How the Stimulus Bill Could Kill You

[thedrifter]

February 04, 2009
How the Stimulus Bill Could Kill You
By Douglas O'Brien

When you read through the nearly seven hundred pages of the House stimulus bill it is easy to begin dozing off after a few hundred billion dollars worth of run-of-the-mill wasteful government spending. One has to keep a keen eye out for the components of the bill that don't just steal your money, but that may actually do you great physical harm, if not kill you outright.

On page 151 of this legislative pork-fest is one of the clandestine nuggets of social policy manipulation that are peppered throughout the bill. Section 9201 of the stimulus package establishes the "Federal Coordinating Council for Comparative Effectiveness Research." This body, which would be made up of federal bureaucrats will "coordinate the conduct or support of comparative effectiveness and related health services research."

Sounds benign enough, but the man behind the Coordinating Council, Health and Human Services Secretary-designate (and tax cheat) Tom Daschle, was kind enough to explain the goal of this organization. It is to cut health care costs by preventing Americans from getting treatments that the government decides don't meet their standards for cost effectiveness. In his 2008 book on health care, he explained that such a council would, "lower overall spending by determining which medicines, treatments and procedures are most effective-and identifying those that do not justify their high price tags."

Once a panel of government experts decides what is and what is not cost-effective by their definition, the government will stop paying for treatments, medicines, therapies or devices that fall into the latter category. Initially, this will limit access to very expensive treatments for federal employees, veterans, the elderly, members of the military and their dependents and others who rely on the feds to pay for their health care. But since this would place nearly half of health care dollars off limits for such treatments, the demand for and further development of such treatments would likely dry up. And Daschle wants to expand the Coordinating Council's power even further, allowing the government to deny tax benefits for private insurance that covers treatments deemed too expensive by the Council. Thus, if a handful of government employees deem a therapy not cost effective, no health insurance will cover it and it will become virtually unobtainable to patients at any cost.

Mind you, they are not simply looking to exclude treatments that don't work, but to exclude treatments that are effective, but whose cost, in their opinion, does not justify their use. You, the patient, and your physician don't get a vote. This would make the federal government the single most important decision-maker regarding health care for every patient in America.

This is also another wonderful example within the stimulus bill of infantile economics. When something is new it is usually expensive, (think $3,000 VCR's back in the ‘70s). As supply increases, two important things happen. First, innovations take place that improve the product. Second, the cost comes down. If the feds step in and say, no, that new treatment is too expensive, it will never have the chance to become better, the supply will not increase and it won't become more cost-effective. It will just die on the shelf, and so will the patients who potentially could have benefited.

For example, scientists have found that proton beams can be used to destroy cancerous tumors by pinpointing the beam on a tumor diminishing the collateral damage to surrounding tissue that often accompanies conventional photon radiation treatment. Five facilities in the United States offer proton therapy at places like Massachusetts General Hospital and the University of Texas. The five can treat a total of about 8,000 patients a year. Protons are most beneficial for children who can suffer severe developmental side-effects from radiation treatment. But the therapy is expensive, often running over $100,000 for a six-week course of treatment. But as new proton treatment facilities are built, improving the delivery of the therapy and increasing its supply, prices will decrease and quality will improve. But how will a panel of bureaucrats react to this situation? Will they allow insurance to cover a treatment that can be many times more expensive than conventional care and let it reach its full potential? Or will it be blackballed for future patients in the name of cost-containment?

Imagine the conversation: Parents are told that their daughter has a brain tumor. Doctors will immediately begin radiation treatment to destroy the tumor. But they also tell the parents that bombarding the child's brain with radiation will likely have developmental impacts. The doctors lament that there once was a better way to deal with this situation with a higher success rate and virtually no side effects, but some people in Washington decided it was too expensive and the centers that offered it closed and no one persisted in further developing the therapy.

Repeat this scenario time and time again and you will glimpse health care in the Age of Hope and Change. Emphasis will be shifted to prevention and management of chronic illness-an excellent idea and potentially very economically beneficial. But health care will be frozen in time. New treatments come on the market at very high costs and most often represent incremental improvements over existing care. That is how progress works and that is why we live longer lives than our great-grandparents. But that is exactly the kind of progress that Daschle and his Coordinating Council will be targeting in order to limit health care spending. It is a perfect example of the way socialized medicine rations care in the name of equality of access and proves the old Canadian axiom that, "national health care is wonderful, unless you get really sick."

Now, all this time, we have been told that Republicans were the ones who only saw health care in terms of dollars and sense and that the Democrats were champions of the needs of the ordinary people. The reality is the exact opposite. A market-based system promoted by many Republicans allows patients to control their care rather than bureaucrats and encourages innovations that save and prolong lives. Under this new health care order, it will be the express task of government employees to stand between you and your family and potentially life-saving care, all in the name of dollars and cents.

Douglas O'Brien is a public affairs consultant and served in the Department of Health and Human Services in the Bush Administration.

Ellie

[thedrifter]

OPINION
FEBRUARY 3, 2009, 11:40 P.M. ET

The Stimulus Package Is More Debt We Don't Need
Can Obama really defend this 'line by line'?

By TOM COBURN

As the Senate considers a massive $1.1 trillion stimulus bill, it is vital that the American people ask hard questions of their elected officials. When they do, it will become very clear that the bill will not only fail to stimulate the economy, but could seriously delay economic recovery.

As a nation, we got into this mess by spending and investing money that didn't exist. We won't get out of it by doing more of the same.

