The Economic Destruction Plan remains the biggest news story this week as the Senate failed to pass its version of the “stimulus” bill last week. Though Majority Leader Reid missed his goal of a Senate vote on the bill last Friday, he telegraphed that he has the votes to pass a compromise bill tomorrow. The compromise reduces the stimulus from $900 billion to an austere $838 billion (sarcasm intended). Apparently that was enough to persuade three Republican senators (Arlen Specter, Susan Collins, & Olympia Snow) to jump ship and betray the best interest of the country. But then again, this is not new behavior for these three.

Even at $838 billion, it severely understates the amount of government stimulative spending. In actuality, the economic stimulus activity began two years ago. Since then, the Federal Reserve, the Treasury Department, and the FDIC have lent or spent $3 trillion and have telegraphed their intent to shell out another $5.7 trillion. Doing the math, their less-than-successful efforts will cost us $8.7 trillion. Add to that the amount the Senate plans to spend in their Economic Destruction Plan and we the people are on the hook for $9.5 trillion. A trillion here, a trillion there, and pretty soon we are talking about real money! I’d like to be in charge of that spending spree!

How big? According to Bloomberg, the government could use the $9.5 trillion to pay off 90% of the nation’s home mortgages. Or the government could buy two-thirds of everything the United States produces in a full year. Now that is starting to sound kind of big!

So it’s big… it might be worth it, right? After all, this is the worst recession in two generations. Without a doubt, the government can and should do something - but whatever they do should have a good likelihood of succeeding. Yet, if we were left to weather the recession without any government action, the market would reach equilibrium and recover by itself. While this alternative would be painful for some and perhaps many, it is a certainty. Another viable option is to implement permanent and long-term tax cuts. This is a tried-and-true method of easing a recession and it has the benefit of helping immediately.

History suggests, though, that when the government tries to spend its way out of a recession, government fails to ignite the economy or does further damage to it. This is especially true when it is widely accepted that the Economic Destruction Plan has much, much more wasteful spending (pork) than stimulative spending. The Washington Times drives home this point:

“President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

“CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing. “

Just as troubling is the precedent this spending level would set. Only twice in the last 60+ years has the government lowered its budget from the previous year. If they hold true to form, and odds are they will, this outrageous spending plan will become the new norm.

Ignoring all that, it might still be  a good idea, one worth trying, right? Consider this: analysis from the CBO shows that most of the spending will not happen in 2009 and not all of it will be spent by the end of 2010. Does that make a lot of sense when the average recession last just 10 months? Say this recession was double the average, lasting until mid-2010. Would it make any more sense?

Underscoring this point, Obama and team are on record saying that they will not be able to raise employment levels back to the 2008 level until 2010 or later. Let’s run this last statement through a sanity check: how often do politicians come in on time? Assuming you answered like I did, “never”, then how long will the “stimulus” really take to be effective?

Well, we can always ask Joe Biden for his thoughts… Speaking of the stimulus plan, Biden said, “If we do everything right, if we do it with absolute certainty, there’s still a 30% chance we’re going to get it wrong.” Sanity check time again. How often does the government do everything right, with absolute certainty? I’m guessing your answer was close to mine. If, in the absolute best scenario, there is a 30% chance we will have squandered $9.5 trillion, what are our realistic odds? That is one thing the Obama team and the Congressional Democrats aren’t answering. If you were wagering your money (and you are), would you take that kind of high-stakes bet?

Apparently Americans are not so convinced that this is the right thing. Rasmussen reports that only 38% of the public (the willfully ignorant among us - editorial opinion) believe that increased government spending would help the economy, whereas 48% believe it would hurt the economy. This is really good news because it means we still have a chance of influencing the outcome.

So, make a difference for you, your children, and your grandchildren. Call your senators now and tell them to kill the stimulus bill and push hard for effective tax cuts. Or, maybe ask them nicely to pay off 90% of your mortgage.

CALL NOW BEFORE YOU FORGET!

• Find your senators’ phone numbers here.
• Senate Majority Leader Harry Reid: (202) 224-3542
• Senate Minority Leader Mitch McConnell: (202) 224-2541

Addendum
I just found a couple of graphics at the Washington Post that paint a very good picture of how the stimulus bill divides up the money and how long it takes to pay out. One provides a higher-level view, the other a more detailed representation. Both worth a look - just click on an image to see it in full size.

High-Level View

Detailed View