Lack of stimulation
When Franklin D. Roosevelt wanted to stimulate the economy in 1933, the first thing he did was create the Civilian Conservation Corps.
Within 37 days of FDR’s inauguration, he had proposed and Congress had enacted the CCC. On the 38th day, the corps began handing out shovels to hundreds of thousands of young men who worked for $30 a month planting trees, building fire roads and fire towers, digging irrigation ditches, restoring what the Dust Bowl had torn asunder.
In today’s world, we might get hearings in 37 days, but we wouldn’t get a bill. The American shovel industry would have to be satisfied; foreign-made shovels might be allowed, but only if a reciprocal trade agreement were hammered out.
The bulldozer industry would demand equity, and the biofuels industry would demand that a certain percentage of bulldozers run on biodiesel, which would require significant re-engineering contracts and trade protection against Japanese bulldozers.
Cities would say “Where’s ours?” States would demand control over a certain percentage of the money so that legislators could reforest their own districts. Labor unions would scream bloody murder about scab labor.
All of these interests would have invested heavily in key committee chairmen and appropriators. Democrats would attach unrelated pork projects to the bill, as would Republicans, who would then vote “no” anyway, preferring merely to give tax breaks to the lumber industry.
If you want to know why the $787 billion economic stimulus bill hasn’t created much stimulus — and right now, with unemployment headed for 10 percent, a lot of people are asking that question — it helps to remember the process that created it.
President Barack Obama’s name is attached to it — as in “Obama’s $787 billion stimulus plan” — and it’s true that he championed it. As president and leader of the party that controls both houses of Congress, he bears ultimate political responsibility for it.
But the bill largely was written by House Appropriations Committee Chairman David Obey of Wisconsin. He and his aides began working on it in November, shortly after Mr. Obama’s election. It is the ultimate camel designed by the ultimate committee.
When you’re about to spend more than three-quarters of a trillion dollars of borrowed money, you hear from a lot of people, many of whom you owe favors. The jobs that most interest members of Congress are their own.
Thirty-four percent of it, about $267 million, was tax relief. About $212 billion went to states to offset Medicaid costs and avoid cuts in education, nutrition and unemployment programs. Some $308 billion was set aside for “discretionary spending.”
Some of the tax relief already has kicked in; much of the rest will kick in next April when taxes are due. Its effect on employment is indirect, as money flows through the economy. Similarly the Medicaid, education and unemployment spending create economic activity, but the direct effect on jobs is hard to measure. Administration officials estimate that the stimulus bill might have saved 150,000 jobs from being eliminated.
Discretionary spending is what’s supposed to create jobs; it might eventually, but not so far. Mr. Obama had estimated the stimulus bill would save or create 600,000 new jobs by August. But 2 million jobs have been lost since he took office, so he’s deeply in the hole.
Vice President Joe Biden said last week that the administration had “misread how bad the economy was” when it took office. Lawrence Summers, the administration’s chief economic adviser, said last week that the stimulus is “on track,” and its full effect will kick in later this year and early next year.
Perhaps so, but it’s a growing political and economic problem now, and the fault can be laid at the way the stimulus plan was designed. Too little was directed at “right now” jobs, and too much at special-interest projects that — admirable though they might be — take a long time to get off the ground.
Consider the $3.4 billion devoted to the Fossil Energy Research and Development Program. Reducing the amount of carbon emitted by burning coal is a critical goal, but it’s not going to create jobs any time soon.
Another big problem: the $26.6 billion to be doled out to states by the Department of Transportation for “shovel-ready” highway and transit projects. States get to make their own decisions on where to spend it, which involves a whole new layer of political considerations, involving very loose definitions of “shovel ready.”
The New York Times reported Thursday that of the $16 billion approved so far for 5,274 transportation projects, more than half is going to projects outside the nation’s 100 largest metropolitan areas. These areas create three-fourths of the nation’s economic activity and nearly all of its traffic congestion.
And here we thought that Missouri was the only state that had a rural-dominated legislature and highway department. Still, we rated a special mention:
“Missouri,” The Times reported, “has directed nearly half its money to 89 small counties which, together, make up only a quarter of the state’s population.”
Now, despite a $1.7 trillion federal deficit, there is talk of yet another stimulus package. Administration officials and congressional leaders are wary, but they haven’t ruled it out. Congress being Congress, the same process would be followed: Lobbyists lining up outside the doors of their favorite appropriator to argue that their pet project would be a job-creating juggernaut.
Explosive detectors for airports! Green neighborhood vehicles (i.e., golf carts)! Head Start programs! A new icebreaker for the Coast Guard! Another billion for Amtrak! A tax refund for General Motors!