Yet this is precisely what this bill proposes we do. Less than 10% of the bill could be considered true stimulus, if one assumes tax credits and infrastructure spending will jolt the economy. The other 90% of the bill represents one of the most egregious acts of generational theft in our nation's history, with taxpayer money going to special-interest earmarks, an ill-conceived bailout to states, and permanent spending increases that expand government's reach in areas like health care and education.

The bill's selling point is that three million jobs will be created or saved by this package. What's alarming is that each job will cost $286,000 to create or save. Moreover, one in five will be a government job.

One of the more egregious provisions in the Senate bill is a $166 billion bailout plan for the states that rewards bad budgeting at the state level. Simply sending cash to states without asking for appropriate sacrifices is grossly irresponsible. States will no longer have the incentive to live within their means, because they'll assume the federal government will be there to bail them out.

Instead of a bailout, Congress could offer states an emergency loan that could be repaid at a low interest rate. This approach apparently wasn't considered because the members who wrote the bill aren't simply interested in saving jobs -- they want to push their agenda along the way.

A key example is health care. The Senate bill doubles the amount of the Medicaid bailout requested by governors and lays the groundwork for government-run health care, which invariably leads to rationing. This ideological overreach has led even some Democrats, like Nebraska's Ben Nelson, to express concern that various "sacred cows" in the package are hurting the bill's overall goals.

The bill is also loaded with old-fashioned pork, despite President Barack Obama's insistence that members of Congress refrain from adding earmarks. In fact, the bill contains the most expensive earmark in history: $2 billion for the FutureGen near-zero emission power plant in Matoon, Ill.

Other nonstimulative pork provisions include $88 million for a new polar icebreaker for the Coast Guard, $600 million to buy hybrid vehicles for federal employees, and $850 million for Amtrak.

What is not in the bill is as troubling as what is. The package does nothing to clear the toxic assets and bad mortgages that helped trigger the credit crisis. It also contains very little meaningful tax relief to make small businesses and American companies more competitive. Instead, the tax provisions of the stimulus are essentially a modest cash handout that repeats the failed policy of George W. Bush's rebate-check stimulus.

Finally, the bill's sponsors have made zero effort to pay for this new spending by eliminating programs that aren't working. Mr. Obama's pledge to go through the budget line-by-line has made no impression on the bill's authors, nor has the plight of millions of Americans faced with tough spending choices.

Dozens of independent watchdog groups, think tanks and elected officials on both sides of the aisle have spent decades identifying areas of the budget that can be cut. Yet Congress remains focused on finding "shovel ready" projects when at least $300 billion in wasteful programs are "scissor ready" today.

One of the lessons I've learned from the practice of medicine is the danger of treating symptoms rather than the disease. Doing so makes the disease worse and causes the symptoms to come back with a vengeance. It's time for government to quit masking the symptoms and deal with this crisis at its source: toxic assets in the mortgage market and a federal government that continues to pollute our economy with pork and failed interventionist policies.

Dr. Coburn is a Republican senator from Oklahoma.

Ellie

[thedrifter]

February 05, 2009, 4:00 a.m.

50 De-Stimulating Facts
Chapter and verse on a bad bill.

By Stephen Spruiell & Kevin Williamson


Senate Democrats acknowledged Wednesday that they do not have the votes to pass the stimulus bill in its current form. This is unexpected good news. The House passed the stimulus package with zero Republican votes (and even a few Democratic defections), but few expected Senate Republicans (of whom there are only 41) to present a unified front. A few moderate Democrats have reportedly joined them.

The idea that the government can spend the economy out of a recession is highly questionable, and even with Senate moderates pushing for changes, the current package is unlikely to see much improvement. Nevertheless, this presents an opportunity to remove some of the most egregious spending, to shrink some programs, and to add guidelines where the initial bill called for a blank check. Here are 50 of the most outrageous items in the stimulus package:


VARIOUS LEFT-WINGERY
The easiest targets in the stimulus bill are the ones that were clearly thrown in as a sop to one liberal cause or another, even though the proposed spending would have little to no stimulative effect. The National Endowment for the Arts, for example, is in line for $50 million, increasing its total budget by a third. The unemployed can fill their days attending abstract-film festivals and sitar concerts.

Then there are the usual welfare-expansion programs that sound nice but repeatedly fail cost-benefit analyses. The bill provides $380 million to set up a rainy-day fund for a nutrition program that serves low-income women and children, and $300 million for grants to combat violence against women. Laudable goals, perhaps, but where’s the economic stimulus? And the bill would double the amount spent on federal child-care subsidies. Brian Riedl, a budget expert with the Heritage Foundation, quips, “Maybe it’s to help future Obama cabinet secretaries, so that they don’t have to pay taxes on their nannies.”

Perhaps spending $6 billion on university building projects will put some unemployed construction workers to work, but how does a $15 billion expansion of the Pell Grant program meet the standard of “temporary, timely, and targeted”? Another provision would allocate an extra $1.2 billion to a “youth” summer-jobs program—and increase the age-eligibility limit from 21 to 24. Federal job-training programs—despite a long track record of failure—come in for $4 billion total in additional funding through the stimulus.

Of course, it wouldn’t be a liberal wish list if it didn’t include something for ACORN, and sure enough, there is $5.2 billion for community-development block grants and “neighborhood stabilization activities,” which ACORN is eligible to apply for. Finally, the bill allocates $650 million for activities related to the switch from analog to digital TV, including $90 million to educate “vulnerable populations” that they need to go out and get their converter boxes or lose their TV signals. Obviously, this is stimulative stuff: Any economist will tell you that you can’t get higher productivity and economic growth without access to reruns of Family Feud.

