of my sons was three, we were driving down the street. I realized I had passed our destination and merely
turned the car back in the direction
of our home. From the back seat I heard
this cheery voice, "What’s the matter Dad, you forget your wallet again?" My tendency to lose my wallet is something my
kids remind me of to this day. A recent
Father’s Day card is to the right. (Note my close physical
resemblance to Indy and that my kids notice it too.)
So when it comes to fiscal responsibility, I may not be the best messenger. But $862,000,000,000??? That is how much the administration spent on
the last stimulus plan. A new report explains
why the administration has given the word "stimulus" such a bad name and why it
would be a huge mistake to allow them to now produce "Stimulus II, More Lost
by John Cogan and John Taylor
The administration attempted to
economic activity by (1) direct payments to state and local governments, (2) creating
and executing "shovel ready" projects and (3) direct payments to individuals. However, with respect to direct payments to
government entities, Cogan and Taylor conclusively show the funds were not used
to create jobs but to (a) increase payments to health and welfare programs and (b)
provide an alternative funding source for existing projects. For example, instead of issuing a bond to pay
for a project they already planned to undertake, they just used stimulus funds.
Regarding "shovel ready" projects, the magnitude of the
deception, or incompetence – take your pick -is shocking. The program has increased government spending
on new roads and other projects by only $20 billion dollars, or just 3% of the $862,000,000,000! All those signs you have seen that show the
project was paid with stimulus funds?
Most of those projects were in the pipeline at the time of the
stimulus. And don’t get me started on
how much each of those signs cost. The only thing these guys know how to shovel
The report is a cautionary tale for both parties. A significant percentage of recent stimulus
programs, under both Bush and Obama, were temporary, direct payments or
subsidies by the government to individuals (checks, cash for clunkers, payroll tax
reductions, etc.) The report shows that
only long-term reductions in taxes changes long-term consumption patterns; temporary
reductions do not.
We are facing a long term,
severe, international financial crisis.
Yet 28 months after unemployment jumped the rails and 15 months after
the "Summer of Recovery", the administration is promising to "someday soon" come
up with a jobs program. Not only has the
horse left the barn Mr. President – the barn is burning. And that barrel over there marked "stimulus" you
are talking about pouring on the fire is filled with gasoline, not water.
Whether he should call Congress back (I think he should until they
make meaningful cuts in the deficit), we are part of a global economy and this
is an international financial
crisis. Where is the summit of world
leaders? What are we doing with our
world partners to address the current unemployment crisis and dismal long term
The apparent answers? He does
not understand the problem. He does not have
a plan. He is not a leader.