Barack Obama has dubbed his behemoth fiscal stimulus proposal the "American Recovery and Reinvestment Plan." But if truth in advertising were required of White House plans, only one title would fit the trillion-dollar-plus-and-growing bill: The Generational Theft Act of 2009.
President-elect Obama was at his most candid when he told the country Tuesday that we face massive deficits for the foreseeable future. "Potentially we’ve got trillion-dollar deficits for years to come," he said, "even with the economic recovery that we are working on."
But one word is glaringly out of place in that warning. It’s the word "even." Washington will saddle future generations with unprecedented debt because of the economic interventions Obama is planning, not despite them.
Think this through. We are now 13 months into the current recession. Since World War II, none of the recessions that have hit the U.S. economy have lasted more than two years. Most have lasted 12 months. The new mega-injections of government "investments" championed by Obama are intended to "break the momentum" of a recession we’re probably more than halfway through suffering.
This is not to suggest that the economic picture is all sunshine and roses. Quite the opposite. Our fundamental ill is too much spending and borrowing and too little saving. It’s going to take years to recover from the housing mess. Washington continues to encourage ever more ill-considered lending in a misguided attempt to stave off needed market corrections. The currently proposed combination of a nationwide infrastructure spending orgy plus tax-cut bribes does nothing to remedy that.
To paraphrase a previous Democratic administration: It’s the timing, stupid. Keep in mind that the Democrats’ stimulus timetable pushed through the House last fall proposed $34 billion in new, "ready to go" infrastructure spending — only $9.8 billion of which could be spent in 2009. As writer Brian Faughnan points out:
"While it’s unclear so far exactly how much infrastructure spending will be included in Obama’s stimulus package, it will clearly run into the hundreds of billions. As Democrats broaden their definition of projects that are ‘ready to go,’ they will by definition slow the rate at which funds are spent. When President Obama signs his stimulus bill into law, it will already be five months further into the recession than when [the Congressional Budget Office] reported on the last Democratic bill — and thus five months along toward being wasteful and counterproductive spending. He will also be signing a much larger bill, with a much smaller percentage of ‘front-loaded’ spending."
Moreover, despite Obama’s earnest-seeming pledge to block all earmarks, there will be an inevitable lard-up of the stimulus. When has there not?
Senate Minority Leader Mitch McConnell signaled openness to the plan over the weekend as long as the GOP gets nominal input and kabuki hearings. The lard-up will guarantee that future capital is diverted to superfluous pork projects ("green jobs") and away from productive private enterprise. Instead of basic roads and bridges, infrastructure spending will go to bloated unions overseeing pie-in-the-sky construction projects like the $30 billion-plus high-speed rail line from Los Angeles to San Francisco, which California officials fully expect to be funded.
Bottom line: Obama’s prescription for economic pain will at most be useless in encouraging short-term growth, while ensuring anemic longer-term growth for the next decade (and beyond) at the expense of Obama’s kids and my kids and yours.
The truly bold thing for Obama to do would be to tell the panic-mongers and boondoggle-seekers to shove it, and to tell taxpayers to ride out the rest of the tough times while he gets Washington’s own economic house in order.
Instead, it’s more of the same old, same old mortgaging of our children’s future for the sake of present political crisis management.