Federal stimulus proposal is flawed

Last week Starbucks announced it is selling its new $45 million corporate jet. With sales slumping and layoffs being planned, the company realizes that times have changed.

  • Tuesday, February 3, 2009 12:10am
  • Opinion

Political

Columnist

Last week Starbucks announced it is selling its new $45 million corporate jet. With sales slumping and layoffs being planned, the company realizes that times have changed.

Last year, Gov. Chris Gregoire negotiated pay raises with several public employee unions. But a projected $2.5 billion budget shortfall has become a $6 billion-and-counting shortfall. The raises have been canceled. Times have changed. (The unions don’t care. They’ve gone to court to try and get the raises anyway).

King County government is asking employees to take some unplanned unpaid leave, in order to keep layoffs to a minimum. They know that times have changed. Companies large and small across the country are doing the same thing for the same reason.

But one place in America doesn’t want to change its ways: Washington, D.C., which is odd, because that’s the one place where change was promised, over and over again.

“Budget reform is not an option. It’s a necessity,” Barack Obama told a news conference Nov. 25. “If we are going to make the investments we need, we also have to be willing to shed the spending we don’t need,”

That is why the $800 billion-plus stimulus bill in Congress should be rejected. It is not reform by any stretch of the imagination and it’s packed with spending “we don’t need.” The bill’s stated intent is to stimulate growth in the economy, but an analysis of the bill by the Wall Street Journal reveals that less than one dollar in eight is spent on actually growing the economy. The rest largely grows the government.

For example, $400 million is earmarked for NASA to study climate change. Another $20 billion is set aside for more welfare services, $2 billion more for the National Park Service and $150 million for the Smithsonian Institution. Another $19 billion in grants to colleges, universities and public schools. My personal favorite: $44 million to renovate the national headquarters of the Department of Agriculture.

Much of the money would be spent where unemployment is already low. Alan Reynolds of the CATO Institute points out that four in 10 dollars goes to government, where the unemployment rate for government workers is just 2.3 percent. Unemployment in the manufacturing sector is three times higher than that. In construction it’s six times higher. We constantly hear that people must be put to work NOW. But the government’s own figures show that only about 25 percent of the money would be spent on infrastructure (energy, transportation and water projects) by the end of 2010.

Even the tax cut portion of the stimulus plan is misdirected. Instead of cutting tax rates, the plan would send a “tax cut” of $500 a year for two years to working people, in the hope that they would spend it and stimulate growth. We tried that just last year. Only about 15 percent of the money was spent. The remainder was saved or used to pay bills. Rebates may be desirable, but they don’t stimulate growth like cutting rates did in the Kennedy and Reagan era.

Change? Far from it. This is Congress at its worst. Kudos to Dave Reichert for voting against it.

Whether you are a Democrat, Republican or neither, this stimulus program stimulates old-fashioned pork barrel spending instead of economic growth. Start over, Mr. President. There is never a right time for doing the wrong thing.

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