbour of Mississippi did the math and figured out his state will be worse off. Mr. Barbour says the bill will force his state “to rewrite its current year [fiscal 2011] budget. Preliminary estimates of the Mississippi Department of Finance and Administration show that we will now have to spend between $50-100 million of state funds—funds that must be taken away from public safety, human services, mental health and other state priorities and given to education—in order for an additional $98 million of federal funds to be granted to education. There is no justification for the federal government hijacking state budgets, but that is exactly what Congress has done.”
For Texas, and only Texas, this funding rule will be in place through 2013. This is a form of punishment because the Beltway crowd believes the Lone Star State didn’t spend enough of its 2009 stimulus money. Apparently Texas politicians have been clinging to the quaint notion that the government should try to live within its means.
Texas Governor Rick Perry is also opposed to this new “assistance” from the federal government. He understands that one-time payments that force permanently higher state obligations are a windfall for government employees. But if given the choice, taxpayers would just say no.
Today’s Cleveland Plain Dealertells a similar story:
By approving $26 billion in new spending nationally, Congress will ensure that Ohio gets more than $880 million. Yet much of that is supposed to help states with Medicaid budget shortfalls, a problem Ohio doesn’t have.
More than $880 million in fresh economic aid is coming to Ohio thanks to Congress — whether Ohio needs it all or not.
“But state Republican lawmakers suggested that however the money is used, it could put Ohio in a bind later because the state will have expanded programs it could not afford in the first place. When the money runs out, the state’s looming problems will be hundreds of millions of dollars deeper, they said.”
