I listened to many of the speeches given by supporters of the bill yesterday. I also had the opportunity to question the Director of the Congressional Budget Office on the subject. The tepid arguments and weak rebuttals of the proponents here lead me to believe that perhaps even they know that this is not really about stimulus. Being generous, I can say that maybe 25% of the items in this bill have some multiplier effect. But the rest is just spending. Just 2 months ago, President Obama’s Chief of Staff, Rahm Emmanuel, said “Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."  

Couple that statement with the President’s repeated comments yesterday that this is just “the first” in a series of economic recovery actions, and it becomes clearer to me that this bill is really about getting about a 20% annual increase in non-entitlement federal spending right now, and paying for it with tax increases to be named later. The public would not stand for that in the normal course of politics.

If you don’t believe that, I hereby submit for your consideration a document that was sent to me by a Democratic Congresswoman from California in order to entice me to vote for the package because of the money that California would receive. It actually pushed me even further in the opposite direction. I think it will have the same affect on you so here is link. Virtually all the spending in here is merely the federal government paying for programs that the state is already doing. In another case,  billions of dollars are allocated for more school construction, at a time when we have just borrowed and spent $30 billion on school construction in California, and where some of our failing schools happen to be housed in beautiful new buildings.  The State of California will get a $32 billion spending increase in this bill, paid for by federal taxpayers. I hope that the idea of raising taxes in California will be dead now. Isn’t $32 billion more spending enough for now?

Last night, the House of Representatives passed a “so-called” stimulus bill, without any Republican support.? In my previous posting, I explained why this bill is not, and will not be stimulative.? In fact, I am not even calling it a stimulus bill, I am calling it a “big spending bill”, because that is exactly what it is.

I know it is easy to criticize, and not offer alternatives, but don’t worry, I have my own ideas on what should have been included in the stimulus package. ?

The main part of any stimulus should be to create consumer demand for homes and cars. This economy will not recover until the housing and car markets find a bottom and start rising again. An up-to-$25,000 refundable tax credit for the purchase of a house (new or existing) and an up to $4,000 credit for a new car, coupled with aggressive loan rates from Fannie Mae and Freddie Mac (4.5% or less), would get a lot of people to overcome their economic fears and take advantage of a great deal.

These should be short-term (no more than 10 months), and then phase out. Obviously, no sub-prime stuff here. This would only be for people with the ability to make real down payments and who have real credit.

That should be put together with a short-term Capital gains tax holiday, in order to get capital to move to more efficient uses.

It is also important to include some infrastructure spending such as creating a national Wi-Fi broadband system, which would generate huge job creation as the tech sector figures out new ways to use that capability.

These are things that will create many downstream jobs in the private sector that are sustainable and would also serve to settle down the panic that is now out there in the minds of consumers, rather than creating a one-time, feel-good government job.

It is frightening if one of your neighbors has lost his job and another her home; but? if one neighbor comes home in a new car and another rents their house out because they just bought a new house, while you may not run out and do either of those things, you will likely at least go out to dinner.

More than anything else, businesses need a market to sell to. That is how recessions end.

This plan would cost only a fraction of the $825 billion in the Democrats’ giant spending package.

On the eve of this historic Inauguration, it is easy to recognize the impact this event will have on American History. Since the founding of our great Republic, Americans have always relished our most sacred of traditions…freedom. This is yet another display which will be viewed all across the globe, and allows us, as Americans, to display our commitment to our founding virtues.

I encourage all Americans to welcome our new Commander – in – Chief and President, Barack Obama. We may not always agree on policy, but we are united by our American tradition, culture, and patriotism.

May God Bless this President and May God Bless America.

In today’s edition of Roll Call, there is a rather telling article regarding earmarks in the Economic Stimulus Package.  The article, titled “Artfully Redefining Earmarks,” clearly points out that some members clearly don’t get it, including those close to Speaker Pelosi.  House Majority Whip James Clyburn (D-S.C.) is quoted in the article saying: “I know the politics of all this.  I just think they’re wrong about it…I love earmarks.”

It should be noted that President-Elect Obama has clearly stated that any stimulus must be earmark free.  Therefore senior Democratic Members of the House are crafting “Legislative formulas …to ensure that their districts share in the wealth…,” in clear defiance of the standard bearer of their party.

It is Clyburn’s intent to have these formulas act as trade-offs for members, particularly freshmen, who need political cover in order to support a stimulus package. 

As I have said time and time again, Members of Congress are not ATM machines.  Fiscal stimulus goes beyond ideological boundaries; and earmarks, or legislative formulas for that matter, have no place in legislation designed at tackling our nation’s economic woes.

I am no fan of the Democrats pay-as-you go (PAYGO) rule that was put in place at the beginning of the 110th Congress, in fact their rule was nothing more than a cheap gimmick which they ignored on a wide range of bills. When taken together this would amount to an increase in the deficit by more than $420 billion.

Well the 111th Congress will further weaken the PAYGO by:

• Providing an exception for emergency legislation (theoretically anything could be termed “emergency legislation” in order to bypass PAYGO)
• Allowing the “banking” of savings in one bill so they can be used to offset spending in another bill. In addition to circumventing their rule in the 110th Congress, increasing the deficit by $420.1 billion, the Majority manipulated the rule by using the same offsets for multiple pieces of legislation (in one case they used a single offset 25 different times). Instead of addressing these violations and gimmicks, this new change stretches the rule to accommodate even more spending.
• The Democrats instituted their pay-as-you-go [PAYGO] rule at the beginning of the 110th Congress with a promise that it would end deficit spending. Since then, however, the fiscal imbalances have worsened dramatically: the deficit has swollen from $162 billion 2 years ago to current projections of more than $1 trillion this year; and the debt, which exceeded $10 trillion in September, may force the Treasury to borrow an additional $2 trillion this year alone, according to some analysts.
• Allowing the Majority to “shop” for budget baselines to make PAYGO compliance easier. Specifically, the rules package modifies the requirement that the House use the most recent baseline from the Congressional Budget Office. In 2008, the Majority waived the PAYGO rule for the Farm bill and justified the waiver based on an out-dated baseline.

The majority makes these exceptions, but still fails to plug existing loopholes in the overarching rule.  PAYGO does nothing to tackle the out of control growth of entitlement spending and it does not apply to entitlement spending increases in appropriations bills. It is clear that PAYGO indiscriminately favors tax increases.