Archives: 06/2009

Public Tires of Wasteful “Stimulus” Spending

The president may believe that he’s created thousands (or is that millions?) of jobs, but the public doesn’t believe him.  In fact, according to Rasmussen Reports, a plurality of the public wants to drop the rest of the “stimulus” spending while keeping the tax cuts:

Forty-five percent (45%) of Americans say the rest of the new government spending authorized in the $787-billion economic stimulus plan should now be canceled. A new Rasmussen Reports national telephone survey found that just 36% disagree and 20% are not sure.

Just 20% of adults say the tax cuts included in the stimulus plan should be canceled while 55% disagree. The stimulus plan includes $288 billion in tax cuts.

While there is a wide partisan gap on the question of stimulus spending, there is little partisan disagreement on maintaining the tax cuts.

President Obama on Monday vowed to speed up the pace of stimulus spending and said the money will help “create or save” 600,000 more jobs this summer.

However, only 31% of Americans believe the new government spending in the stimulus package creates new jobs. Forty-eight percent (48%) say the stimulus spending does not create jobs, and 21% are not sure.

This is certainly a better approach for growing the economy.  The people are proving to be a lot smarter than their governors in Washington.

A Nation of Lawlessness

The matter of Chrysler’s bankruptcy seems to have rendered quaint our system of checks and balances. President Obama is breaking the law and the other two branches are letting him get away with it. One can probably understand how a smitten public might casually allow this president a stipend of unconstitutional acts, since he doesn’t scowl like Nixon or stutter like Bush. But, even a popular president (in particular, a popular president) must be held in check by the legislative and judicial branches.

And that’s not happening.

On Tuesday at 4:00 pm, Justice Ruth Bader Ginsburg “stayed pending further order” the bankruptcy-related transactions of Chrysler, giving hope the Supreme Court might hear the appeal filed on behalf of certain Indiana state pension and construction funds, who claim that their property rights as secured creditors were violated by the forced sale and that the use of Troubled Asset Relief Program funds to support Chrysler and facilitate its restructuring was illegal. Only 28 hours later, the Supreme Court decided against taking the appeal, despite the seemingly compelling issues at hand.

Just as the Bush administration was telling Congress last September that there was no time to debate the merits of a financial bailout and that the only course was to give Treasury Secretary Paulson carte blanche immediately to spend $700 billion, the Obama administration was telling the Supreme Court this week that time was of the essence and that Fiat would walk away from the Chrysler deal if it wasn’t allowed to proceed right away. Was that the decisive factor in the Supreme Courts rejection of the appeal? It seems to me the appeal contains some serious constitutional issues worthy of judicial consideration (consideration that goes beyond merely rubber-stamping the Obama administration’s pre-packaged, politically-driven bankruptcy plan for Chrysler, which is what Judge Gonzalez appears to have done).

But it’s now a done deal, possibly facilitated by illegalities.

I’m struck by the relative quiet about this issue (in the mainstream media and the blogosphere). Maybe we’re all just too numb and shell shocked by the blitzkrieg of government interventions over the past 9 months that it’s no longer possible to feel alarmed or outraged by just another government act that would have been unthinkable this time last year.

Well wake up!

There is a compelling legal argument against using TARP funds to support automobile producers. (Obviously, there is a compelling economic argument, as well.) Convincing the courts to hear the argument and subsequently persuading judges (probably up to the Supreme Court) of its merits will likely be the last chance to spare us the nationalization of General Motors.

As you may recall, there wasn’t a whole lot of clarity about how the Treasury’s use of TARP funds would be limited or defined. Lots of discretion was granted the Treasury Secretary. However, Section 101(a)(1) of the law establishing the TARP stipulates:

“The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.” (My emphasis).

Neither Chrysler nor GM is a financial institution and therefore neither can receive TARP money.  There’s the argument, plain and simple.  Congress authorized funds for a defined use; the executive breached those boundaries, and thus acted illegally. Is it more complicated than that?

President Bush was the first to break the law by authorizing $17.4 billion in TARP funds for GM and Chrysler, circumventing the wishes of Congress, which had recently voted against an auto bailout.  And President Obama has followed suit, providing funding the Chrysler and GM during bankruptcy.

If there’s any doubt that TARP funds were not to be used for automobile companies, consider the fact that the same House of Representatives that passed the legislation creating the TARP in October also passed a bill specifically authorizing the use of TARP funds for automobile companies in December. (There was never a vote in the Senate so it never became law.)  Such legislation wouldn’t have been necessary if the intent of Congress was to allow TARP funds to be used for automakers originally.  Thus, there are two conclusions to draw here. First, the 110th Congress didn’t think the TARP legislation, which it had passed two months earlier, allowed TARP funds to be used for automakers; and second, Congress was too cowardly to bring the matter to the Supreme Court, thereby exercising its constitutional responsibility and allowing the judiciary an opportunity to exercise its.

Let’s hope the judiciary finds the opportunity to check the legality of the executive’s implementation of the legislature’s instructions, as far as the people’s money is concerned.

The Politics of Stimulus Spending

USA Today investigates how members of Congress are “working behind the scenes to try to influence how the [stimulus]  money is spent.”

Congress and President Obama proudly noted that there were no earmarks in the $787 stimulus bill. But…

Ten of 27 departments and agencies receiving stimulus money have released records of contacts by lawmakers under Freedom of Information Act requests USA TODAY filed in April. Those records detailed 53 letters, phone calls and e-mails recommending projects from 60 members from February through the end of May. Thirteen of those lawmakers voted against the stimulus package.

