Jobs not pork

President Obama's so-called Stimulus bill passed by the House is supposed to "jump start" the economy and to create or preserve jobs. Strangely, however, the bill as written will do neither.

There are certain clear requirements for federal actions which will stimulate the ecomony. First, the federal expenditures have to be made quickly. Additional federal spending in the next few months will have a positive effect on economic activity. Spending in 2010 and 2011 will not help get the economy moving. Strangely, the vast majority of the President's stimulus spending will not come until next year and thereafter. It's as if the patient goes to the doctor who prescribes an antibiotic but says not to take it for at least a year. Even an idiot would know that this would not work.

Second, federal expenditures have to be directed towards increasing sustained economic activity and, where possible, creating jobs. Much of the President's package does neither. For example, hundreds of millions of dollars directed at the treatment of STD's will not increase economic activity in any way. Nor will these funds help those who are suffering temporarily from the effects of the recession. This is just a typical Democrat social program which should be looked at separately and not passed under the cover that it is somehow a stimulus measure. The same is true of the family planning money that was removed from the bill when it was brought to light. Also, the massive health insurance sections of the bill such as the five year federal subsidy for COBRA fall into this category. It may well be that the funding of COBRA is a salutory measure, but it has nothing at all to do with stimulating the economy. Its inclusion is simply another dishonest move by the Democrats to slip their pet programs through under cover of the purported stimulus package.

Even the public works projects funded by the bill do not meet the needs of the economy. Large public works projects cannot simply be started on short notice. It takes years of design and planning before the work begins. As a result, the bill will fund billions of unnecessary projects -- those that were already designed but were put on hold since the need for them was not worth the expenditure. The funds will also pay for projects which were to have gone ahead anyway, but instead of state and local funds paying for them, there will be federal money used. Again, this is not going to stimulate the economy.

Third, even the tax cuts will not help. Tax cuts could easily be aimed at creating jobs, but they are not. How hard would it be to include a meaning ful investment tax credit in the bill? After all, business investment is the most significant driver of new jobs. A new facility or piece of equipment requires new employees to run it. Alternatively, it would also be easy to reduce the corporate tax rates. During the fall debates, Obama agreed with McCain that US corporate tax rates were too high and were reducing US economic growth. So now, it should be a no-brainer to reduce those rates.

Fourth, the enormous growth in federal spending and the defecit while not doing much to help increase economic activity puts the country at significant risk of major inflation once the recession ends. The money supply has increased more in the last year than in the twenty preceeding years combined, all due to the government. Throwing another trillion dollars of defecit spending on top of that will just make matters that much worse. We may well see inflation like the Carter years when prices rose inexorably and quickly. Sure, this may help with the federal deficit since the US will be able to pay back the debt with dollars of much reduced value. The inflation, however, will basically wipe out the retirment savings of most Americans. Those who live on fixed incomes will rapidly be impoverished. the social security problem will move on to disaster status and then get worse. To make matters worse, the capital available from private sources, the life blood of our economic system, will also be worth less. In other words, this misguided "stimulus" package will reduce the ability of the economy to grow in the future.

It seems amazing to me that after ten days in office, the Obama Administration is poised to get passed a bill which will likely spell doom for the economy for a long time to come. Shouldn't the American people expect some sort of rational action from the White House. Where are the people who will explain the need for the programs that have nothing to do with the economy. Where are the economists who can explain why this plan will help. Who is minding the Store? Obama still has time to correct these problems and to change the stimulus package into one that will accomplish something beneficial for the economy. Absent quick action by the President, however, things are going to get a lot worse here in the US.