Summary:
$50 million for the National Endowment for the Arts
$380 million in the Senate bill for the Women, Infants and Children program
$300 million for grants to combat violence against women
$2 billion for federal child-care block grants
$6 billion for university building projects
$15 billion for boosting Pell Grant college scholarships
$4 billion for job-training programs, including $1.2 billion for “youths” up to the age of 24
$1 billion for community-development block grants
$4.2 billion for “neighborhood stabilization activities”
$650 million for digital-TV coupons; $90 million to educate “vulnerable populations”



POORLY DESIGNED TAX RELIEF
The stimulus package’s tax provisions are poorly designed and should be replaced with something closer to what the Republican Study Committee in the House has proposed. Obama would extend some of the business tax credits included in the stimulus bill Congress passed about a year ago, and this is good as far as it goes. The RSC plan, however, also calls for a cut in the corporate-tax rate that could be expected to boost wages, lower prices, and increase profits, stimulating economic activity across the board.

The RSC plan also calls for a 5 percent across-the-board income-tax cut, which would increase productivity by providing additional incentives to save, work, and invest. An across-the-board payroll-tax cut might make even more sense, especially for low- to middle-income workers who don’t make enough to pay income taxes. Obama’s “Making Work Pay” tax credit is aimed at helping these workers, but it uses a rebate check instead of a rate cut. Rebate checks are not effective stimulus, as we discovered last spring: They might boost consumption, a little, but that’s all they do.

Finally, the RSC proposal provides direct tax relief to strapped families by expanding the child tax credit, reducing taxes on parents’ investment in the next generation of taxpayers. Obama’s expansion of the child tax credit is not nearly as ambitious. Overall, his plan adds up to a lot of forgone revenue without much stimulus to show for it. Senators should push for the tax relief to be better designed.

Summary:
$15 billion for business-loss carry-backs
$145 billion for “Making Work Pay” tax credits
$83 billion for the earned income credit


STIMULUS FOR THE GOVERNMENT
Even as their budgets were growing robustly during the Bush administration, many federal agencies couldn’t find the money to keep up with repairs—at least that’s the conclusion one is forced to draw from looking at the stimulus bill. Apparently the entire capital is a shambles. Congress has already removed $200 million to fix up the National Mall after word of that provision leaked out and attracted scorn. But one fixture of the mall—the Smithsonian—dodged the ax: It’s slated to receive $150 million for renovations.

The stimulus package is packed with approximately $7 billion worth of federal building projects, including $34 million to fix up the Commerce Department, $500 million for improvements to National Institutes of Health facilities, and $44 million for repairs at the Department of Agriculture. The Agriculture Department would also get $350 million for new computers—the better to calculate all the new farm subsidies in the bill (see “Pure pork” below).

One theme in this bill is superfluous spending items coated with green sugar to make them more palatable. Both NASA and NOAA come in for appropriations that properly belong in the regular budget, but this spending apparently qualifies for the stimulus bill because part of the money from each allocation is reserved for climate-change research. For instance, the bill grants NASA $450 million, but it states that the agency must spend at least $200 million on “climate-research missions,” which raises the question: Is there global warming in space?

The bottom line is that there is a way to fund government agencies, and that is the federal budget, not an “emergency” stimulus package. As Riedl puts it, “Amount allocated to the Census Bureau? $1 billion. Jobs created? None.”

Summary:
$150 million for the Smithsonian
$34 million to renovate the Department of Commerce headquarters
$500 million for improvement projects for National Institutes of Health facilities
$44 million for repairs to Department of Agriculture headquarters
$350 million for Agriculture Department computers
$88 million to help move the Public Health Service into a new building
$448 million for constructing a new Homeland Security Department headquarters
$600 million to convert the federal auto fleet to hybrids
$450 million for NASA (carve-out for “climate-research missions”)
$600 million for NOAA (carve-out for “climate modeling”)
$1 billion for the Census Bureau


INCOME TRANSFERS
A big chunk of the stimulus package is designed not to create wealth but to spread it around. It contains $89 billion in Medicaid extensions and $36 billion in expanded unemployment benefits—and this is in addition to the state-budget bailout (see “Rewarding state irresponsibility” below).

The Medicaid extension is structured as a temporary increase in the federal match, but make no mistake: Like many spending increases in the stimulus package, this one has a good chance of becoming permanent. As for extending unemployment benefits through the downturn, it might be a good idea for other reasons, but it wouldn’t stimulate economic growth: It would provide an incentive for job-seekers to delay reentry into the workforce.

Summary:
$89 billion for Medicaid
$30 billion for COBRA insurance extension
$36 billion for expanded unemployment benefits
$20 billion for food stamps


PURE PORK
The problem with trying to spend $1 trillion quickly is that you end up wasting a lot of it. Take, for instance, the proposed $4.5 billion addition to the U.S. Army Corps of Engineers budget. Not only does this effectively double the Corps’ budget overnight, but it adds to the Corps’ $3.2 billion unobligated balance—money that has been appropriated, but that the Corps has not yet figured out how to spend. Keep in mind, this is an agency that is often criticized for wasting taxpayers’ money. “They cannot spend that money wisely,” says Steve Ellis of Taxpayers for Common Sense. “I don’t even think they can spend that much money unwisely.”

Speaking of spending money unwisely, the stimulus bill adds another $850 million for Amtrak, the railroad that can’t turn a profit. There’s also $1.7 billion for “critical deferred maintenance needs” in the National Park System, and $55 million for the preservation of historic landmarks. Also, the U.S. Coast Guard needs $87 million for a polar icebreaking ship—maybe global warming isn’t working fast enough.

