Addressing the Economic Emergency
“Our country is plunging headlong into a horrendous recession and we risk an economic meltdown comparable to the Great Depression. The need for the government rescue is so incredibly urgent that Congress must pass the Economic Destruction Plan immediately. The slightest delay truly imperils our country.” Thus the presidential rhetoric and scaremongering is launched.

An all too complicit Congress joined the chorus and rammed through the biggest spending package ever, bigger than has been imagined by even the biggest tax & spend liberal. Without debate, without public input they forced this legislation into the shortest possible time frame. The need to enact the legislation was so incredibly critical that Nancy Pelosi, Speaker of the House, was “forced” to renege on her promise to allow the public 48 hours to review and consider the package before she proceeded to a vote. At least now we can all give a giant and collective sigh of relief as the stuttering messiah signs the legislation and rescues our nation from certain destruction.

Oh, but wait! The president has something more important to do. Instead of saving our country in our moment of desperate need, Obama felt it was more important to take a 3-day vacation and will delay signing the bill until Tuesday. He will return to Washington from Chicago tomorrow and turn around and fly back to Denver so he can sign the Economic Destruction Plan there. The symbolism is there, I’m sure, but it’s meaning eludes me. (Maybe he is earning frequent flyer miles!)

So the Democratic leadership did the president’s bidding, but at what cost? Well they don’t know exactly. In fact, no one really knows (including you and me). Why? Because no one has read it. Let’s take a quick poll.

Poll Question: Have you read the 1100 pages of the economic stimulus bill?
0%     House of Representatives  (not one member of the House has read it)
0%     Senate (not one of the 100 senators have read it)
0%     White House (no one at the White House has read it)
0%     Journalists (not one of the thousands of journalists in the country has read it)
0%     Electorate (not one of the millions of Americans has read it)

So, who has read the bill? Well, perhaps a handful of congressional staffers have read the whole bill.

Writing the Legislation
But you thought that congress wrote the legislation. Nope! Wrong! Not even close! This, like a lot of legislation, was written by non-elected folks. Conspiring to draft this legislation were unelected staffers working for liberal/socialist members of congress, fringe leftwing special interest groups, and paid mercenaries (lobbyists) who were ensuring only that the interests of their employers were addressed. This is the team that is rescuing our country!

So How Bad is the Recession?
As I have mentioned before, not all that bad. The Wall Street Journal has an excellent comparison of this recession and bad recessions of the past. (Hint: no where close to the Great Depression).

Responding to Presidential strong-arm tactics, the Senate Democrats passed the Economic Destruction Plan with the help of three defecting Republicans. Seeking to pressure the Senate, Obama attempted to make his case with the American people on the eve of the Senate vote. Breaking with long-standing protocol, the President read his statements from a teleprompter. When he took questions, his responses often took 13+ minutes each as he rambled on, obfuscating and dodging the core queries. These efforts, however, may be failing as people and elected officials begin to balk at the details of the plan.

In so doing, Obama remained consistent with his rhetoric: “We must pass the stimulus bill immediately to avert an otherwise unpreventable catastrophe. This is so urgent, we can’t take time to understand the bill, to debate the bill, or even question the bill. Trust me we must do this and do it now. So, pass that bill and get it to my desk immediately.”

The Senate has complied and is now conferencing with the House to draft a version that both can agree on. While it may be too late to protect the country from the damage of this economic destruction bill, the passage has been delayed long enough that some critical analysis is beginning to surface, even in the dominant media.

How Bad is this Recession?
Of all sources, the New York Times ran an article on Sunday stating this recession is not that bad. The article quotes Robert Gordon - a Northwestern University professor and one of the seven economists who make up an economic committee of the National Bureau of Economic Research that determines if and when we are in an actual recession. It is to these elite seven that the country turns for assessments of the national economic climate. Here are Gordon’s key points.

• We are in a recession
• The recession likely started in August or September 2008
• It is hard to determine how long or how deep this recession will extend
• This recession will likely be worse than the recessions of 2001 & 1990-91
• This recession may not be as bad as the recession of the early 1980’s

Hmm… So it’s not sounding like the worst recession since the Great Depression. If we survived the recession of the early 1980’s without an unfathomable mountain of government spending, how necessary is such spending now?

