Temporary, Timely and Targeted

By February 2, 2009Economy

A quick look around at news and commentary as the Senate begins debate on H.R. 1, the American Recovery and Reinvestment Act. It appears the Senate may be moving toward more stimulus, less long-term, grand-scale reordering of the relationship between citizens and the government.

Robert Samuelson, Washington Post, “Too Little Bang for The Bucks,” which uses proposals to finance the “smart grid” electrical infrastructure as an illustration to make these points:

The decision by Obama and Democratic congressional leaders to load the stimulus with so many partisan projects is politically shrewd and economically suspect. The president’s claims of bipartisanship were mostly a sham, as he skillfully maneuvered Republicans into a no-win position: Either support a Democratic program, or oppose it — and seem passive and uncaring.

But the result is that the stimulus, as an act of economic policy, is hobbled. A package so large can be defended only because the economy is so weak — and seems to be getting weaker by the moment. The central purpose is simple: halt downward momentum. Perhaps some of the out-year spending might ultimately prove useful. But the immediate need is for the stimulus package to stimulate — now. It needs to be front-loaded; it isn’t.

Byron York, National Review, The Corner, “The Future of Stimulus“:

Have spent some time today [Sunday] talking to Republican and Democratic members of the Senate, as well as political strategists, about what is coming with the stimulus bill.  The first thing is that the Republican critique of the bill, as passed by the House, has taken hold among some moderate Democrats — or, at least, they share many of the Republicans’ reservations.  Those Democrats simply will not support the bill if it comes up in the Senate in the same form in which it passed the House.  They want to see a lot — a lot — of spending taken out of the bill, spending that they might actually support were it in a normal appropriations bill but which they believe has no place in the stimulus package

Kevin Hassett, American Enterprise Institute, in Bloomberg, “Enjoy Stimulus Now, Pay Your $14,000 Share Later“:

When the stimulus package, the SCHIP expansion and whatever else our representatives in Washington dream up are on the books, it seems likely that the deficit for this year will approach $1.7 trillion. This is an enormous swing in the U.S. fiscal condition.

Under President George W. Bush — a big spender in his own right — the federal budget deficit reached a record $455 billion in fiscal 2008, more than double a year earlier. Government bailouts of banks and other industries that started under Bush, and may accelerate under President Barack Obama, will help push the deficit toward that $1.7 trillion mark.

That is $1.7 trillion in future taxes. Nobody knows exactly when the tax hike will come. It might even be that we shall try to foist the costs on our children. Still, those planning their financial futures should account for the dramatically higher taxes that will be the result of this year’s policies.

And here’s the text of President Obama’s Saturday radio address to the nation.

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