Obama's Rescue Plan Fails Taxpayers

Donald Lambro
|
Posted: Jan 30, 2009 12:01 AM
Obama's Rescue Plan Fails Taxpayers

WASHINGTON -- The Democrats love the anti-tax-cut attack line "trickle-down economics." Well, guess what? That big-spending, government-stimulus bill that passed the House fits that description perfectly.

Most of the $820 billion-plus bill, which will really cost more than $1 trillion when borrowing costs are factored in, will be spent on federal and state programs of one kind or another in the name of creating or preserving jobs. In many cases, government jobs.

What do ordinary taxpayers get? The bill provides a paltry $140 billion for President Obama's "making work pay" tax credit that will be paid out to most taxpayers by lowering the federal income-tax-withholding rate.

Economists who have crunched the numbers tell me that this part of the stimulus bill will put about $10 (for single taxpayers) to $20 (for couples) more in their weekly paychecks over the course of a year.

Few economists think $10 more a week is going to send cash-strapped consumers flocking to the stores on a spending spree, but this is what the Obama administration thinks will help low- to middle-income Americans cope with a fierce recession that's going to get worse before it gets better.

"It has virtually no bang for the buck because it doesn't affect incentives for working, investing and things that actually make the economy go," said economist J.D. Foster at the Heritage Foundation.

"Even if you get all of the money at once in a government check or over a quarter of the year, it will have the same effect on the economy -- zero," Foster told me.

While taxpayers will be getting the crumbs of the Obama rescue plan, hundreds of billions of dollars will go out to dozens of federal agencies to further fatten their budgets and to bail out debt-ridden state governments that in the good times overspent like there was no tomorrow.

Some $300 billion goes out in just aid to the states that have a long laundry list of public-works programs that have been on the back burner for years until Obama came along and offered them a deal they could not refuse.

A chunk of this money will go into needed safety-net and social-welfare programs for unemployment compensation, healthcare and food stamps. But budget analysts tell me the really big money will go into "a black hole" of government largesse that won't deliver the nearly 4 million jobs Obama says it will.

Democratic Sen. Kent Conrad, the Budget Committee chairman, says at best it may create half that, and even that is questionable.

The Congressional Budget Office issued a stinging data analysis of the spending plan during inauguration week that raised troubling unanswered questions about Obama's retro-New Deal infrastructure-spending scheme. It showed that just a very small fraction of the money being dished out will get into the economy by the end of this year. Less than half will get out by late 2010.

Not a single Republican voted for the spending plan that passed the House on a straight party-line vote, 244 to 188. With good reason: They believe it will fail.

"The problem is, it won't work, and the American people will be watching at some point in the future to say, 'Well, what happened?'" Rep. Tom Price of Georgia told me.

The chairman of the 100-member caucus of GOP conservatives calls Obama's plan "the non-stimulus," like the un-cola, because whenever it has been tried in the past, it has failed to boost economic growth.

One wonders if any White House reporter at the president's next news conference will ask Obama to point to another spending stimulus program that pulled the economy out of a recession. When I have put that question to economists, they can't come up with one example where infrastructure spending has worked.

So Obama and the Democrats have a lot of political capital riding on the hope of his plan's success in the face of a deep recession, worsened by a shaky financial system. But its prospects in the short term do not look good.

Republicans have a lot at stake, too, if they are to rebuild confidence in their party's shattered brand. But now they are united in a common bond in favor of some fundamentally sound economic principles that are at the core of their party's agenda: lower taxes for workers and businesses, along with reductions in the size and cost of government and its crushing debt.

That debt is going to grow exponentially under the Obama regime as it tries to prove that you can have a much bigger, costlier government and a stronger economy all at the same time.

The trick, they think, is to offer a little trickle-down tax relief in exchange for a breathtaking expansion of government that they believe will solve all of the economy's problems.

But Obama's big government requires a lot of money and that is going to be obtained through increased borrowing and higher taxation, making an undernourished economy even weaker.

The GOP is betting that the American people will come to understand that sooner rather than later.