Government Stimulates Itself

First off, I cannot believe someone would have the cajones to ask if Harry Reid was confident that this bill was big enough. I remember only a short time ago when people were up in arms about TARP's $700 billion price tag. Now people are wondering if this is enough? Are you serious? TARP hasn't done much thus far, so why do you think this bill will be any different? It's just a melange of pet projects and partisan pork. The point of a stimulus bill is to create jobs, spur investment, and strengthen the economy. All this bill seems to do is make a feigned or even superficial effort to address stimulus, all the while really just throwing most of the money at projects that are entirely irrelevant. Senator Inhofe's recent press release confirms my unease:

February 6, 2009

WASHINGTON, DC - U.S. Senator James Inhofe (R-Okla.), issued the following statement tonight after the announcement of a compromise on the Senate stimulus bill.

"While I appreciate the efforts of my colleagues to bring down the price tag of this bill, the fact is we still face a trillion dollar spending bill. Making it worse, the bill is 93% spending and only 7% stimulation. Over the past few days I have fought to include more in the way of real stimulus through higher percentage of infrastructure and defense spending, while working to cut much of the typical government waste often found in a bill of this size. Yet Democrats have blocked these efforts.

"The good news tonight is that the American people are catching on to the fact that this is the largest spending bill in history and are becoming more and more vocal in their opposition. My offices in Oklahoma and Washington DC have been flooded with emails, phone calls and faxes overwhelmingly opposed to this trillion dollar legislation. They can rest assured that my vote remains an unwavering ‘no.'"

Here's real stimulus.

(If only this cartoon were what the government was really doing. As it turns out, they're fanning themselves with money while pelting the bull with loose change.)

For Real Stimulus

Sometimes when you read this blog you chuckle. Other times I hope you think. Other times I hope you get confused. But today the blog is going to touch on some important stuff that most people should know. I got this article from Investment Business Daily. I think it was published either the fifth or the ninth (sorry, I cannot make out my grandmother's handwriting on the copy she sent me). I am in no way claiming this as my own work, but I am taking the time to re-write it on this blog verbatim for all of your benefit. Read on.

"Economy: Congress is ready to ram through a half-baked stimulus package costing as much as $1 trillion. But if it's stimulus we need, why not make it effective stimulus - tax cuts, say, instead of wasteful spending?

The massive new spending program that is being pushed by the congressional Democrats emboldened by their newly enhanced majorities may come up as soon as Tuesday, when they return from their holiday breaks.

Unfortunately, they've picked the least effective way to give the economy a boost. Those who argue for hundreds of billions of dollars for infrastructure projects and "green jobs" have it all wrong. We've tried those remedies before and found them wanting.

In the 1930s, for instance, we went on an infrastructure binge, building new roads, dams and schools; electrifying the rural south and enlarging our ports, among other major tasks.

Granted, some infrastructure improvement was called for. But all the activity didn't pull the country out of depression - not by a long shot. Unemployment averaged 17% in the '30s, and it wasn't until 1941 - the start of World War II - that GDP returned to its 1929 level.

Japan followed the same Keynesian game after its real estate bust of 1989. To the applause of many American liberals, hundreds of trillions of yen were spent on infrastructure, raising outlays on big projects from 6.5% of GDP in 1990 to 8.3% in 1996 - even more than contemplated under Obama's plan.

That didn't work either. The 1990s were a "lost decade" for Japan's economy, and the country is still stagnating. Its infrastructure boom did have one lasting legacy however: Japan is now the most heavily indebted nation in the OECD.

If President Obama and his fellow Democrats get their way, the U.S. may soon be trudging down the same path. Next year, reckons budget expert Stan Collender, the defecit may hit $1.3 trillion, or 8% of GDP, as Congress tries to spend its way out of recession. That's roughly $13,000 for every taxpayer.

Shouldn't we at least expect some big bang for our bucks? If so, and although it's not popular with his party, Obama might want to re-think his aversion to tax cuts. They'll actually work.

How do we know? Because they have in the past. In the '20s, '60s, '80s and again this decade, new presidents also faced grim economic conditions. Each time, the president - be it Coolidge, Kennedy, Reagan or Bush - cut taxes. And each time the economy boomed.

McKinsey & Co. estimates total losses of $1.4 trillion to $2.2 trillion due to the credit collapse. But this can be reversed by making the underlying assets profitable again. The fastest way to do this is to cut taxes on businesses and entrepreneurs, which will immediately lift the rate of return on assets and thus their value.

This in turn will bring more investment, more hiring and more income - all things that Obama has said he wants.

We're not making this stuff up. According to research cited by former White House economist Greg Mankiw, the economy expands by $1 to $1.40 for every $1 spent by government. But if you cut taxes instead, you really get results.

Mankiw cites a major study of tax cut changes dating back to 1947 showing that each $1 of tax cuts brings $3 in added GDP. This study is particularly significant because one of its authors, Christiana Romer, is Obama's chief economic advisor.

