Rein in un­spent money

The Washington Times Weekly - - Commentary - Don­ald Lam­bro

Nearly five months into Barack Obama’s pres­i­dency, his stim­u­lus pro­gram is fail­ing to pro­duce the jobs he promised. And vot­ers are sour­ing on his big-spending, deficit-driv­ing poli­cies.

A na­tion­wide Ras­mussen poll found that nearly half of Amer­i­cans (45 per­cent) want the ad­min­is­tra­tion to stop spending the re­main­ing bulk of the $787 bil­lion eco­nomic stim­u­lus fund, doubt­ing the money will cre­ate any new jobs. Just 36 per­cent want the spending to con­tinue, while 20 per­cent say they’re not sure.

With the un­em­ploy­ment rate spi­ral­ing up to 9.4 per­cent in May and this year’s bud­get deficit speed­ing well past $1.8 tril­lion, Amer­i­cans are turn­ing against Mr. Obama’s han­dling of the econ­omy and the un­prece­dented rise in gov­ern­ment spending.

The Gallup Poll said two weeks ago that while 55 per­cent of its sam­pling ap­proved of the way the pres­i­dent was han­dling the econ­omy, 42 per­cent dis­ap­proved — up sharply from 30 per­cent in Fe­bru­ary.

Amer­i­cans are grow­ing even more dis­gusted with how Mr. Obama is deal­ing with the bud­get deficit — with 46 per­cent ap­prov­ing and 48 per­cent dis­ap­prov­ing. His num­bers are worse on the is­sue of “con­trol­ling fed­eral spending” — 45 per­cent ap­prove, but, for the first time, a 51 per­cent ma­jor­ity dis­ap­proves.

Th­ese polling num­bers are re­in­forced by a num­ber of economists on the left and the right who say his in­fra­struc­ture stim­u­lus has been an ab­ject fail­ure from the beginning.

“De­spite ad­min­is­tra­tion claims, the stim­u­lus pack­age has cre­ated or saved few jobs,” said Uni­ver­sity of Mary­land econ­o­mist Peter Morici. “This is best seen in the ab­so­lute ab­sence of growth in state and lo­cal gov­ern­ment em­ploy­ment.” Last week, Mr. Morici’s lat­est eco­nomic anal­y­sis said: “The stim­u­lus pack­age was poorly con­ceived. Not enough is de­voted to hard projects, and lit­tle of the spending will stim­u­late per­ma­nent growth.”

The same view can be found at the con­ser­va­tive Hoover In­sti­tu­tion on the Stan­ford Uni­ver­sity cam­pus.

“The end of the re­ces­sion is still months away, but it is in­creas­ingly clear the stim­u­lus pack­age was a se­ri­ous mis­take. To date, it has had no iden­ti­fi­able ben­e­fi­cial im­pact on the econ­omy,” Stan­ford econ­o­mist John F. Co­gan told me.

“More im­por­tant, its im­pact later this year and next will be de­cid­edly neg­a­tive be­cause the funds re­quired to fi­nance the pack­age’s spending will be drawn from pri­vate-sec­tor re­sources that are needed to fuel the re­cov­ery. At this junc­ture, Congress would be wise to re­peal the re­main­der of the pro­gram,” Mr. Co­gan said.

That idea may be gain­ing sup­port among Repub­li­cans on Capi­tol Hill, whose “stop the spending” plea is res­onat­ing with mil­lions of Amer­i­cans an­gered by the Obama Democrats’ spending spree on make- work, pork-bar­rel projects that will en­large the fed­eral deficit but em­ploy few work­ers.

The econ­omy is clearly show­ing signs of life that is ex­pected to bear more growth in the third and fourth quar­ters, though just $44 bil­lion of the stim­u­lus money has been spent so far. That begs the ques­tion: Why spend 70 per­cent of the money next year when the re­cov­ery will be fully un­der way?

“If there is any way we can claw some of it back, it makes a whole lot of sense to re­duce our debt [rather] than spending it as quickly as we can,” said Sen. Jim DeMint, South Carolina Repub­li­can.

The chances of that idea be­ing adopted in this Demo­cratic Congress are slim to none be­cause much, if not most, of the money isn’t for any short­term stim­u­lus, al­though it orig­i­nally was sold as that. It’s part and par­cel of the Democrats’ agenda to ex­pand hun­dreds of fed­eral grant pro­grams for their fa­vored spe­cial-in­ter­est con­stituen­cies.

“Part of the $800 bil­lion wasn’t re­ally tem­po­rary stim­u­lus,” said econ­o­mist Alice Rivlin, Clin­ton ad­min­is­tra­tion bud­get di­rec­tor. “It was in­vest­ments in in­fra­struc­ture, ed­u­ca­tion, health, in­for­ma­tion tech­nol­ogy, etc., that we need [in or­der] to have a more pro­duc­tive econ­omy in the longer run.

“The case for th­ese in­vest­ments isn’t af­fected by quick re­cov­ery, even if it hap­pens,” Ms. Rivlin told me.

There has been enor­mous ex­ag­ger­a­tion by the Obama ad­min­is­tra­tion about how many jobs are be­ing cre­ated by the spending stim­u­lus. But the Amer­i­can peo­ple seem to un­der­stand that Mr. Obama’s mas­sive spending scheme isn’t per­form­ing as he said it would and that it should be stopped.

The Fed­eral Re­serve Board ex­pects the re­ces­sion to end some­time later this year, but the stim­u­lus pro­gram will con­tinue on — spending the lion’s share of its funds in 2010 and on into 2011 for no le­git­i­mate rea­son.

“If the pur­pose of the money is to end the re­ces­sion, then once the re­ces­sion ends, there will be no jus­ti­fi­ca­tion for not tak­ing the money back. The en­tire pur­pose of the ex­pen­di­tures would have ceased to ex­ist,” said Brian Riedl, chief bud­get an­a­lyst at the Her­itage Foun­da­tion.

We are fast ap­proach­ing the point where it will be time to pull the plug on what has turned out to be a non­stim­u­lus spending pro­gram that has done more harm than good.

Don­ald Lam­bro is chief po­lit­i­cal cor­re­spon­dent of The Wash­ing­ton Times.

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