It should come as no surprise that rural communities—those parts of the nation that were hardest hit by rampant real-estate speculation and the collapse of the investment-banking industry—are in dire need of an additional $7.6 billion for “advancement programs.” Congress passed a $300 billion farm bill last year, but apparently that wasn’t enough. This bill provides additional subsidies for farmers, including $150 million for producers of livestock, honeybees, and farm-raised fish.

Summary:
$4.5 billion for U.S. Army Corps of Engineers
$850 million for Amtrak
$87 million for a polar icebreaking ship
$1.7 billion for the National Park System
$55 million for Historic Preservation Fund
$7.6 billion for “rural community advancement programs”
$150 million for agricultural-commodity purchases
$150 million for “producers of livestock, honeybees, and farm-raised fish”


RENEWABLE WASTE
Open up the section of the stimulus devoted to renewable energy and what you find is anti-stimulus: billions of dollars allocated to money-losing technologies that have not proven cost-efficient despite decades of government support. “Green energy” is not a new idea, Riedl points out. The government has poured billions into loan-guarantees and subsidies and has even mandated the use of ethanol in gasoline, to no avail. “It is the triumph of hope over experience,” he says, “to think that the next $20 billion will magically transform the economy.”

Many of the renewable-energy projects in the stimulus bill are duplicative. It sets aside $3.5 billion for energy efficiency and conservation block grants, and $3.4 billion for the State Energy Program. What’s the difference? Well, energy efficiency and conservation block grants “assist eligible entities in implementing energy efficiency and conservation strategies,” while the State Energy Program “provides funding to states to design and carry out their own energy efficiency and renewable energy programs.”

While some programs would spend lavishly on technologies that are proven failures, others would spend too little to make a difference. The stimulus would spend $4.5 billion to modernize the nation’s electricity grid. But as Robert Samuelson has pointed out, “An industry study in 2004—surely outdated—put the price tag of modernizing the grid at $165 billion.” Most important, the stimulus bill is not the place to make these changes. There is a regular authorization process for energy spending; Obama is just trying to take a shortcut around it.

Summary:
$2 billion for renewable-energy research ($400 million for global-warming research)
$2 billion for a “clean coal” power plant in Illinois
$6.2 billion for the Weatherization Assistance Program
$3.5 billion for energy-efficiency and conservation block grants
$3.4 billion for the State Energy Program
$200 million for state and local electric-transport projects
$300 million for energy-efficient-appliance rebate programs
$400 million for hybrid cars for state and local governments
$1 billion for the manufacturing of advanced batteries
$1.5 billion for green-technology loan guarantees
$8 billion for innovative-technology loan-guarantee program
$2.4 billion for carbon-capture demonstration projects
$4.5 billion for electricity grid


REWARDING STATE IRRESPONSIBILITY
One of the ugliest aspects of the stimulus package is a bailout for spendthrift state legislatures. Remember the old fable about the ant and the grasshopper? In Aesop’s version, the happy-go-lucky grasshopper realizes the error of his ways when winter comes and he goes hungry while the industrious ant lives on his stores. In Obama’s version, the federal government levies a tax on the ant and redistributes his wealth to the party-hearty grasshopper, who just happens to belong to a government-employees’ union. This happens through something called the “State Fiscal Stabilization Fund,” by which taxpayers in the states that have exercised financial discipline are raided to subsidize Democratic-leaning Electoral College powerhouses—e.g., California—that have spent their way into big trouble.

The state-bailout fund has a built-in provision to channel the money to the Democrats’ most reliable group of campaign donors: the teachers’ unions. The current bill requires that a fixed percentage of the bailout money go toward ensuring that school budgets are not reduced below 2006 levels. Given that the fastest-growing segment of public-school expense is administrators’ salaries—not teachers’ pay, not direct spending on classroom learning—this is a requirement that has almost nothing to do with ensuring high-quality education and everything to do with ensuring that the school bureaucracy continues to be a cash cow for Democrats.

Setting aside this obvious sop to Democratic constituencies, the State Fiscal Stabilization Fund is problematic in that it creates a moral hazard by punishing the thrifty to subsidize the extravagant. California, which has suffered the fiscal one-two punch of a liberal, populist Republican governor and a spendthrift Democratic legislature, is in the worst shape, but even this fiduciary felon would have only to scale back spending to Gray Davis–era levels to eliminate its looming deficit. (The Davis years are not remembered as being especially austere.) Pennsylvania is looking to offload much of its bloated corrections-system budget onto Uncle Sam in order to shunt funds to Gov. Ed Rendell’s allies at the county-government level, who will use that largesse to put off making hard budgetary calls and necessary reforms. Alaska is looking for a billion bucks, including $630 million for transportation projects—not a great sign for the state that brought us the “Bridge to Nowhere” fiasco.

Other features leap out: Of the $4 billion set aside for the Community Oriented Policing Services—COPS—program, half is allocated for communities of fewer than 150,000 people. That’s $2 billion to fight nonexistent crime waves in places like Frog Suck, Wyo., and Hoople, N.D.

The great French economist Frédéric Bastiat called politics “the great fiction through which everybody endeavors to live at the expense of everybody else.” But who pays for the state bailout? Savers will pay to bail out spenders, and future generations will pay to bail out the undisciplined present.

In sum, this is an $80 billion boondoggle that is going to reward the irresponsible and help state governments evade a needed reordering of their financial priorities. And the money has to come from somewhere: At best, we’re just shifting money around from jurisdiction to jurisdiction, robbing a relatively prudent Cheyenne to pay an incontinent Albany. If we want more ants and fewer grasshoppers, let the prodigal governors get a little hungry.

Summary:
$79 billion for State Fiscal Stabilization Fund

— Stephen Spruiell is a staff reporter for National Review Online. Kevin Williamson is a deputy managing editor of National Review.

