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Thread: ACORN's Stimulus
01-28-09, 06:15 AM #1
By Matthew Vadum on 1.27.09 @ 3:30PM
With a new president ensconced in the White House, it's time to roll out the goodies for loyal supporters in left-of-center political advocacy groups such as ACORN.
The latest economic stimulus bill promises to do just that by providing a huge bailout --up to $5.2 billion in taxpayer funds -- for some of the same liberal groups that helped get Barack Obama elected.
The three relevant fiscal provisions are buried deep in the $825 billion monstrosity known as the proposed "American Recovery and Reinvestment Act of 2009."
Title XII of the spending legislation backed by the Democratic congressional leadership and the Obama administration would dole out $1 billion in old-fashioned slush funds for the Community Development Block Grants (CDBG) program. Local politicians love CDBG because it is flexible. The program gives them wide latitude when spending grant money and allows local leaders to use federal dollars on local projects that they wouldn't dream of spending their own local tax dollars on. ACORN loves CDBG because it is adept at lobbying for CDBG funds.
A separate $10 million is provided in the stimulus package to develop or rehabilitate low-income housing under the Self-Help and Assisted Homeownership Opportunity Program (SHOP).
But the biggest chunk of the $5.2 billion comes in the form of $4.19 billion for foreclosure relief through the Neighborhood Stabilization Program.
Although ACORN operatives usually get their hands on such funds only after they have first passed through the U.S. Department of Housing and Urban Development or state and local governments, the new spending bill largely eliminates these dawdling middle men, making it easier to get Uncle Sam's largess directly into the hands of the same people who run ACORN's various vote fraud and extortion rackets. And the legislative package provides these funds without the usual prohibition on using government money for lobbying or political activities.
The current version of the stimulus package would allow nonprofit groups to compete with states and localities for $3.44 billion from the $4.19 billion Neighborhood Stabilization Program allocation. The remaining $750 million from the program plus the $10 million in SHOP funds would be set aside exclusively for nonprofit groups.
Probably chief among the groups to benefit from stimulus spending will be ACORN, the infamous network of 100-plus left-wing activist groups.
As everyone who hasn't been in a coma for the last year knows, ACORN and President Obama go way back.
You may remember in October when ACORN's CEO, "chief organizer" Bertha Lewis, appeared in a YouTube video in front of a banner reading "Working Families Party: Fighting for Jobs and Justice," and endorsed Obama for president. (The Working Families Party, a minor New York party, is an ACORN affiliate.) This plea to voters eliminated any doubts that the most diehard benefit-of-the-doubt-giving ACORN supporters may have been harboring that ACORN's voter-registration and get-out-the-vote drives were aimed at getting conservatives and Republicans to the polls.
ACORN's national political action committee, ACORN Votes, also endorsed Obama. ACORN national president Maude Hurd said Obama was "the candidate who best understands and can affect change on the issues ACORN cares about like stopping foreclosures."
You may also remember that during last year's primaries, the Obama campaign paid $832,598 to Citizens Services Inc., another ACORN affiliate, for get-out-the-vote activities. It's also well known that Obama led a voter drive for ACORN affiliate Project Vote, represented ACORN in court, and lectured at ACORN on organizing techniques.
Then-candidate Obama promised a gathering of community organizers in December 2007 that he would involve them in the policy process. "Before I even get inaugurated, during the transition, we're going to be calling all of you in to help us shape the agenda. We're going to be having meetings all across the country with community organizations so that you have input into the agenda for the next presidency of the United States of America."
Apparently President Obama is a man of his word.
Matthew Vadum is a senior editor at Capital Research Center, a Washington, D.C. think tank that studies the politics of philanthropy.
01-28-09, 06:16 AM #2
The Obama Watch
Good Morning, Suckers
By Peter Ferrara on 1.28.09 @ 6:10AM
Barack Obama and Congressional Democrats are playing the voters for fools with the so-called stimulus package. The massive $825 billion package is not even targeted on programs to stimulate the economy. Instead, it is laced with runaway government spending for increased welfare, overgrown bureaucracy, pork, political payoffs, and other waste. That runaway spending is causing record smashing deficits of $1.5 trillion or more, equivalent to over 50% of the entire federal budget for fiscal 2008.
