Topic: Government and Politics

Update—2012 GOP Contenders and the Stimulus

Louisiana Governor Bobby Jindal has indicated that he may refuse $4 billion in federal funds that his state is scheduled to receive under the stimulus bill that President Obama signed this week.

Earlier South Carolina governor Mark Sanford said he would turn down the money. Alaska governor Sarah Palin has also suggested she may say no to stimulus funds.

On the other side, of course, Florida governor Charlie Crist was perhaps the most ardent Republican proponent of the stimulus bill. (Mitt Romney opposed the stimulus, but since he is no longer a governor he doesn’t face the difficult decision of whether to put principle above “free” federal money).

Who knows, Republicans in 2012 might actually have candidates who are (or at least want to be) fiscal conservatives.

The Obama Recovery Plan: Carter Redux?

The big-spending massive pork barrel bill known as the stimulus package has been signed into law.  Richard Rahn reflects back on the economic crisis three decades ago and finds that the Obama plan looks a lot more like the Carter than the Reagan plans.  And we know which one of those worked best.

Writes Rahn:

President Jimmy Carter inherited a growing economy but one with relatively high inflation and high unemployment. He left office with the economy in a recession, high unemployment, and a record high inflation and interest rates (the prime rate at one point had reached 21 percent). Mr. Carter’s policies were to maintain the very high marginal income tax rates in effect at that time, coupled with a small expansion in the relative size of government.

Mr. Carter had appointed G. William Miller as Federal Reserve chairman, who proceeded to engage in a very rapid monetary expansion. The inflation disaster caused by the excessive monetary expansion caused Mr. Carter to replace Mr. Miller with Paul Volcker at the very end of his administration.

President Reagan inherited an economic situation even worse than the one President Obama has. When Reagan took office, the economy had been in recession for about a year, the unemployment rate was almost identical to today’s, but the labor force participation rate was smaller, and inflation was out of control. At the time, the newspapers were filled with stories about the “worst economy since the Great Depression” - which, unlike today, was true, and the economic establishment seemed to be bereft of ideas of what to do.

Credit markets were in a mess, and both businesses and consumers were not borrowing because they could not afford the interest rates. President Reagan, unlike his critics, had a clear plan to revive the economy, which included: monetary restraint to stop inflation; large reductions in marginal tax rates to renew the incentives to work, save and invest; and a reduction in nondefense spending as a percentage of gross domestic product (GDP).

Unlike other recent presidents, Reagan actually kept and delivered on his promises, which resulted in high growth (7.2 percent in 1984 alone) and large reductions in the unemployment rate - particularly, inflation. He stuck with Mr. Volcker and his monetary restraint because he understood inflation had to be brought under control, even though he also knew it would necessarily prolong the recession. How many of today’s politicians would be willing to take the heat for the long run good?

It is hard not to ask:  do the supporters of the “stimulus” bill really think it will work?  Or did they decide long ago that policy effectiveness was irrelevant to their political success?

The Biggest Check Ever Signed

The Obama Administration has banked a lot of political capital on the economic “stimulus” package signed into law today, and is hailing the measure as a sound-minded reaction to a dreary economic climate.  In truth, many of the programs in the bill are not only wasteful and inefficient, but have the potential to do some real long-term harm to U.S. policy.

Among them:

The economic stimulus bill is merely a nearsighted return to government spending policies which have been discredited over and over again [PDF].

For more on the package, check out Cato’s Fiscal Reality page.