No, wait. Those projects are in the current stimulus bill. We can only imagine what might be Stimulus II. Actually it would be Stimulus III, since President George W. Bush signed a $168 billion stimulus package 12 months before Mr. Obama signed the $787 billion package.
If, on top of that $955 billion, there must be a third round — and we’re not convinced it’s a good idea — Republicans say it must come in the form of tax cuts (of course), not more spending. But tax cuts take a long time to work their way through the economy.
To make any immediate dent in unemployment, stimulus must be pork-free and only for projects that will help immediately. We doubt Congress is up to that task. More’s the pity.



Obama’s “stimulus” is a train-wreck- these jobs figures are far worse than the ones the White House warned us about if we DIDN’T pass the bill- so it was passed, and then unemployment soars anyway?
He said it would top-out at 8%, we give him a trillion dollars, and he and Joey Pluggs now tell us they “underestimated” as it pushes 10%?
-oh please
Instead of creating jobs, interest rates were bumped up, the dollar slid… and it didn’t help anybody get any work. Much of this is due to the fact that Obama’s agenda has mortified almost every machine of job-and-growth creation in the country.
The One couldn’t deliver the type of “temporary, targeted, and timely” bill that he promised repeatedly, and regardless of his image in the press, Obama simply lacks the the political stature to control Pelosi and Reid… who hit the trough hard, while bickering like siblings.
And the lack of GOP co-conspirators exposed Obama politically… this legislation now looks to be a HUGE gamble. And when all this pork-n-welfare fails to generate any real economic gains, the Democrats will face a bloodbath in 2010.
http://reaganiterepublicanresistance.blogspot.com
Editorial Board,
You are getting EXACTLY what you champion for on this page as well as the written page, BIG GOVERNMENT. What do you expect from an entity that owes it’s very existence to political patronage? Why would anyone with logical thinking skills think this could have turned out any other way? Because some “community organizer” said he had “hope” and could give you “change”? Hahahahahahah. Who’s the fool now? Soon the only change we’ll have left will be jingling around in our pockets. Oh, but those in Congress and their political lobbyists will be just fine because they’ve seen to it that they are protected.
Our government has failed us. But yet, they keep getting elected. Why?
Wow, you (the editorial board) sound a little testy. You must be disappointed that another utopian, socialist revolution is going down the toilet of waste, fraud and abuse. Are you really so naive as to think the current Democratic leadership would have done anything different than what they actually did? If so, you are even dumber than I thought.
Now, please pay attention. Governments to not create wealth, the private sector does. Government can only redistribute wealth using legalized theft (or taxes if you prefer.) Yes. those rich, evil corporations and businessmen are primarily responsible for creating new products, services and jobs. I know this conflicts with your socialist utopian vision but sometimes reality does bite.
There is so much more to say but why bother. A leopard doesn’t change his stripes and a liberal will always be for more government and less freedom. Fortunately, we have another election around the corner and I suppose every generation has to learn just how destructive your radical ideology is before they change course back towards freedom.
Are the Editors saying that government is inefficient, even unethical, in its handling of the economy? Does this mean the Post will begin to rethink its support for handing over health care to our betters in Washington? Probably not, since liberal thinking is never rooted in common sense.
Obama’s recovery plan is an 18 month program…not 2 months.
The real train wreck is the realization of 8 years of Bush incompetence and economic disaster.
Obama is trying to stop the bleeding. Funny, those who now find fault with our new president after only 5 months, didn’t hesitate to vote for the cause of our economic woes twice! The same people who supported 8 years of social, moral and economic decline….Some bloodbath.
Garrison, “social, moral, and economic decline” blah, blah, blah. As I see Michelle Obama with her $500 pair of shoes and $5000 handbag, I’m wondering who the real moral losers are.
PD, I have to give you credit for actually going after the President and his cronies. I’m quick to condem you for your partisanship so I’ll be quick to commend you now.
I take issue with the amount of time a tax cut would take to “make it through the system”. Really, it’s simple. Immediately lower the tax rates on everyone who works. This would immediately put more money in everyone’s pockets and would have an immediate impact on the economy because people will spend the money!
Obama’s “stimulus plan” will send more money into the pork projects in 2010..the election year for the House and Senate..convenient isn’t it?
Sure, Obama has only been in office a short time and is trying to fix what the last two years of Democratic control of the Congress did to this country, but he is supposed to be a different type of politician with his “change” and “hope”…and he has been making promises that he knew he couldn’t keep..like creating the 600,000 jobs for the summer (which dropped to 150,000). He is a liar.
Garrison,
The economy has been going down hill ever since the Demorats took control of Congress in 2006. So, please stop with the lame excuses that it’s only been two months. Your incompetent bunch of socialists have been ruining it for a while now. Your gang deserves way more credit than you are willing to give them.