But Obama Said…
During Monday’s national address, Obama said that he had spoken with many economists — both liberal and conservative, both Republican and Democrat — and that there was “no disagreement.” “Economists from across the political spectrum agree” on the need for massive government spending to stimulate the economy now to save the country from certain economic peril. (Just one of Obama’s many whoppers that night.) 

Maybe the President is simply too busy to read the newspaper or maybe he simply didn’t speak with enough economists. What is clear is that he failed to recognize that the Cato Institute placed an ad in major newspapers across the United States, which was signed by hundreds of economists, including Nobel laureates and other prominent scholars. Here is what the nation’s leading economists are saying with a unified voice:

• We do not believe that more government spending is a way to improve economic performance.
• Government spending did not save us from the Great Depression.
• Government spending did not solve Japan’s “lost decade” of the 1990’s.
• It is blind hope and not experience that leads one to believe government spending will help this time.
• To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

To better understand what these economists think, please see a very readable interview with Mike Munger, a Duke University economist as published by the Pope Center.

Why the Hurry? Can’t We Just Talk About It?
Perhaps the biggest, and increasingly obvious, reason is that the economic destruction bill is as much (or more) about imposing a socialist system on America as it is about government spending. Buried in this unfathomable mountain of spending are some of the greatest leaps towards socialism in the history of our republic. If the socialists in Congress and the White House can sneak this bill through under the guise of an economic emergency, thereby preventing serious consideration and debate, they will have pulled off an amazing political coup.

Lest you think these are the rantings of a right-wing nut, take a moment to read these comments from New York City’s former mayor Ed Koch, himself a lifelong liberal Democrat.

“While I support the ultimate [socialist] goals of the new Democratic congressional majority for significant changes in our society, I do not want those changes imposed through stealth. I want them debated and voted on by a Congress able to sort out the good from the bad in shaping legislation. That is not what is happening now. According to Pear’s New York Times article,
‘Democrats said the current economic crisis did not allow time for public hearings on the legislation.’ For me, this is a form of tyranny and is not acceptable. The ends here do not justify the means. There is no need or excuse for stealth.”

What Kind of Stealth Provisions
Unfortunately, the list is really, really long. Here is a very small sampling, but by researching online, even for just a few minutes, you will find these and countless other stealth provisions.

• Anti-religious measures, preventing stimulus funds to be used if a school allows religious activities in a building.
• Massive increases in government health coverage.
• Government power to monitor how a doctor is treating his patients and the ability to dictate which treatments may be used.
• Rationing of health care to those the government deems most deserving.
• Massive support and funding of unions and socio-economically preferred citizens.
• Doubling of the budget for the Department of Education, greatly expanding their power over states and communities.
• Sponsorship of radical environmental efforts.
• Nationalization of businesses and industries (also part of the broader “rescue” efforts).
• Support of radical “community activist” groups.

Do the Liberals Realize What they are Doing?
Probably not all of them. Our citizenry is horrendously ignorant of economic principles. The same is probably doubly true of our sitting Congress. Your average, run-of-the-mill liberal/progressive is probably blissfully ignorant of what is happening and the likely consequences. These are still basking in the elevation of their anointed one. But, some are clearly catching on. Even so, the socialists in the government are clearly aware and are aggressively pressing forward.

The State of New Hampshire (no conservative bastion there) has been woken from its slumber and just passed a defiant joint resolution warning the federal government, in no uncertain terms, to back off and stay within the bounds the Constitution has firmly planted around it. They see this federal power grab for what it is and are taking aggressive action. The legislature has directed a copy of this resolution be sent to the President of the United States, each member of the United States Congress, and the presiding officers of each State’s legislature. This is a call to action and a hissing threat of “do not tread on me” that we should all embrace and champion.

