Not Very Stimulating

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To be honest, I've been very hesitant to tackle the stimulus bill currently being debated in Washington DC. This hesitancy is not from a lack of courage to challenge Obama and his minions, but from its sheer size and depth. It takes time to find all the pork, so to speak. Not only that, there is also a problem of perception. I am keenly aware that disagreeing with Obama is very unpopular, but he is a politician, not the Messiah. I can and will hold him publicly accountable, a task the media pundits are unable to do with anything resembling dispassion.

First, allow me to state that Bush's bailout plan (referred to as Bush's mostly for the sake of simplicity, as he had precious little to do in the brain work required to put it together) can safely be deemed a failure. The bailout plan was meant to free up the markets, and convince banks to start lending again. The huge amount of money devoted to the bailout bill was supposed to inject fresh capital into banks that were on the verge of collapse, restoring liquidity, propping up the economy and getting banks to lend money again. However, rather than lend, the banks sat tight on their fresh capital, determined to survive as best they could, especially with more potential losses lurking deep within the balance sheet. The IMF has calculated that the United States and its developed counterparts have reached the depression stage of the business cycle and warns that it could get much worse if the financial system isn't fixed.

Of course, it doesn't help that more than one of the many banks and automakers being propped up by the bailout may in fact be a zombie. Zombies, in financial jargon, are the living dead, debtors that have little chance of recovery but stay alive with money from their lenders and consume tax money, capital, and labor that would probably better utilized. The problem comes from knowing that letting zombies die also means more people becoming unemployed, and it's bad enough that the actual unemployment rate is higher than the official one. But in the long term, zombies hurt us just as much, since they stifle that buzz word of business, innovation. If the core business of a company is healthy and the only problem is the financial services, it should be saved. If not, it should be dismantled. It's not that workers should lose their jobs, but that their income should be protected until they can get new ones.

Anyway, we have Obama's stimulus plan to chew on. First, allow me to reassure my correspondents before I drive in the stake. I applauded Obama's move to cap executive compensation. I have been a dedicated opponent to golden parachutes before I even knew that there was a term for the excessive reward packages executives got for driving their companies into the ground. To have Wall Street executives slurping up bonuses for being greedy, stupid, and incompetent is the height of irresponsibility. To cap compensation and punish idiots for being idiots is thinking near and dear to my heart. However, Obama's compensation cap plan is currently full of loopholes, as you can just give a senior executive a lower title and he'll still loot taxpayer money to pay for his ten million dollar NYC apartment. Not only that, it should be retroactive, and force those who have been paid out to give back what they for all intents and purposes stole from the taxpayer.

So, what's different between Bush's bailout and Obama's stimulus, besides the PR friendly name change? How about the inconvenient fact that the Green New Deal is utterly pointless? Yes, the stimulus plan is a joke because it will not have the slightest effect on an economy in the throes of depression. The billions of dollars that the stimulus plan is meant to spend will not be spent until 2011 and beyond. Keep in mind that the depression has been estimated to end by 2010 without government intervention.

What will 800+ billion dollars of spending do, then? It certainly won’t help us get out of the depression. In fact, in the long term, it will hurt us more that if the government had sat back and done nothing. However, as any good Roman consul would tell you, it’s all about the bread and circuses. The plebs will hear about the massive stimulus package and feel good that Obama is taking such action to help them. Somewhat. A trillion dollars is a huge sum, laden with buyer’s remorse, and the ones paying that debt will be the next three generations, but that’s too far in the future to be worried about, right? Immediate action is required, the sort that bypasses typical budgetary concerns such as necessity and viability. Regardless, the stimulus plan, for the most part, will follow the old New Deal’s outline for deficit spending, a tactic that actually failed to end the Great Depression, and in fact, made it longer. The point that the stimulus plan seems to be trying to make is classically Keynesian; paying people to dig ditches and fill them in again would boost the economy because at least wages would be pumped back into the system.

Unfortunately, the stimulus plan is one of the biggest pork spending sprees in history, if not the biggest, which has many businesses salivating at the earmarks, and special interest groups are practically throwing parties in the street. There are 1400 pages of to this massive plan, crafted in language that manipulates and wastes huge sums of money. Allow me to share just a little of the pork:

• $726 million for after-school snack programs
• $44 million for repairs to the Agriculture Department
• $650 million for digital TV coupons
• $1 billion for climate satellite and habitat restoration programs
• $400 million for state and local governments to acquire new vehicles
• $600 million to replace a portion of the federal government vehicle fleet
• $462 million to replace Centers for Disease Control facilities
• $7.7 billion for construction and repairs of federal buildings
• $2.1 billion for Head Start and Early Head Start programs
• $13 billion for special education state grants
• $50 million in funding for the National Endowment of the Arts

How do new vehicles for the government help the common man? Why blow billions on construction and repair of federal buildings when you could use that same money to make a dent in smoothing the market correction in housing? How do the arts help the common man? And all this is just the tip of the iceberg.

Honestly, the stimulus plan is so huge that it will take weeks just to get through all of the elegantly crafted language that conceals the pork, let alone the sparse amount of time Congress has been given to pass it. In the long term, it is unnecessary and loaded down with special projects and social programs that need to be checked over thoroughly. So it is not very heartening to hear Vice President Biden note that there is a 30% they will get it wrong. A pork-filled, trillion dollar spending plan that has a one in three chance of going wrong and saddling future generations under a mountain of inescapable, pointless debt. That’s change we can believe in.

Sources
The Bank Bailout Is Broken
Stimulus Plan Data
In stimulus bills, earmarks by any other name
Obama’s “Stimulus Plan”==> Pork Filled and Fear Driven
Stimulus: How Porky Is It?
Biden: 30 Percent Chance We'll Get It Wrong
Latest Industry Forecast: Recession Will Last Until 2010
Recession could last into 2010
"I Won" Isn't Going to Close the Deal
Vote expected Tuesday on stimulus after bipartisan deal
A sham 'stimulus'
CBO: Obama stimulus harmful over long haul
IMF Says Advanced Economies Already in Depression
Loopholes Sap Potency of Pay Limits