Ellie

[thedrifter]

Stealing the Stimulus

By Alyssa A. Lappen
FrontPageMagazine.com | 2/6/2009
When are earmarks not earmarks? When Congressional Democrats add them to New Deal-style legislation.

According to Democrats, “there are no earmarks” in the American Recovery and Reinvestment Act of 2009, the massive $1.1 trillion stimulus bill under debate in the Senate this week. In fact, there is little except earmarks in the pork-laden legislation the Obama administration is marketing to skeptical Americans as the urgent cure for the country’s ailing economy


As things now stand, less than 10 percent of the stimulus bill’s proposed projects could be expected to generate real economic uplift, mostly through tax credits and infrastructure funds. On the other hand, more than 90 percent of the bill would channel taxpayer funds to “special-interest earmarks,” state-level bailouts, and “permanent spending” increases for what will in effect be social engineering by the federal government.


Pork abounds in the bill. For instance, there is $88 million for a new Coast Guard polar icebreaker, $13 billion to repair and weatherize public housing, $2.25 billion for national parks, and $1 billion for the National Railway Passenger Corp. (Amtrak), which hasn't earned one red cent since its original 1971 government rescue from Penn Central's ashes. And that’s just the beginning.


The Senate bill greatly expands welfare spending. There are $13.3 billion earmarked to raise health insurance for unemployed workers, $27.1 billion for increased unemployment benefits, and $11.1 billion for “Other Unemployment Compensation.” Another $20 billion will go to raise maximum Supplemental Nutrition Assurance Program benefits (i.e., food stamps).


Elsewhere, the bill looks like a Trojan Horse for Barack Obama’s campaign plan to foster a national “green economy.” To that end, there is $18.5 billion set aside for energy efficiency and renewable energy programs, another $2.4 billion for demonstrations of how to safely remove atmospheric greenhouse gas, $2 billion for a Matoon, Ill. FutureGen near-zero emission power plant, and $600 million for federal government employee hybrid vehicles.


Despite its grand billing as a national life preserver– House Speaker Nancy Pelosi, in a telling demonstration of what Democrats once called “the politics of fear,” had earlier warned that “five hundred million” Americans would loose their job each month if the stimulus package were not passed – the bill increasingly is becoming liberal politics by other means. All in all, the bill packs in $136 billion for unproven ideas to create 32 new open-ended federal programs – most of which failed close inspection in earlier Congressional sessions.


While the bill will vastly increase the federal government’s reach, it is noteworthy that the government has never profitably managed a single enterprise. A by-no-means-exhaustive list of government failures might include mortgage giants Fanny Mae Freddie Mac, the mismanaged Federal Reserve Bank and US Postal Service, and the insolvent Social Security, Medicare, Medicaid systems. They're all bankrupt, as are 40 of the 50 states, each of which is now begging for handouts from a federal government effectively just as bankrupt. As pundit David Coughlin asks, “Why do we think the people who caused these problems are able to fix them ...?”


The stimulus bill amounts to a major opportunity missed. Bankruptcy – not a government bailout – is often the road back to solvency. Consider that six major airlines – including United, Delta, Northwest, and Continental – all filed for Chapter 11 and emerged with real hopes for profit. Such large and small steel companies as National Steel, Bethlehem Steel, Wheeling-Pittsburgh, Kaiser, Bayou, Weirton Steel, and many others have leveraged Chapter 11 to emerge as stand-alone companies – or to sell a leaner version of themselves to competitors. Pacific Gas & Electric and Kmart are healthy again, too, following their Chapter 11 filings.


No surprise, then, that over 100 economists are petitioning the Senate against the stimulus and 200 oppose financial bailouts in general. The public seems to agree. Support for the Senate stimulus plan has plummeted to just 37%, according to Rasmussen. Cooler heads are even starting to prevail in the Senate. President Obama called “centrist” Maine Sen. Susan Collins to the White House this week to discuss cutting the plan's price tag to $700 billion, and to focus on tax cuts and spending to specifically generate jobs. That means spending of dubious simulative potential -- $780 million to prepare for a flu pandemic, for example – may soon be trimmed from the bill.


Still, it's too bad that no one has managed to convince President Obama to eliminate the idea of “stimulus” spending all together. The U.S. already has squandered nearly $1 trillion in bailouts, to no avail. We got here “by spending and investing money that didn't exist,” notes Oklahoma Sen. Tom Coburn. As a good physician, Coburn wisely prescribes treating the disease, not its symptoms.


The generic term for raising holdings in a tanking stock is “doubling down.” But great investors only do that for successful companies. The stimulus bill is something else entirely. If the Senate passes this “stimulus,” it would merely be doubling down on legislative pork. In the end, not even calling such proposals “job-creating investments” can disguise the fact that the bill won’t actually create jobs.

Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org.

Ellie

[thedrifter]

Political Hay
Preparing for Failure

By Philip Klein on 2.10.09 @ 6:10AM

Even while calling for the urgent passage of the $800 billion-plus economic stimulus package, the Obama administration and its liberal allies are laying the groundwork to neutralize criticisms should it fail.

"[B]y the midterm elections we're probably not going to see an economy that's better than now," former Clinton Labor Secretary Robert Reich conceded Sunday on ABC's "This Week" with George Stephanopoulos. "I mean, not that the stimulus program will have failed, but that the stimulus program, even if it succeeds, will not actually kick in. It will not get the economy better than it is now. Without the stimulus, the economy could be far worse in two years than it is now."

While he hasn't been quite as explicit as Reich, President Obama has adopted the same line of reasoning as part of his public relations offensive to boost support for the stimulus package: a failure to act will make things worse, even if acting may not make things better -- or at least not for a while.

