NCPA - National Center for Policy Analysis


January 28, 2009

The House Appropriations Committee, chaired by Rep. Dave Obey of Wisconsin, last week passed a significant portion of what will be an $825 billion stimulus bill.  It contains $275 billion in tax cuts but substantially increases government spending on some 150 existing federal programs.  Much of the spending increases are pure politics, involving a substantial expansion of the federal government's policy role, says Pete du Pont, chairman of the National Center for Policy Analysis and former governor of Delaware.

For example:

  • Four billion dollars to help hire, equip and pay state and local police forces won't stimulate the economy, but it will give Washington some control over police spending.
  • Nor will $50 million for the National Endowment for the Arts, $2.1 billion for Head Start, or $16 billion more for Pell grants stimulate the economy.

They are all standard congressional preferences but no help at all in economic stimulation, which is supposed to be the objective of the bill.  In short, the House bill has no broad strategic vision, merely a bigger government spending goal, says du Pont.

Nor would much of the legislation have an immediate economic impact, for only a small portion of its funds would be immediately spent, says du Pont:

  • Of the $18.5 billion it contains for renewable energy, only $3 billion would be spent by 2011.
  • Similarly, of the $30 billion for highways, only $4 billion would be spent by 2011, and less than half of the $14 billion additional school construction money would be promptly spent.

One more troubling aspect of the Obey legislation is that it contains no sunset provision.  If the bill's spending helps and the economy begins to recover (or if it recovers on its own), there is no limit on new government spending, which makes one think that the objective of the bill is to permanently increase the size, scope and spending of the federal government.  And that, of course, would lead to higher taxes of various kinds to feed the government's appetite, says du Pont.

Source: Pete du Pont, "The Trouble With Harry; Will President Obama resist the tax-and-spend Congress?", January 26, 2009.

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