Critics of the stimulus bill pointed out that government money is always politically directed. It’s little consolation to be proven right.

Rotating Congress

In today’s Washington Post, Dana Milbank does a typically brilliant job deconstructing the activities of Congress. He looks at how members of the various defense committees put their energies into fighting for home-state hand-outs rather than focusing on broader defense issues from a national perspective.

The dominance of parochial interests over the general public interest is, of course, a long-standing problem in Congress. Members from cotton-growing states gravitate to the farm committees in order to defend cotton interests, while members from inner cities gravitate to committees overseeing urban affairs to defend programs that subsidize their constituents.

The result is that Congress spends a lot of money on items that don’t have broad public support, and it spends little time actually considering policies from a national perspective.

A partial solution to the problem would be mandatory committee rotations every two years in the House and Senate. All committee assignments would be made by random selection at the beginning of each Congress.

People will say: “You can’t do that because members on particular committees are often experts in their field.” That would be a good argument if members used their expertise to serve the general interest of the public. Rep. Jack Murtha is an expert on defense issues, and in theory he could be spending his and his staff’s time probing Pentagon operations, reviewing administration defense strategies, overseeing procurement programs to reduce waste, and other public-spirited activities.

But that is apparently not what Murtha and most other members of Congress spend their time doing. Anyone who watches congressional committee action on C-SPAN can see the pattern that Milbank describes–members use their brief time with important witnesses to get in on-the-record statements in support of favored special interests. And their staffs spend most of their time figuring out how to maximize the home-state grab from the budget, not examining big-picture policy issues.

We have a $3 trillion government because members of Congress love to spend money, as a sort of general proclivity. But they are particularly addicted to spending money on their home states. Random committee assignment would help to disrupt that addiction, and it would allow members to adopt a more neutral and critical eye on matters in front of the committees that they were assigned.

O’Hanlon on Defense

Maybe you have wondered, is it possible to get an op-ed published in the Washington Post advocating increased US defense spending without any mention of the enemies the defense budget is meant to defend us against or the wars we might fight with them?  Yes! Michael O’Hanlon proves it.

He says: 1. The Pentagon needs two percent annual growth above inflation to maintain its current plans. 2. Therefore the zero percent real growth the Obama administration plans for the next five years is unwise and we need to add $150 billion over that period.

The first part is reasonable, but why should the Pentagon maintain all its current programs? O’Hanlon doesn’t say. What the article amounts to is an argument for higher defense spending because defense spending is expensive. That is not persuasive.

Also omitted is that fact that O’Hanlon is repeating the Secretary of Defense’s view. Here’s what Robert Gates said on April 7.

I don’t think that the department can sustain the programs that we have with flat growth. And therefore I believe that we need at least 2 percent real growth going forward.

Here’s O’Hanlon:

For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year)…we need roughly 2 percent real growth per year, while Obama offers zero.

The zero percent real growth in defense spending figure that O’Hanlon takes issue with is from budget charts prepared by OMB. Time will tell whether that, Gates’ view, or something else becomes policy.  So it appears that O’Hanlon, knowingly, one hopes, is taking Gates’ view in an intramural Obama administration squabble. I’d say that’s worth knowing when you read this article.

Cash for Clunkers Lesson: How to Use the $$ to Buy a Gas Guzzler

My son’s station car is an old Ford Explorer AWD which, despite being a V-6, was rated at about 15 mpg.  Approaching 100,000 miles, the SUV’ s resale value is very low.

The House approved a bill to give him a $3,500 voucher to buy a car that is supposed to get only 18 mpg, or $4,500 if it gets 20 mpg.  Only 18-20 mpg?  That’s not moving us much closer to President Obama’s pie-in-the-sky 35.5 mpg goalpost is it?

Consider how easy it would be to game this giveaway program by using that $4,500 voucher to buy a big SUV or V-8 muscle car.

First of  all, with Chrysler and GM dealerships folding, it should be easy to buy a mediocre Chevy Cobalt or Dodge Caliber for about $10,000 more than the voucher.

What you do next is sell that boring econobox, even if you end up with $1,000 less than you paid – that still leaves you with $3,500 of free money, courtesy of taxpayers.

As this  process unfolds, the flood of resold small cars will make it even  harder for GM, Chrysler and Ford dealers to get a decent price for small cars, because of added competition from new cars being resold as used.

That’s their problem, not yours.

So, take the $9,000 net from reselling the crummy little car plus the $4,500 from Uncle Sam.  Then use that $13,500 to make a big down payment on a used Cadillac Escalade,  Toyota Tundra pickup or Corvette.

File this under “unintended consequences” (my own file is running out of space).

U.S. Presence in Afghanistan Feeds Pakistan’s Insurgency

alg_pakistan_hotelYesterday’s attack on Peshawar’s Pearl Continental Hotel was the latest signal of Pakistan’s growing Islamist insurgency.

Since the raid by the Pakistani government on the Red Mosque (Lal Masjid) in Islamabad in July 2007, a wave of revenge attacks against the army and the government has been launched by loose networks of suicide bombers. It’s possible, depending on the culprit, that the recent attack in Peshawar might have been retribution for the Pakistan army’s month-long offensive against extremists in the country’s northwest districts.

While the United States hopes to eliminate the threat from extremists in Afghanistan and Pakistan, the knock-on effects from U.S.-NATO efforts to stabilize Afghanistan destabilize Pakistan. America’s presence in the region feeds Pakistan’s insurgency. If America’s interests lie in stabilizing Pakistan, and ensuring that the virus of anti-American radicalism does not infect the rest of the country, the fundamental objective should be to get out of Afghanistan in a reasonable time frame.