The Senate is expected to vote on the new economic stimulus bill on Tuesday, according to the Wall Street Journal, and it appears it will be able to squeak through. Once the Senate passes the bill it will need to go through House-Senate negotiations, but it should just be a matter of time before the bill ends up on the President’s desk for signing. The bill has not seen the sweeping bi-partisan support that President Obama was hoping for, but could we honestly expect anything but controversy? Senate Democrats only needed a couple Republican votes to make it happen, and that is exactly what they were able to get. So what exactly about this bill has Republicans up in arms? And do their concerns have any merit?
The biggest complaint coming from the Republican side is that the bill is full of wasteful spending. According to an analysis in the Washington Post, the new version of the bill is 78 percent spending and only 22 percent tax cuts. Naturally this type of break down isn’t going to sit well with most Republicans. To make matters worse, the urgency with which supporters want to pump money into the economy has many questioning how well this massive spending will be regulated—if at all. According to the Post, “The stimulus plan presents a stark choice: The government can spend unprecedented amounts of money quickly in an effort to jump-start the economy or it can move more deliberately to thwart the cost overruns common to federal contracts in recent years.”
“’You can't have both,’ said Eileen Norcross, a senior research fellow at George Mason University's Mercatus Center who studied crisis spending in the aftermath of Hurricane Katrina. ‘There is no way to get around having to make a choice.’”
The objections to the spending portion of the bill prompted Obama to make the following statement at a recent House Democratic retreat, according to the Wall Street Journal: “So then you get the argument, ‘Well, this is not a stimulus bill, this is a spending bill.’ What do you think a stimulus is? (Laughter and applause.) That's the whole point. No, seriously. (Laughter.) That's the point. (Applause.)”
The Republicans continue to claim that tax cuts are more efficient than many of the spending proposals being included in the bill. If you are interested in hearing more about that, here is a good opinion piece recently published in the WSJ.
The way that I look at it, we have already tried tax cuts, and they didn’t work out quite as well as we had hoped. Though I don’t think that means we should give up on them all together, I am willing to give other things a try. What I don’t like is the lack of oversight on the spending. If we are going to spend $600 billion, I sincerely hope that we can spare a few million to ensure that these billions are used effectively. I don’t want to see us squander this stimulus money the way that we have the in past. This article in the Post gives a good walk-through of the potential problems with spending oversight as it sits now. Leaders would do well to read this and think hard about how they can ensure that we stimulate the economy in the most efficient and cost-effective manner possible.
I do not understand why people are having problem realizing the urgency to get this bill approved. The number of unemployed people (11.6 million) and the unemployment rate (7.6 percent) rose in January. Over the past 12 months, the number of unemployed persons has increased by 4.1 million. The Department of Labor reported today that nonfarm payroll employment fell sharply in January (-598,000) and the unemployment rate rose from 7.2 to 7.6 percent. Payroll employment has declined by 3.6 million since the start of the recession in December 2007, .... most of this mess happening only in past three months! And some wonder Obama is pushing so hard for a stimulus package. Is the Herbert Hoover approach, do nothing, all we need, leading us to a twelve year depression ??
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