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

“It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their consciences.” So said C. S. Lewis. The robber barons of the past have been reincarnated and are doing their dirty work in Washington D.C. Under the guise of taking care of us, of rescuing us from a disastrous recession, our elected officials (specifically Congress and the President) claim to be rescuing the banks, helping the middle class, creating jobs, and preparing our country for an unimaginably bright future. In reality, these are the omnipotent moral busybodies of our day that would punish profitable companies, reward failing businesses, horrifically expand government programs and spending, control nearly every aspect of our existence, and wreak economic havoc in all of our personal lives.

In my last blog, I discussed the nature of recessions. Today, I’d like to discuss the elements and implications of the current economic stimulus plan.

The Background
In case you haven’t heard, Obama and Congress are aggressively pushing a huge spending plan, claiming it is the only way to save our country from economic demise. Here are the top headlines.

• The House of Representatives approved a $825 billion dollar economic stimulus plan, on top of the previous $700 billion dollar attempted bail out of the banking system. That is $1.5 trillion.
• The US budget deficit scored a new record in 2008: $438 Billion. The projection for the 2009 budget deficit is $1.2 trillion (nearly triple the record) and that is before we add in the cost of the stimulus plan. Afterwards, $2.7 trillion.
• Total national debt in 2008 was $5.8 trillion. It is expected to double by 2015 and triple by 2019.

Government Spending Will Not Help the Economy
Don’t believe the dominant media with their blind love affair with all things Obama. Don’t believe the prophecies of doom or the promises of salvation coming from our elected officials. Instead, learn what history has already proven.

• Government spending (stimulus) is sleight of hand and does not work. It simply takes money out of the economy and redistributes it after removing a big chunk for administrative costs. Government does not create wealth or any new spending. It only redistributes the money and changes who spends it. Ask yourself this question: who do you want spending your money, you, the government, or someone else  whom the government gives it to?
• The chairwoman of Obama’s council of economic advisors states that money policy (the Fed) is fairly effective in ending recessions, but government spending is not.
• The stimulus plan follows the same model used by Japan during its economic crisis. What resulted there was an economy that stagnated for a decade and fell from its position as the world’s leading economy, even falling behind China — and it will soon fall behind India.
• Central planning does not work. Simply look at social security, welfare, US energy policy, and countless other government programs. The best and most current example is the total failure of the recent emergency bank bailout. The government approved $700 billion to rescue the ailing banking sector, authorizing $350 billion for immediate distribution. A couple of months later, when it was time to release the second half, no one could explain how the first half was spent (though there is significant evidence of misuse) and there was no improvement in the availability of credit (loans), which was a primary objective.
• To pay for the stimulus plan, the government will be forced to borrow money. Borrowing means repayment. The only way the government can afford to repay the debt will be to raise taxes or print money, the latter resulting in significant inflation. Keep in mind that inflation works just like taxes in reducing the amount of buying power that individuals have.
• You want proof that government spending doesn’t work? Take a little time to research the topic and you will find mountains of economic data proving that the expansion of government spending cannot work and that it only hurts the economy. Or, consider the mountain of economic stimulus spending the government has shelled out over the last year and how effective it was. Did you know that the federal government:
  • Increased spending by 11% to $3 trillion this last year? (How big was your raise in 2008?)
  • Enacted a $333 billion “emergency” spending bill? (Did it fix the emergency?)
  • Authorized $105 billion in tax rebates/refunds? (Significant evidence has already demonstrated, that reducing/refunding taxes does not work unless the reduction is seen as permanent.)
  • Pushed the budget deficit to a record $455 billion in the name of an economic stimulus? (It looks like that one didn’t work!)
  • Tried massive spending in the 1930’s, 1960’s, and 1970’s? (All failed to help during those recessionary periods.)
• Heavy government spending reduces productivity and future growth by:
  • Raising Taxes. Increasing taxes creates a less motivated workforce and reduces the amount of money businesses have to invest in their operations and create new jobs.
  • Social Spending. Money-for-nothing programs subsidize leisure and unemployment. It reduces incentives to be productive and self-reliant as it shifts money from investments (building future wealth) to consumption.
  • Creating Inefficiencies. The government has a consistent record of economic inefficiencies. When they run a program, it is done more poorly and more expensively than when the private sector runs the same kind of program. Additionally, government overlays the cost of a program with heavy and unnecessary administrative costs.