President Obama is selling the plan as one that will "save or create" four million jobs, and he's continued to hedge his statements on the upside potential of the legislation while portraying the dire consequences of inaction.

Last week, he wrote in a Washington Post op-ed that if Congress didn't pass the stimulus package: "Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."

On Monday, President Obama took his show on the road, urging an Elkhart, Indiana audience to get behind his plan, while cautioning them not to expect miracles.

"We know that even with this plan, the road ahead won't be easy," Obama said in his initial remarks at the town hall-style gathering. "This crisis has been a long time in the making, and we know that we cannot turn it around overnight. Recovery will likely be measured in years, not weeks or months."

Then, in his first primetime press conference as president Monday night, Obama explained: "My administration inherited a deficit of over one trillion dollars. But because we also inherited the most profound economic emergency since the Great Depression, doing little or nothing at all will result in even greater deficits, even greater job loss, even greater loss of income, and even greater loss in confidence."

What this means is that if the economy is still in trouble as the 2010 elections approach, Democrats will argue that eight years of Republican rule left the country in such awful shape that Democrats will need more time to clean up the mess. If unemployment is in the 7 percent to 9 percent range, they'll say, without their policies, it would have been 12 percent, or perhaps higher.

While lawmakers are primarily interested in getting reelected, to liberal intellectuals who are constantly clamoring for more government spending, the failure of the stimulus package would represent another real-life example of the failure of Keynesian theory. That's why they've been criticizing the plan from the left.

New York Times columnist Paul Krugman has led the way by arguing that the stimulus package is far too small.

"[I]f we look at the scale of the problem, the Congressional Budget Office says that we're gonna have a hole in the economy, insufficient spending to the tune of $2.9 trillion over the next three years," Krugman said on ABC's "World News" this Sunday. "And we've got a sort of $800 billion plan to cope with it. It's actually quite a bit on the low side."

Krugman has complained that the "sort of" $800 billion legislation has too many tax cuts, and that President Obama made too many concessions in an effort to win support of Republicans.

"You know, he did a tremendous amount of attempt at outreach and got zero for it," Krugman lamented. "Absolutely nothing. And I hope he's learned his lesson from that."

In his Monday column, Krugman tore into the compromise legislation forged by centrists in the Senate. "I blame President Obama’s belief that he can transcend the partisan divide -- a belief that warped his economic strategy," Krugman snarled.

So for Krugman and other liberal ideologues, if the economy does not recover after an $800 billion government stimulus package, the excuse will be that Obama abandoned pure Keynesianism out of a misguided desire for bipartisanship.

But unlike Krugman, Democrats will have to face voters in the fall of next year, and if economic conditions do not improve, they'll be forced to explain how they ran up trillions in debt without having anything to show for it.


Philip Klein is a reporter for The American Spectator.

Ellie

[thedrifter]

The Obama Watch
Obama's Scam and Pelosi's Pigs

By Jeffrey Lord on 2.10.09 @ 6:08AM

Let's name a few names.

Let's x-ray the process that is giving us this so-called "stimulus" bill.

The gargantuan spending bill now waddling through Congress is a lobbyist's dream. Do not think for a second that Democrats in Congress dreamed this up all by themselves. The principle behind it -- enlarging the government, creating more lobbyists and then robbing the taxpayers blind -- yes. This is gospel to liberals on Capitol Hill, always decked out in the language of superior morality and compassion. But the details? Please. The Congressional expertise in this area is close to zilch. Members of Congress are dependent on lobbyists for this kind of material. So they did what they always do: cranked up some blank pages on their Microsoft Word and turned to their favorite lobbyists to ask "whaddya got?"

What Team Obama and Speaker Pelosi are in the middle of doing here is giving the keys to your safe deposit box (not to mention what's left of your 401k's, mutual funds or the value of your house and anything else you haven't nailed down) to their favorite lobbyists. Then sitting back and letting them ransack every last dime you have for themselves. All for the purpose of growing Big Government into Humongous Government, hence creating enough new lobbyists to fill several Super Bowl-sized stadiums. Not to mention slopping the trough for the thousands upon thousands of lobbyists already in town. All of whom will be most anxious to send contributions to the Re-elect Obama campaign in 2012, not to mention the re-election campaigns of Pelosi's congressmen and senator buddies. Talk about pigs dressed up in lipstick! Next to prostitution this is the oldest game in Washington -- and it produces the same results. Someone is always getting screwed. In this case that someone is -- yet again -- you.

Tempting as it may be to focus on the bureaucratic obfuscation that comes along with hundreds of pages written in language like "Title I- General Provisions: Subtitle A-Use of Funds: Section C of Section 1104," let's do something else here. Let's pick four examples at random from the latest version of the stimulus bill. Let's speak English, as well. Instead of the aptly named "Appropriations to which this section applies," let's put it plainly: follow the money.

Who gets your money? Indian tribes.
Lobbyist delivering the goods: National Congress of American Indians.
How much of your money: "American Indian tribes stand to gain almost $3 billion..." (Source: AP).
Best quote from lobby group: The money from Obama is a "once in a lifetime opportunity."
Favor to Obama from lobby group: On October 31, 2008, Ron Allen, who has served as both president and treasurer of NCAI and describes himself in a public statement as being proud to "serve as a member of John McCain's advisory committee," endorses Barack Obama. Why? "Because I believe he does represent true, sincere and positive change for Indian country." Translation: Obama can be trusted to deliver the goods. The goods turns out to be $3 billion of your money.