Simply handing blank checks to Congress and the White House, and letting them pass an ill-considered stimulus plan with little transparency and no checks on spending is a very bad idea. 

No stimulus would be better than a bad stimulus. And the only stimulus that's been shown to really work is cutting taxes.

Stop the Bailouts!

Yes, it is true, the economy is not in good shape. However, I am appalled and disgusted by the public's apathy toward the piss poor government solution of bailing out and buying up the private sector. The American public seems to have given the democrat-controlled congress and President Obama a blank check. Well, not entirely blank. The check looks to be to the tune of one trillion dollars. A trillion dollars! That's not petty cash. That is $300 billion more than the $700 billion that was already pumped into the market under TARP, and puts us down a path of spiraling monetary value, and endless debt.

(Government solution)

We are entering an age pervaded by a horribly defeatist philosophy of bailouts. And, what bothers me more than anything else is that the market now looks to Washington for help, instead of innovating and reinventing. But this was Washington's plan all along. It has fostered a cycle of dependency for years. On one hand it promises government backing for the likes of Freddie and Fannie, encouraging predatory lending, and then turns around and reprimands those same companies for practices it encouraged. How can we expect a problem that was in large part instigated and then exacerbated by the government to be solved by the government? If we continue to allow congress, the treasury, and Obama to buy up toxic assets and attempt to recapitalize the market, all we are doing is pumping the market with more instability. We are allowing the government to reward failures and cover its own backside when it has already failed royally.

There should be more outrage. I understand many are hurting, many are out of a job, but that is no reason to allow the government to spend, spend, spend. The effects are disastrous. The best one can hope for with such a strategy is a temporary rebound or a slight boost in morale, but the long term effects are irremediable. In no uncertain terms, what I am saying is the long term costs far outweigh the supposed short term benefits. Here is what all of this spending means:

1. The federal government, already submerged in massive debt, will go deeper into the abyss than ever. They are printing money with nothing but good will to back it. The dollar's value will plummet in the next months and years because of all the bailouts.

2. The federal government, despite its almost limitless debt, will position itself to control a huge part of the private market. It will be the biggest government expansion since the New Deal. It will create a new toxic asset bank, and numerous other bureaucratic arms that will supposedly maintain transparency and accountability but in reality will only further their own interests and limit investment opportunities, and market flexibility.

3. With government's part ownership of certain companies (namely the now state-controlled banks), and its demand for high prices for its involvement and money (taking preferred shares, and forcing companies to spend money the way that it deems most appropriate), investors will not help re-capitalize the banking industry and the financial sector. The government will have taken all the attractive parts of investment. Without private interest and investment, these state-controlled entities will stagnate or decline, and will end up needing even more bailouts to stay functioning.

4. The burden of all these bailouts does not fall on some mystical government entity that has endless supplies of cash. It falls on the taxpayer. The cost of this crisis from TARP to the trillions in infusions by the FED, to the latest Obama-Pelosi stimulus has reached stratospheric proportions. When all is said and done the government may well have spend upwards of 6 trillion dollars. That is nearly half the US GDP. And it also means that taxpayer will be saddled with these massive financial commitments for years to come.

5. If it were not bad enough that our dollar will be worth next to nothing, we will be digging ourselves deeper into debt, and the government will in large part be taking over the private sector and no new investment will be coming our way, the stimulus package proposed will throw money at terribly wasteful items. Some notorious examples are the mob museum in Las Vegas and Pelosi's birth control stimulus. Those are only the more notable worthless projects. Others involve vineyards and train rides and amusement parks in Alabama. 

I implore you. I exhort you. Stand up against this wasteful stimulus. It will not bring us back. The New Deal didn't work, and neither will this. The only thing all this spending accomplishes is building an ever-growing, less competent Leviathan. The government will tighten its stranglehold on the private sector, and its centralizing power will eventually consume every aspect of our lives (You might think that I'm exaggerating, but I'm not). This is the soft despotism that Tocqueville warned about. Call your congressmen and senators. Tell them to stop the bailouts. Tell them to come up with real solutions. Perhaps instead of bailing out and buying up, we could compromise. Half of that trillion in tax cuts, and half in bailouts. Let's see which strategy works better and gets the economy moving. 

Here the numbers for all of the US Senators:

ALABAMA

Jeff Sessions (R) - 202-224-4124

Richard Shelby (R) - 202-224-5744

ALASKA (202-224-6665)

Lisa Murkowski (R)

