Albert Einstein once said, “The definition of insanity is doing the same thing over and over again and expecting different results.” By that definition, President Obama has gone insane. Or perhaps he’s not so much insane as he is just suffering from a bout of memory loss. Does he not remember how badly his previous effort at pumping money into the economy went? Nevertheless, here we are, a year and a half later, and creeping unemployment remains undeterred by the federal government’s intervention. And yet the president is pitching another stimulus.
By political necessity this one is much smaller. He’s decided to take a piecemeal approach, breaking the package into three parts: (1) $50 billion in infrastructure improvements, (2) a R&D tax credit extension, and (3) an investment tax rebate. Nevermind that President Obama attempted to sell his $800 billion stimulus plan last February by listing previous “failed theories that helped lead us into this crisis” including “that we can meet our enormous tests with half-steps and piecemeal measures.” Sounds to me like he’s embraced the piecemeal approach. Must be that memory loss.
The worst part of the plan is President Obama’s decision to throw $50 billion at infrastructure improvements. After all, what happened to all those “shovel-ready” infrastructure jobs that the first stimulus was supposed to contain? An even better question was posed in this Investor’s Business Daily editorial:
. . . why in the world do we need another stimulus when we’re not even close to exhausting the funds allocated for the last one?
$275 billion of the original $838 billion has still yet to be doled out. More specifically, less than a third of the $230 billion allocated to infrastructure projects has been spent. So with literally hundreds of billions of dollars worth of infrastructure investment still pending, why are we tacking on an additional $50 billion?
Well, because it sounds good. 150,000 miles of roads will be rebuilt. 4,000 miles of rail will be constructed or maintained. 150 miles of runways will be rehabilitated.
But while Obama was clear about how many miles of pavement or tracks would be laid, there was never a hint of how many jobs would be created. Apparently, the government is finally getting out of the “jobs created or saved” business. What it should be getting out of is the stimulus business altogether. The first one was an utter failure. Last quarter, the economy grew at an annual rate of 1.6 percent — not even fast enough to keep unemployment stable, much less actually create jobs. In fact, the economy shed 54,000 jobs in August, a depressing finale to what was billed as the “Recovery Summer.”
The only true history made by the stimulus bill was the record levels of debt and deficits it wrought upon America’s balance sheet. As the CBO wrote in their latest Budget and Economic Outlook, “relative to the size of the economy, this year’s deficit is expected to be the second largest shortfall in the past 65 years.” I’m betting you could guess which year had the largest. Things are not projected to get much better. As the CBO explains, “Beyond the 10-year budget window, the nation will face daunting long-term fiscal challenges . . . Continued large deficits and the resulting increases in federal debt over time would reduce long-term economic growth.”
$50 billion will not cure our problems; it will only add to them. The economic multiplier effect of Keynesian economics only works in theory. In the harsh reality we live in, businesses care little for economic theory. They care about their bottom lines. They care about an uncertain policy environment clouded by an activist government. They care about how much taxes they are going to have to pay now, and in the future, as we are forced to pay for this unprecedented spending binge.
Democrats have already gone “all in” on their original stimulus package. They gambled with taxpayer money and lost. Now they want to ante up another $50 billion. But they’ve tried spending us out of this recession over and over again. Can we really expect different results this time around? That’s a sane question likely to be ignored by an out-of-touch Washington.
Brandon Greife is the Political Director at the College Republican National Committee. He holds a J.D. from University of North Carolina at Chapel Hill, and a B.A. in Political Science and History from there as well.