The Public Policy

Overstimulated

The stimulus bill is an example of what will happen when Nancy Pelosi has complete control of the nation's purse strings.

By 10.20.08

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With just 15 days remaining before the election, John McCain needs to emphasize that a unified, Democratic government in
Washington will produce runaway, irresponsible, and wasteful spending that can only be financed through tax hikes or deficit increases. The case should not be too hard to make, because the evidence of the last several weeks should demonstrate how Democratic Congresses conduct business.

Due to the crisis that has afflicted the economy and resulted in frozen credit markets, Congress and the Bush administration had little choice but to act boldly, which they did by passing a $700 billion bill authorizing the Treasury Department to purchase distressed assets from financial institutions and to take preferred equity in the nation’s largest banks in return for cash infusions. While this may have been necessary to prevent a broader economic crisis, the behavior of Democrats in Congress amidst this economic turmoil should prove to Americans how sincerely uncommitted Democrats are to fiscal responsibility.

Despite finger-pointing at the Bush administration for increasing the U.S. budget deficit, a shortfall that was somewhat unavoidable given the events of 9/11 and subsequent military action, Democrats are now using the emergency expenditures designed to ensure economic stability as an excuse to go on a bureaucratic shopping spree. House Speaker Nancy Pelosi seems to think that a bipartisan effort to stabilize the banking industry is part of a quid pro quo justifying massive Democratic earmark spending.

This week, Democrats are prepared to propose a $300 billion "stimulus" package, which amounts to 2% of the nation’s GDP, over 40 percent of the Emergency Economic Stimulus Package (EESP), and more than half the current price of the war in Iraq. Although Democrats will certainly argue that the bill is intended to "stimulate" the economy, "stimulate," in government parlance, is often a euphemism for "governmental waste." This bill is no exception.

Pelosi’s gift to taxpayers includes new spending on highways and bridges, new unemployment benefits, and aid to profligate states. For weeks, Congress has been telling Americans that we are facing extraordinary times that require extraordinary measures. Now, Democrats want to use the opportunity to enhance welfare, build roads, and use taxpayer money to subsidize irresponsible state governments. Are poor roads what are keeping Americans nervously lying awake at night? Even if our infrastructure is in need of an upgrade, this is not the time for taxpayers to fund another "Big Dig" riddled with corruption and waste.

Furthermore, packed inside of the EESP that Congress already passed, which notoriously grew to over 400 pages long, are tax cuts and rebates for selected industries, including producers of wooden arrows. While the absolute value of these earmarks is relatively low -- a mere few hundred million dollars -- it is somewhat appalling, although not surprising, to think that members of Congress were quibbling over these provisions as the economy languished. It is no wonder that Congress has an approval rating that hovers around 10 percent.

There is certainly a lesson in all of this. If Democrats are willing to seek massive spending increases in the midst of a severe economic crisis where credit is scarce, budget deficits are high and a Republican still occupies the White House, imagine the chill that must be running up and down the respective legs of Nancy Pelosi and Harry Reid thinking about the prospects of an Obama administration and a filibuster-proof Senate.

While Republicans have not been free of guilt in overspending -- in fact, Republicans have paid the price at the polls in recent years partially as a result of irresponsible fiscal policy -- the Republican leadership in Congress at least seems cognizant of the need to control spending, which is also a key component of John McCain’s presidential campaign. In response to Speaker Pelosi’s claim that Congress would have to make more "harsh" decisions to right the economy, including passing her new stimulus package, Republican House Minority Leader John Boehner, said, "This is not a 'harsh' decision. It’s more of the same: a business-as-usual approach using taxpayer dollars to feather politicians’ nests."

Obama likes to reassure voters that he can shrink the deficit, control spending, and cut taxes for 95 percent of Americans. That notwithstanding, Barack Obama never talks to voters about how he will control a Democratic Congress intent on spending wildly. He has given no indication that he would veto tax increases or other big programs that Nancy Pelosi sponsors. To truly understand what to expect from an all-Democratic government, one need not go far back in American history. The history of the past several weeks says enough.

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About the Author
Brett Joshpe is an attorney and entrepreneur in New York City. He is Of Counsel to the American Center for Law & Justice and co-authored the book Why You're Wrong About the Right (Simon & Schuster, 2008).