Obama-Pelosi Plan Would Create Thirty-Two Government Programs

COMMENTARY Budget and Spending

Obama-Pelosi Plan Would Create Thirty-Two Government Programs

Jan 28, 2009 4 min read
COMMENTARY BY

Former Distinguished Fellow

Ernest served as a Distinguished Fellow at the Heritage Foundation.

The proposed Obama-Pelosi "economic stimulus" would end the era of merely big government and replace it with leviathan government.

"It'll never go away," says Sen. Tom Coburn (R-Okla.), calling the plan "a permanent increase at a time when we are in the worst financial shape we've ever been in." He adds, "None of this is going to stimulate anything."

However, President Barack Obama says size doesn't matter. As he said at his inaugural, "The question we ask today is not whether our government is too big or too small, but whether it works."

We should also ask whether it's Constitutional, whether the plan is being sold with false advertising, and whether we can afford it.

It would require our Treasury to borrow record levels of money from overseas, perhaps more than the world is willing to lend us. It might double our $1.3-trillion deficit that now makes us more dependent on China than any other country.

Since Obama has pledged to root out "unnecessary spending," then why not start with this "stimulus" bill? Even Sen. Kent Conrad (D-N.D.), the Senate Budget Chairman, notes that the $825 billion package at best would reduce unemployment rate by "maybe" 1 percent -- far less than Obama's extravagant claims.

The president's radio address last weekend told us only what he wanted us to know -- which means he never mentioned the cost. Pollsters have told Obama and fellow Democrats to describe their plans as "bold" but never to mention the price tag. So much for hard choices!

That $825-billion figure -- all borrowed money -- also fails to include the interest that must be paid, which will push the total price tag over $1.1-trillion.

Those who look beneath the pile of proposed new debt won't find a pony, but they will find many false claims:

  • The notion that it's about infrastructure is hype. Only 5% ($43 billion) of the bloated $825 billion package is for transportation, including only 3% for highways. Very little is "shovel-ready" work; most wouldn't be spent for two years or more.
  • It's not about government efficiency. The $43 billion for transportation spending is overshadowed by five times as much (more than $200 billion) to bail out state and local governments that have overspent their budgets.
  • Although Obama stated, "We won't just throw money at our problems -- we'll invest in what works," $136 billion of the bill is for unproven ideas -- to start 32 new federal programs.
  • "Community organizers," such as the left-wing lobbying group ACORN, would get their own new slush fund of up to $750-million.
  • Plenty of other parts don't pass either the laugh test or the smell test as a stimulus, such as $20-million to re-sod the National Mall, hundreds of millions for contraceptives, $650 million for digital TV coupons, and $250-million for an after-school snack program.

A better plan would be the genuine stimulus of tax reforms such as The Heritage Foundation has proposed, more than once. Unfortunately, most of what the "stimulus plan" deceptively labels as "tax cuts" is actually sending government checks to millions of people who don't pay income taxes.

If enacted, the Obama/Congressional proposal may exhaust America's ability to borrow. It certainly will increase our dependency on foreign money.

Foreign borrowing by the U.S. Treasury has soared in the past year. The latest Treasury Department numbers (November) show China's holdings in our national debt are up to $682 billion from $459 billion in the prior 12 months. Japanese holdings declined slightly, but still are $577 billion. England's share of American pie climbed from $170 billion to $360 billion. Oil exporters such as the Mid East and Venezuela upped their holdings from $139 billion to $198 billion. Russia's skyrocketed from $33 billion to $78 billion. And foreigners who use Caribbean banks for secrecy raised their stake from $108 billion to $220 billion.

How much more can we borrow before our creditors cut us off, or our Treasury securities become junk bonds that must pay exorbitant interest rates?

If Uncle Sam borrowed this $825-billion "stimulus" cash from his own citizens, each household would have to fork over more than $10,000 right away as the price of his help. That would spark outrage. It also would illustrate the absurdity of claiming that government borrowing is a stimulus.

Sadly, the misnamed "stimulus" package is a prelude to more record spending to come. Other massive spending bills are in the pipeline for action by Congress within the next couple of months, to add trillions atop trillions.

Unfortunately, rather than recognizing that big government is the problem, those who now run Washington have an notion that government technocrats are smarter than the free enterprise system.

But we should never forget that America's economic meltdown was prompted by government meddling, creating a quota system that required home mortgage lenders to issue sub-standard loans (see article Big-government Fingerprints on Murder Weapon). When those collapsed, the housing market tumbled and took the financial markets and everything else down with it.

Politicians at least should be honest about the cost, and that our children and grandchildren will be asked to pay it. Instead, the public is being told about the price tag, "If you have to ask, you can't afford it."

That's an excellent reason not to buy.

Ernest Istook is recovering from serving 14 years in Congress and is now a distinguished fellow at The Heritage Foundation.

First Appeared in Human Events