Ted Stevens (R) - 202-224-3004

ARIZONA

John McCain (R) - 202-224-2235

Jon Kyl (R) - 202-224-4521

ARKANSAS

Blanche Lincoln (D) - 202-224-4843

Mark Pryor (D) - 202-224-2353

CALIFORNIA

Barbara Boxer (D) - 202-224-3553

Dianne Feinstein (D) - 202-224-2841

COLORADO

Wayne Allard (R) - 202-224-5941

Ken Salazar (D) - 202-224-5852

CONNECTICUT

Joseph Lieberman (I) - 202-224-4041

Christopher Dodd (D) - 202-224-2823

DELAWARE

Joseph Biden (D) - 202-224-4041*

Thomas Carper (D) - 202-224-2441

FLORIDA

Mel Martinez (R) - 202-224-3041

Bill Nelson (D) - 202-224-5274

GEORGIA

Saxby Chambliss (R) - 202-224-3521

Johnny Isakson (R) - 202-224-3643

HAWAII

Daniel Akaka (D) - 202-224-6361

Daniel Inouye (D) - 202-224-3934

IDAHO

Larry Craig (R) - 202-224-2752

Michael Crapo (R) - 202-224-6142

ILLINOIS

Richard Durbin (D) - 202-224-2152

Roland Burris

INDIANA

Evan Bayh (D) - 202-224-5623

Richard Lugar (R) - 202-224-4814

IOWA

Charles Grassley (R) - 202-224-3744

Tom Harkin (D) - 202-224-3254

KANSAS

Sam Brownback (R) - 202-224-6521

Pat Roberts (R) - 202-224-4774

KENTUCKY

Jim Bunning (R) - 202-224-4343

Mitch McConnell (R) - 202-224-2541

LOUISIANA

Mary Landrieu (D) - 202-224-5824

David Vitter (R) - 202-224-4623

MAINE

Susan Collins (R) - 202-224-2523

Olympia Snowe (R) - 202-224-5344

MARYLAND

Benjamin Cardin (D) - 202-224-4524

Barbara Mikulski (D) - 202-224-4654

MASSACHUSETTS 

Edward Kennedy (D) - 202-224-4543

John Kerry (D) - 202-224-2742

MICHIGAN

Carl Levin (D) - 202-224-6221

Debbie Stabenow (D) - 202-224-4822

MINNESOTA

Norm Coleman (R) - 202-224-5641*

Amy Klobuchar (D) - 202-224-3244

MISSISSIPPI

Thad Cochran (R) - 202-224-5054

Roger Wicker (R) - 202-224-6253

MISSOURI 

Kit Bond (R) - 202-224-5721

Claire McCaskill (D) - 202-224-6154

MONTANA

Max Baucus (D) - 202-224-2651

Jon Tester (D) - 202-224-2644

NEBRASKA

Chuck Hagel (R) - 202-224-4224

Ben Nelson (D) - 202-224-6551

NEVADA

Harry Reid (D) - 202-224-3542

John Ensign (R) - 202-224-6244

NEW HAMPSHIRE

Judd Gregg (R) - 202-224-3324

John Sununu (R) -202-224-2841*

NEW JERSEY

Robert Menendez (D) - 202-224-4744

Frank Lautenberg (D) - 202-224-3224

NEW MEXICO

Jeff Bingaman (D) - 202-224-5521

Pete Domenici (R) - 202-224-6621

NEW YORK

Kirsten Gillibrand (D)

Charles Schumer (D) - 202-224-6542

NORTH CAROLINA

Richard Burr (R) - 202-224-3154

Elizabeth Dole (R) - 202-224-6342*

NORTH DAKOTA

Kent Conrad (D) - 202-224-2043

Byron Dorgan (D) - 202-224-2551

OHIO

Sherrod Brown (D) - 202-224-2315

George Voinovich (R) - 202-224-3353

OKLAHOMA

Tom Coburn (R) - 202-224-5754

James Inhofe (R) - 202-224-4721

OREGON

Ron Wyden (D) - 202-224-5244

Gordon Smith (R) - 202-224-3753

PENNSYLVANIA

Robert Casey (D) - 202-224-6324

Arlen Specter (R) - 202-224-4254

RHODE ISLAND

Jack Reed (D) - 202-224-4642

Sheldon Whitehouse (D) - 202-224-2921

SOUTH CAROLINA

James DeMint (R) - 202-224-6121

Lindsey Graham (R) - 202-224-5972

SOUTH DAKOTA

Tim Johnson (D) - 202-224-5842

John Thune (R) - 202-224-2321

TENNESSEE

Lamar Alexander (R) - 202-224-4944

Bob Corker (R) - 202-224-3344

TEXAS

John Cornyn (R) - 202-224-2934

Kay Hutchison (R) - 202-224-5922

UTAH

Robert Bennett (R) - 202-224-5444

Orrin Hatch (R) - 202-224-5251

VERMONT

Frank Lautenberg (D) - 856-338-8922

Bernie Sanders (I) - 802-862-0697

VIRGINIA

John Warner (R) - 202-224-2023

James Webb (D) - 202-224-4024

WASHINGTON

Maria Cantwell (D) - 202-224-3441

Patty Murray (D) - 202-224-2621

WEST VIRGINIA 

Robert Byrd (D) - 202-224-3954

John Rockefeller (D) - 202-224-6472

WISCONSIN

Rusell Feingold (D) - 202-224-5323

Herb Kohl (D) - 202-224-5653

WYOMING

John Barrasso (R) - 202-224-6441

Michael Enzi (R) - 202-224-3424

*Some of these Senators are no longer in office.