Who gets your money? Labor union
Lobbyist delivering the goods: United Steelworkers union
How much of your money: Vice President Biden promises $100 billion will be spent on infrastructure projects. (Source: news reports.)
Favor to Obama from lobby group: On May 15, 2008, the United Steelworkers, led by president Leo Gerard, endorsed Obama.
Favor from Obama to lobby: Obama refuses to insist on removal of a "Buy America" amendment sponsored by Democrats Byron Dorgan (North Dakota Senator) and Peter Visclosky (Congressman from Indiana and chairman of the aptly named if misspelled "Steel Caucus"). Amendment mandates that all funds "appropriated or otherwise made available" by the bill must be used to pay only for "iron and steel ...produced in the United States." Translation: We don't care if this causes a repeat of the Great Depression as it did in the 1930s as long as we get ours. One hundred billion dollars of your hard-earned money is being set aside for the private use of this union. Period. So shut-up and hand over your wallet.

Who gets your money? Teachers union (government employees).
Lobbyist delivering the goods: National Education Association.
How much of your money: $150 billion (Source: New York Times)
Favor to Obama from lobby group: The NEA endorsed Obama on July 4, 2008. On July 5 he spoke to the group by satellite.
Best quote from lobby group: "We've been arguing that the federal government hasn't been living up to its commitments, but these increases go a substantial way toward meeting them," said Joel Packer, a lobbyist for the National Education Association, the nation's largest teachers union. Translation: Your piggy bank is now the property of a liberal activist union and its members. It will create jobs for them -- on your dime. They will want a tax increase eventually to pay for this. And don't even think of abolishing these new programs once they're funded or they will say you hate teachers and education.

Who gets your money? Environmentalists.
Lobbyist delivering the goods: The Sierra Club (and many others).
How much of your money: $80 billion to subsidize "renewable energy." (Source: news reports.)
Favor to Obama from lobby group: The Sierra Club endorsed Obama on July 19, 2008.
Best quote from lobby group: In a news release from Sierra, club president Allison Chin said: "Our endorsement today marks the beginning of a massive mobilization of thousands of members around the country for the campaign -- on the phone, on the ground, on the airwaves and online, spreading the message that as President, Barack Obama will lead America into the clean energy future and that we support his plan to solve both our economic challenges and the challenge of global warming at the same time." The group has received funding from the Democracy Alliance, which in turn is funded by billionaire George Soros. Translation: We take your money and give it to our lobby pals in groups like the American Wind Energy Association over on M Street (as opposed to K Street or Connecticut Avenue or…well, you get the idea). It creates jobs for more lobbyists, usually ex-Hill staffers and ex-Members of the House and Senate who will lobby for more of your money and, getting it, will hire more lobbyists to get still more of your money. You pay, they lobby. Get it? No house payment problems in the expensive Washington suburbs for these guys.

What's described above is what you might call the Culture of Tom Daschle. Daschle came to Washington as a Senate staffer for a South Dakota senator. Then went home to get elected to Congress himself, where, House or Senate, he remained until his defeat in 2004. Did he go home then? Are you kidding? As the Wall Street Journal noted in a recent editorial, of course not. Tom Daschle a farmer after all that time in the Big Government Big City? Not on your life. There was influence to peddle and money to be made. In Daschle's case, he made millions almost immediately.

In fairness to Daschle, the real culprit here was one of FDR's New Dealers, the late Tommy "The Cork" Corcoran. Corcoran was a gung-ho New Dealer who spent his time with FDR planting all the green shoots of Big Government. When they quickly blossomed and began to endlessly multiply into the bureaucratic jungle that is modern Washington, Corcoran left government to sign on as a jungle guide. A highly paid jungle guide. He was, in some respects, the Bill Gates or Henry Ford of lobbying. Instead of a real product like software or cars, however, the product was influence. The game was simple. Lobby the government to set up a bureaucracy regulating some aspect of your life out there beyond the Beltway, or better yet have a program for it imbedded in the government itself. Even better, get this done while in government yourself. Set these things in political concrete, which is to say they can never, ever be ended. Then, with some formerly private entity now being squeezed or padded by the government, go to them and volunteer your services to lobby. For or against, no matter. You'll get paid -- well paid -- either way.

Take a look around your immediate surroundings as you read this. What do you see? Your computer? Reading this on Windows? Did you Google this publication? The folks at the Computer and Communications Industry Association (which includes as members Microsoft and Google, to name but two) popped for almost $1.5 million in lobbying last year, a long way from the barely couple hundred grand of a decade ago when there weren't as many computers being sold in the world and the 'Net was just getting off the ground. A while back the New York Times reported Bill Gates had to hire an "army of lobbyists" just to deal with the Justice Department alone. Sipping a coke? According to OpenSecrets.org, the Coca-Cola Company felt the need to spend north of $2.5 million on lobbying last year. Wearing your favorite Nike sneakers? Yup. About half a million listed for them last year. Listening to some soothing music? That would be the folks over at the Recording Industry Association of America.

You get the picture.

In other words, Big Government has so invaded every aspect of your life that in self-defense Americans have had to resort to establishing a very well paid influence-peddling industry in Washington, D.C. (and mini-versions in state capitals) just to survive. After decades of this the whole thing has become one very smooth version of an extortion racket disguised as a candy store. Daschle is only the latest to set up shop, focusing on extorting his living from his area of interest -- health-care. It's no accident why he was selected for the Secretary's job at Health and Human Services. Daschle had made it -- quite literally -- his business to know anybody who is anybody in the health-care industry. And like the president he was set to work for, he had every intention of expanding the government's role in your health-care choices and thus willfully enable (not to mention enlarge) the number of lucrative lobbying jobs in the health-care lobbying trade.

