Tag: government spending

At Just One Year Old, Stimulus an Overgrown Drain on the U.S. Economy

On the first anniversary of the stimulus bill’s passage, administration officials are traversing the country (on the taxpayer dime) touting its alleged successes.

But the inconvenient truth is that no number of orchestrated press events can mask the threat massive deficit spending poses for future living standards.

What administration officials are calling “investment” is really the opportunity cost of the government borrowing resources out of the economy. As a result, to the degree there has been any “stimulus,” it has been in the stimulation of government jobs and debt

It is the private sector that fuels job growth and wealth creation, whereas government spending necessarily comes at the private sector’s expense. Fortunately, it appears that a growing segment of the populace is beginning to understand that there’s no free lunch when it comes to government spending.

How to Tell When ObamaCare Is Dead

Democrats have lots of ambitions.  One of them is their health care overhaul, which included a lot of “pay-fors” – i.e., spending cuts that would pay for ObamaCare’s new entitlements.  But they also want a jobs bill, a “doc fix,” and other things that require new government spending.  Those also require pay-fors – unless Democrats are willing to expand further a $1-trillion-plus deficit – and pay-fors are a scarce commodity.

Today, CongressDaily’s Anna Edney reports:

Some, though, are skeptical Democrats would use any of the pay-fors because that would mean officially declaring the reform effort dead.

“I don’t expect any effort to dismantle the reform bill until there’s no pulse,” one lobbyist said.

Right now, ObamaCare is mostly dead. And as we all know, “There’s a big difference between mostly dead and all dead…Mostly dead is slightly alive.

A good way to tell when ObamaCare is all dead is when Democrats start picking at the carcass for pay-fors.

There Is Some Budget Good News, but It Is Actually Really Bad News

The Office of Management and Budget has released the President’s FY2011 budget and the Congressional Budget Office has released its semi-annual Budget and Economic Outlook. Much of the coverage of these documents has focused on deficit numbers. This is not a trivial concern, particularly since the Bush-Obama policies of bigger government have dramatically boosted red ink.

But the most important numbers in the budget documents are the estimates of what is happening to government spending. The good news is that burden of government spending is projected to decline over the next few years from about 25 percent of GDP to less than 23 percent of GDP.

That’s the good news. The bad news is that federal government outlays only consumed 18.2 percent of economic output when Bush took office. In other words, notwithstanding the good news cited above, the size and scope of government has increased dramatically since 2001. The worse news is that the long-run spending forecasts show a cataclysmic expansion in the burden of government. The “optimistic” estimate is that the federal government will consume more than 30 percent of GDP by 2050 and 40 percent of GDP by 2080.

Karl Rove’s Spending

Former George W. Bush adviser Karl Rove enjoys complaining about the spendthrift ways of President Obama and the Democrats. But I noted in a Wall Street Journal letter today:

 Annual average real spending grew faster under President George W. Bush than any president since Lyndon Johnson… Even leaving out defense, President Bush was the biggest spender since Republican Richard Nixon.

My letter pointed to two prior op-eds by Rove, but he was at it again yesterday in the Journal. He said that his former boss “cut in half the growth of discretionary domestic spending from the sizzling 16 percent rate of President Bill Clinton’s last budget.” Call me crazy, but I don’t think supporting domestic spending growth of 8 percent during a time of very low inflation is an acheivement to crow about.

Over at National Review, Veronique de Rugy apparently gets just as annoyed as I do hearing big-spending Republicans complain about big-spending Democrats.

Mr. Rove’s columns are usually very interesting, but I’d like to see him accept at least some of the blame for the exploding size of government during his tenure at the White House.

Here are the data on spending by presidents.

How the Washington Post Covers Education

Yesterday, the president proposed yet another big increase in federal education spending. The Washington Post quoted ”senior White House officials” as saying that the spending would boost “the nation’s long-term economic health.”

I sent the story’s authors a blog post laying out the evidence that higher government spending hasn’t raised student achievement, and that if you don’t boost achievement, you don’t accelerate economic growth.

Today, there is an updated version of the original WaPo story. It no longer mentions the stated goal of the spending increase. It doesn’t mention that boosting gov’t spending has failed to raise achievement, and so will fail to help the economy.

But it does cite a single non-government source for comment on the president’s plan: the Committee for Education Funding. The Committee is described by the Post as “prominent education advocates,” and as an organization that “represents dozens of education groups.”

Here’s how the CEF itself measures its accomplishments: “The… Committee [has] been very successful in championing the cause of increasing federal educational investment. Through strong advocacy… [it has] won bipartisan support for over $100 billion in increased federal education investment over the last five years.” Its members, if you haven’t guessed already, include virtually every public school employee organization you can name, including, of course, the national teachers unions.

That’s the source, the one source, the Washington Post asked to weigh in on a new federal education spending gambit.

I asked the author of the revised version of the story to comment for this blog post. At the time of this writing, I’ve received no response.

State of the Union Fact Check

Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.


Obama’s claim:

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right – the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster.

Back in reality: At the outset of the economic downturn, Cato ran an ad in the nation’s largest newspapers in which more than 300 economists (Nobel laureates among them) signed a statement saying a massive government spending package was among the worst available options. Since then, Cato economists have published dozens of op-eds in major news outlets poking holes in big-government solutions to both the financial system crisis and the flagging economy.


Obama’s claim:

Let me repeat: we cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.

Back in reality: Cato Director of Tax Policy Studies Chris Edwards: “When the president says that he has ‘cut taxes’ for 95 percent of Americans, he fails to note that more than 40 percent of Americans pay no federal incomes taxes and the administration has simply increased subsidy checks to this group. Obama’s refundable tax credits are unearned subsidies, not tax cuts.”

Visit Cato’s Tax Policy Page for much more on this.


Obama’s claim

Starting in 2011, we are prepared to freeze government spending for three years.

Back in reality: Edwards: “The president’s proposed spending freeze covers just 13 percent of the total federal budget, and indeed doesn’t limit the fastest growing components such as Medicare.

“A better idea is to cap growth in the entire federal budget including entitlement programs, which was essentially the idea behind the 1980s bipartisan Gramm-Rudman-Hollings law. The freeze also doesn’t cover the massive spending under the stimulus bill, most of which hasn’t occurred yet. Now that the economy is returning to growth, the president should both freeze spending and rescind the remainder of the planned stimulus.”

Plus, here’s why these promised freezes have never worked in the past and a chart illustrating the fallacy of Obama’s spending claims.


Obama’s claim:

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.

Back in reality: Cato Policy Analyst Tad Dehaven: “Actually, the U.S. economy has lost 2.7 million jobs since the stimulus passed and 3.4 million total since Obama was elected. How he attributes any jobs gains to the stimulus is the fuzziest of fuzzy math. ‘Nuff said.”

Monday Links

  • Beware the “Crusader Temptation”: “Afghanistan has become a target of aggressive pro-war activists in America, including feminists who believe in waging war to improve the status of women.”