Now that the So-Called Stimulus Is Enacted, the Time Has Come to Look at Policies that Actually Improve Economic Performance

The faux stimulus bill will be signed into law today by President Obama. The bad news is that making government bigger will hurt the economy. The good news is that sooner or later there will be a recovery from the current downturn. The real issue is whether long-run growth will be robust. Unfortunately, the evidence strongly suggests that an increased burden of government spending is among the policies that harm long-run economic performance. In a new video, I review the Fraser Institute’s Economic Freedom of the World and highlight the policies that expand freedom and increase prosperity:

Obama’s K Street Recovery Plan

Not that it needed it – lobbying was one industry that kept on growing during 2008 – the Washington influence business is getting a boost from the Obama-Pelosi-Reid massive spending bill. In a graphic on page A6 of the February 13 edition, not available online, the Washington Post reports that “A Washington Post analysis found that more than 90 organizations hired lobbyists to specifically influence provisions of the massive stimulus bill.” The graphic shows that the number of newly registered lobbying clients peaked on the day after Obama’s inauguration and continued to grow as the bill worked its way through both houses of Congress.

In the accompanying article, the Post notes that – unsurprisingly – the $800 billion spending bill “is not free of spending that benefits specific communities, industries or groups, despite vows by President Obama that the legislation would be kept clear of pet projects.” My favorite, as I’ve noted before, is

a controversial proposal for a magnetic-levitation rail line between Disneyland, in California, and Las Vegas, a project favored by Senate Majority Leader Harry M. Reid (D-Nev.).

Here are some other recent headlines from the political class’s newspaper of record: “THE INFLUENCE GAME: Lobbyists work stimulus to end”; “A Lobbying Frenzy For Federal Funds”; “Ohioans Seek Slice of Stimulus Pie”; “Lobbyists Get Around Obama’s Earmark Ban”; “Certain Firms, Industries Got Last-Minute Gifts in Stimulus.”

More on the frenzied efforts to get a piece of the taxpayers’ money in the spending bill here and here.

If you want money flowing to the companies with good lobbyists and powerful congressmen, then the stimulus bill may accomplish something. But we should all recognize that we’re taking money out of the competitive, individually directed part of society and turning it over to the politically controlled sector. Politicians rather than consumers will pick winners and losers. That’s not a recipe for recovery.

The Blogosphere Has Corrected the Record

Will Paul Krugman?

At a Heritage event, Arnold Kling said:

Back in September when they were talking about taking $700 billion dollars to unclog the financial system I wanted to yank Henry Paulson out of the TV screen and say to him: “Keep your hands off my daughter’s future.” But he got away with it. For me it felt like sitting there watching my home being ransacked by a gang of thugs. And now we’ve got a new gang of thugs and they are doing the same thing.

Careless blogging and hyper-ideology twisted that into a knock on President Obama and imputed racism to Kling. Krugman incorporated it all into a column decrying the “ugliness of the political debate” over Obama’s stimulus.

Well, Paulson’s TARP and Obama’s stimulus are ugly, and so evidently is the cacophony in the echo chamber where Krugman gets his information. But not Kling.

President Honors Pledge to Post Bills Before Signing

… or does he?

Friday afternoon, the White House blog announced that the American Recovery and Reinvestment Act of 2009 was posted online for public comment. This looked like good evidence that the President intends to honor his campaign promise to post legislation online and take public comment for five days before signing it.

But it’s not great evidence of that.

The post went up at 2:05 pm, but the House didn’t vote until 2:24 pm and the Senate voted at 05:29 pm. (Click on the “votes” to see how your representatives did.) As of Saturday afternoon, the Thomas legislative tracking system doesn’t indicate that the bill has been presented to the President yet. And news reports indicate that the President will sign the bill on Monday, three days after it was “pre-posted.”

Regular order, Mr. President. When a bill is presented to you, post it online (at a consistent place on your Web site, not just at ad hoc URLs as you’ve done up to now). Then wait five days, reviewing the comments of the public as you promised to do when you asked the public to elect you.

The steps the White House has taken toward implementing the President’s promise are good steps. (In this Cato daily podcast, I characterized the President’s record on transparency so far as “mixed.”) But the promise is not fulfilled until bills receive five days online airing after they have been presented.

Presentment is a distinct, constitutional step in the legislative process. Until every non-emergency bill is posted online for five days after presentment and before signing, President Obama will look like he’s being driven by events and maneuvered by his elders in Congress.