The particularly bad part of this is that Republicans long ago bought into this flim-flam machine. It is an article of faith in Washington that lobby shops hire both Democrats and Republicans to work their respective brethren on Capitol Hill and in the White House of the moment. The only way to effectively protest the whole rigged game if you are leaving government service is, simply put, not to play the game. Lots, needless to say, simply don't have the stomach to fight. It's too lucrative. They are addicted to what might be called influence-peddling crack. Instead they become part of the problem, accepting the underlying premise that a centralized Big Government is here to stay and the only thing to do is just accept the fact it will be made bigger. Endlessly. This is why Republicans pop up as lobbyists for the scandal-tarred Fannie Mae. Hey, everybody does it, goes the rationale. And in Washington, D.C. they would be correct. Everybody does do it. And they get paid very, very well to do it.

So now President Obama arrives, using high-blown rhetoric about "change" when he is in fact determined to make the game bigger by a factor of a trillion dollars. The new guy has been in office barely three weeks and his only questions to lobbyists are how fast he can lay down and should he roll over? To which Speaker Pelosi says Amen!

You, my fellow Americans, are being scammed. You are sitting out there working your butts off making or selling widgets -- cars, computers, movies, sandwiches, furniture, cocktails or whatever. You are literally creating and re-creating America. At this exact moment you may very well be unemployed because of what this Washington lobbyist game has done to your widget business. Mark this well: when former President Obama stands at the door of Marine One outside the East Front of the Capitol to get his farewell salute from his successor in four or eight years, you can rest assured that he -- and all the lobbyists he has fed at the trough -- will be laughing as he is flown in high style all the way back to Chicago or Hawaii. He and they will have picked you clean in the name of change.

A little advice?

Stop laying down.

Jeffrey Lord is a former Reagan White House political director and author. He writes from Pennsylvania at jlpa@aol.com.

Ellie

[thedrifter]

February 10, 2009, 0:00 a.m.

Last Gasp for Limited Government?
Obama charts a socialized course.

By Rich Lowry

Is American exceptionalism about to be bundled off on a long trip to the Continent, never to return? Socialism may happen here.

Republicans fought an inspired battle against the stimulus bill, holding all but three of their 219 senators and congressmen. And they still lost.

Barring a last-minute House-Senate blowup, Pres. Barack Obama will sign a bill spending at least $475 billion in the first major substantive victory of his presidency. Some of that spending will enter the permanent “baseline” of the federal budget, the starting point for all future budgets that, in the immutable law of Washington, always grow and never shrink.

Even pruning the House version of the bill—in other words, paring back spending that hadn’t yet taken place—was portrayed as tightfisted and cruel. House speaker Nancy Pelosi called the “cuts” in proposed spending “very damaging.” Just wait until the spending is actually in the budget. An analysis by Robert Rector of the Heritage Foundation shows that the House version has $264 billion in new means-tested welfare spending that, (safely) assuming it’s never rolled back, will add $787 billion in welfare costs over ten years.

Randolph Bourne posited that war is the health of the state. True. But one wonders: What isn’t the health of the state? Republicans from Ronald Reagan to Newt Gingrich intent on limiting government during the past 25 years have succeeded in a limited way: From 1983 to 2000, the size of the federal government relative to GDP declined from 23.5 percent to 18.4 percent. Federal spending didn’t shrink, but it grew at a slower rate than the economy, providing more breathing room for the private sector.

It had bounced back to 20.9 percent last year, and could conceivably go as high as 28 percent this year. According to Newsweek (latest cover: “We Are All Socialists Now”), in 2010 total U.S. government spending will be 39.9 percent of GDP, only about eight percentage points below the average in the socialistic eurozone countries. Is American exceptionalism about to be bundled off on a long trip to the Continent, never to return?

That’s the momentous question posed by Obama’s presidency. Those who favor socialism of the creeping variety are feasting on a collapse of Wall Street’s reputation as complete as that of the early 1930s, when it was said of disgraced banker Charles E. Mitchell: “If you steal $25, you’re a thief. If you steal $250,000, you’re an embezzler. If you steal $2,500,000, you’re a financier.”

The lost moral authority of the financial sector—and the market generally—has accrued to government, now on the hook for $9.7 trillion worth of interventions in the economy. Whether this program is perceived to work, whether Obama further nationalizes heath care, and how much of our wealth is claimed by looming entitlements will determine the country’s future, and its nature.

The backdrop to the debate over these questions is a roiling, up-for-grabs populism. The ascendant left-leaning populism feeds off anger at the new “malefactors of great wealth.” But a right-leaning populism is building. It takes the same anger but lumps government in with the malefactors, through its bailout of failed industries and its self-serving irresponsibility, symbolized by silly pet projects in the stimulus bill and burgeoning deficits (which Republicans are newly outraged about).

Obama can’t get on the wrong side of this populist sentiment. It is why he did his rapid about-face on the nomination of Tom Daschle (a liberal swell enjoying a privileged Washington lifestyle, while neglecting his tax bills), and won’t yet ask for more spending as part of the latest financial bailout. Obama’s position gets more precarious if he ever imposes a broad-based tax increase to pay for an imminent deficit of nearly $2 trillion, larger than the entire federal government a mere eight years ago.

If Obama manages to cement an aggrandized government, his domestic political accomplishment will equal Ronald Reagan’s—although, obviously, in reverse. The late sociologist Seymour Lipset wrote a brilliant book on why the U.S. didn’t embrace socialism, called It Didn’t Happen Here. In a few years, its conclusion might look premature.


— Rich Lowry is the editor of National Review.

Ellie