The Stimulus Plan Has Ulterior Motives
If the economic stimulus plan will not help the economy, why is Congress and the President so anxious to pass it? In short, for the same reasons they have been on a massive spending spree for the last several years. One, spending helps them get re-elected. Two, they are able to reward donors and the special interest groups that supported them. Three, they seek to achieve their ideological objectives (socialism for many). One clear indicator is the President’s strong push for immediate action. This recession was months in the making, and it will last a long time (by his account anyway). In reality, if Congress took one or two months to make smart, reasoned decisions the delay would not cause greater suffering than if they acted now. Yet, the House passed the biggest spending bill ever with just 8 hours of debate, while the leadership banned Republicans from participating in the debate.

By doing so, Congress hopes we won’t observe that:

• Nearly half of the stimulus funds are directed to organizations that sponsor or employ Service Employees International Union, federal, state, and municipal employee unions, or other unions closely associated with Democrats.
• One quarter of the funds will be given to governors, mayors, and local school boards to spend on their pet projects.
• Most of the “infrastructure” projects in the plan won’t pay out this year or next — until after the recession is already over.
• Countless billions of dollars with absolutely no connection to the economic recovery are committed to special pet projects (researching STDs, forcing the military to buy electric cars, stop-smoking programs, environmental programs, education spending, public housing, hunger programs, job protection for government employees, expansion of Medicare and Medicaid, and many more). See for yourself by reviewing the Congressional summary.

This Stimulus Package is Big — REALLY REALLY BIG!
Sure, everyone admits this plan is big money, but everyone seems so at ease saying the word trillion. Let’s take a moment and put the numbers in perspective.

• As a percentage of GDP (the best method of comparing), Obama’s plan is nearly double the amount spent to recover from any other recession. It is more than 4 times greater than what was spent for the 2001/2002 recession.
• It is nearly half of the current annual US budget.
• The plan promises an increase of 600,000 new government jobs.
• The cost to create the 3 million jobs Obama promised is $285,000 per job.
• If the same funds were divided between those unemployed for a longer period of time, each would receive $300,000.
• The Bloomberg News Service has run the numbers on all the Bush/Obama stimulus and bail out plans for the 2008/2009 recession and estimated the final cost to you and me will top $7.76 trillion. To put this in perspective, this is more than all of the following combined (using inflation-adjusted dollars): the old New Deal, the Louisiana Purchase, the Marshall Plan, World War II, the Korean War, the Vietnam War, both Iraq Wars, the S&L Crisis in the ’80s, and every single NASA project (NASA was established in 1958).
• Still, the true cost is grossly understated. Why? Because this emergency spending bill is like every other appropriation bill. The government has never cut real spending - ever. They might cut the rate of growth and call it budget cuts, but they never cut spending. So once this precedent is set, they will certainly continue spending the same amount or more.

Does that help give you an idea of how big this package of pork really is?

You Will Spend Your Life Paying This One Off!
What does this mean to you? Well, if the only cost to us is the payback, you will spend all of your life paying this scam off. Your children will spend their lives paying it off. Likely, your grandchildren will spend their lives paying it off as well. This payback will take the form of much higher taxes and run away inflation.

If the authors of the plan achieve their ideological goals, we will also lose our free market economy, industries and businesses will be nationalized, and the medical system will be run by the government (socialized medicine) with government bureaucrats making your health-care decisions for you. We will see stagnant economies, persistently high unemployment, and stifled innovation much like France and other parts of Western Europe. Our ability to protect ourselves from foreign and domestic threats will be severely diminished. We will live in a very different country.

It is amazing to think we are willing to do this to ourselves simply because we are going through a normal part of an economic cycle, a short term recession that will likely last less than a year.

TAKE ACTION!
The House has passed its version. The Senate is seeing some opposition. We still have some time, though not much. Do two things and make a big difference. 1) Call your senators and the senate leadership. 2) Share your concerns with friends and family (maybe email a link to this blog) and ask them to take action. Please do it today.

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