For example, the "stimulus" package includes $50 million for the National Endowment of the Arts to help "the arts community throughout the United States." Wouldn't want our economy to get behind in the international arts competition. The government is going to borrow $50 million out of the private economy to spend on this, which will result in a net loss of economic output rather than a net gain.
Another $2.1 billion is for Head Start, another program not previously known for stimulating the economy. A further $2 billion is to be spent on Child Care Development Block Grants, which provide day care. We are going to revive economic growth through the federal government spending billions on babysitting, rather than tax cuts for capital investment. A similar initiative involves $120 million to finance part-time work for seniors in community service agencies.
Then there is $500 million to speed the processing of applications for Social Security disability claims. This has already created one net new job in the employment of a person within the Obama Administration assigned to figure out what this has to do with stimulating the economy.
Another $6 billion goes to college and universities. We already spend hundreds of billions on these schools, and such education provides valuable long-term benefits. But this is not a means to spark a booming economy in the short term. The same is true of the $13 billion in Title I grants "to provide extra academic support to help raise the achievement of students at risk of educational failure or to help all students in high-poverty schools meet challenging State academic standards," as the congressional report accompanying the bill explains. Ditto that for the $13 billion in IDEA, Part B State grants to help pay for "the excess costs of providing special education and related services to children with disabilities."
Then there is the effort to stimulate the economy by increasing welfare spending. There is $20 billion for increased food stamps, including lifting restrictions on how long welfare dependents can receive food stamp benefits. Another $1.7 billion is to be spent to help the homeless, not previously in our history a significant source of economic growth. Another $1 billion goes for the Low Income Home Energy Assistance program, to help low income families pay their heating bills, a worthy objective that has nothing to do with stimulating the economy. Still another billion goes to the Community Services Block Grant to support "employment, food, housing, health, and emergency assistance to low-income families and individuals." Another $200 million goes for senior nutrition programs, such as Meals on Wheels. Then there is an additional $200 million for AmeriCorps, to help satisfy "increased demand for services for vulnerable populations to meet critical needs in communities across the U.S." Another $5 billion is devoted to public housing. None of this increased welfare spending has anything to do with promoting economic growth. Rather, it retards growth by inducing more dependency on government.
Another $87 billion is to be spent on Medicaid, a welfare program already costing roughly $400 billion per year. Those funds would be spent in part on "family planning services," meaning contraception. Reagan created a 25-year economic boom in part by cutting top marginal income tax rates. Liberal Democrats are now going to try to do it by passing out condoms.
Medicaid is one of the major entitlement programs projected to explode to overwhelming costs in the future. Obama is assuring the more conservative Blue Dog Democrats that he will address runaway entitlement costs as soon as next month. But to start let's increase those costs by almost $100 billion right now.
Then there is the funding to maintain and expand bureaucracy and overall big government spending. The "stimulus" package includes $2.5 billion for the National Science Foundation, $2.0 billion for the National Park Service, $650 million for the U.S. Forest Service, $600 million for NASA, $800 million for AMTRAK, $276 million to the State Department to upgrade and modernize its information technology, $150 million for maintenance work at the Smithsonian Institution, $209 million for maintenance work for the Federal Agricultural Research Service, $44 million for repairs and improvements at the Washington, D.C. headquarters of the Department of Agriculture, and $245 million to upgrade the information technology of the Farm Service Agency. Borrowing money from the private sector to spend on these bureaucracies will not provide a boost to the economy. It will likely again produce a net loss of output.
A shocking provision provides $1.1 billion for so-called federal comparative effectiveness research in regard to health-care services. The congressional report explaining the stimulus bill says:
By knowing what works best and presenting this information more broadly to patients and healthcare professionals, those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases, more expensive, will no longer be prescribed.
But a government bureaucracy in Washington is never going to know what "items, procedures and interventions are most effective to prevent, control and treat health conditions" for each patient, regardless of how much federal research is done. This is what doctors are for. This bureaucratic initiative is really laying the foundation for the eventual health care rationing to be imposed under the new Obama "universal" health care entitlement program, which is coming soon. I told you so, in previous columns.
To call this spending economic recovery stimulus, however, is an abuse of the English language.
Another abuse is to be found in the $4.2 billion provided to the Neighborhood Stabilization Fund, which provides the funds to local governments to purchase and rehab vacant housing due to foreclosure. The congressional report accompanying the stimulus bill states, "Up to $750 million may be used for a competition for nonprofit entities to enhance the funding included under this heading through capitalization of the funds." Reportedly, this funding is intended to be siphoned off to ACORN, the far-left, rogue, lawbreaking organization prosecuted across the country in the past couple of years for voter fraud. ACORN has also used violent intimidation tactics in the past to pursue its goals, and was heavily involved in housing programs in the past that led to widespread bad loans.
Another $79 billion is to go the states to maintain their runaway government spending, particularly for such spendthrift jurisdictions as California, New York, New Jersey, and Massachusetts. High state government spending is also not a source of economic growth.
Then there are other items in the "stimulus" package that may involve desirable government spending, but do not involve stimulating the economy, and should be subject to the normal budget process. These include $3 billion for health care prevention and wellness programs, such as childhood immunizations and other state and local public health programs, $2.4 billion for projects demonstrating carbon capture technology, $17 billion for Pell Grants, $1 billion for Technology Education, $1.9 billion for the Energy Department for "basic research into the physical sciences," $650 million for digital TV coupons to help Americans upgrade to digital cable television, $100 million to reduce lead-based paint hazards for children in low income housing, $400 million for "habitat restoration projects" of the National Oceanic and Atmospheric Administration, $1.2 billion for summer jobs for youth, $2 billion for Superfund cleanup, and others.
Even the infrastructure spending in the stimulus bill will not produce economic recovery. When President Roosevelt directly employed workers in construction projects in the 1930s, unemployment had been as high as 25% for several years, and this seemed like the only way for some to get jobs. But unemployment today at 7.6% is below average for all postwar recessions, and it has only been over 7% for a few months.
The Congressional Budget Office recently estimated that only $26 billion of the $355 billion in the stimulus bill would be spent this year, and only $110 billion by the end of 2010. But that is not the real problem with infrastructure spending as a stimulus strategy. The bigger problem is that the government finances the spending by first borrowing the funding from the private sector, taking out of the economy what it later puts in, for no net gain overall. In the process, there is no change in the basic incentives governing economic activity, which do have the power to revive growth. And after the government make-work project ends, then what? Steve Entin best explained the fundamental economics of the problem yesterday in the Wall Street Journal, saying that to end a recession:
Ultimately, labor and capital must shift from declining industries and areas to expanding ones -- but intercepting people as they make the shifts and parking them in government projects for a year just delays the adjustment. And the debt and future taxes raised in the process become permanent burdens that shrink private output and income forever after.
A couple of weeks ago, I went over the data showing that even assuming Obama's claim that the stimulus package will create "or save" 3.7 million jobs, the cost would be over $200,000 per job. The government could just pay each worker $50,000 a year directly, and save taxpayers the rest. If we just count jobs actually created by the plan, then the cost is almost $400,000 per job. But under the analysis above, actually no new jobs will be created by this Keynesian stimulus bill on net.
What we want is private sector jobs privately financed in a booming economy, not make-work jobs financed by the public sector that end when the government gravy train ends. I have previously discussed what policies would get the economy booming again. Cuts in corporate tax rates, and in the tax rates on capital. Deregulation to allow the market to produce oil, natural gas, nuclear power, and more electricity, providing a low cost reliable energy supply for the rest of the economy, and a booming energy industry. A new strict price rule to guide monetary policy, focusing it only on maintaining stable prices rather than discretionary policy to guide the economy, which has only led to stock market and housing bubbles causing the current chaos. And restrained government spending to reduce government burdens on the economy.
These are the policies that Reagan adopted so successfully. But Obama does not include any of these proven policies in his stimulus bill, even though he claims he is only interested in what works, and not ideology, a dishonest spin.
Now what we have is not only a stimulus bill that will not work. What we have is a fraudulent bill that is not even focused on stimulus at all, but on runaway spending for liberal, big government spending programs, meaning more welfare, overgrown bureaucracy, pork, political payoffs, and waste.
Peter Ferrara is director of budget and entitlement policy at the Institute for Policy Innovation and general counsel for the American Civil Rights Union. He formerly served in President Reagan's White House Office of Policy Development, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School.
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