I found it ironic that the 2008 elections were the longest in history, and gave us a president we know less about than perhaps any other in history. Not surprisingly, we don’t know much about Obama’s economic stimulus plan, or the American Recovery and Reinvestment Plan as it is named.
I was curious what exactly he has planned for our economy. I know he’s an eloquent speaker, but what will his actions be?
Well, I went digging for the details of the American Recovery and Reinvestment Plan, and found that there are very few. So, I turned to some recent articles and the President’s own weekly radio address. Here’s what I found, and some thoughts along the way…
Environmental Policy.
From a recent Yahoo! finance article:
“What’s more surprising: Even with gas prices dropping, the Obama team will likely get started this year on an extremely aggressive energy agenda. The decision to replace Rep. John Dingell, a Michigan Democrat loath to challenge Detroit, with environmentally minded Rep. Henry Waxman (D-Calif.) as head of the House Energy and Commerce Committee, means that body is likely to consider aggressive cap and trade legislation-which tries to lower greenhouse gas emissions by charging companies for the pollution they pump into the air-for the first time ever”
Yikes! Carbon emissions are now a pollutant? Cap and trade legislation and carbon offset scams will not only kill capitalism, they will cripple the already reeling economy. Small town farms that can’t afford the methane tax on cow flatulence (A.K.A. the “fart tax”), to mom and pop bakeries and delis, small businesses will go out of business. Even large corporations will feel the hit, and likely increase layoffs to reduce overhead costs. How is this going to help the economy recover?
Creating or “saving” jobs.
From the Washington post:
“…recovery package aimed at saving or creating as many as 4 million jobs.”
How do we measure how many jobs are saved? How can we know why an employee was not laid off?
“”Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four,” Obama said yesterday. “And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future.
Can somebody tell me what this means? Does the “..economy could fall $1 trillion short of its full capacity..” mean that the GDP will drop by $1 trillion dollars? Regardless, how does that translate into “..more than $12,000 in lost income for a family of four” ? I can see how a family can lose much more, by way of a provider losing his job or asset values in their investments plummeting, but is that part of the economic “capacity”? And why will a generation be forced to forgo college dreams? Recessionary times are tremendously good for college enrollment as laid off workers go back to school to ride out the poor job market.
“In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse.” “
This is the sort of thing that bothers me most. It’s more panic and fear to get the public to go along with whatever the government proposes.
Energy Policy
And lastly, from the man himself:
“To accelerate the creation of a clean energy economy, we will double our capacity to generate alternative sources of energy like wind, solar, and biofuels over the next three years.”
Alternative energy is not scaleable and not profitable at current energy prices. This means one of two things: 1) alternative energy subsidies (i.e. the tax payer is on the hook , yet again to support an unprofitable business model) or 2) Higher energy prices, possibly by way of taxes or further restrictions on oil and gas producers. How is any of this going to help our economy recover?
“We’ll begin to build a new electricity grid that lay down more than 3,000 miles of transmission lines to convey this new energy from coast to coast. We’ll save taxpayers $2 billion a year by making 75% of federal buildings more energy efficient, and save the average working family $350 on their energy bills by weatherizing 2.5 million homes.”
I suspect we could save the tax payers a lot more by reducing needles bureaucrats than just the energy they consume. As for weatherizing 2.5 million homes, haven’t we been getting tax incentives to do this already? I can’t read a personal finance blog these days without tripping over some article about a tax deduction for a programmable thermostat, increased insulation and the like.
Education.
“We’ll invest more in Pell Grants to make college affordable for seven million more students, provide a $2,500 college tax credit to four million students…”
That just increased tuition prices by $2,500. If the government really wanted to lower the cost of tuition, they’d pass legislation to move education towards a free market. The amount of government grants has skyrocketed since the 80′s, and so has the cost of tuition. It’s partially because the grants and low cost loans are baked into the price. Colleges know that the students will get an extra $2k, so they add that to the tuition cost, and nobody gets hurt. It’s like a victimless crime, except the tax payer gets victimized once again.
Infrastructure.
“That means repairing and modernizing thousands of miles of America’s roadways and providing new mass transit options for millions of Americans. It means protecting America by securing 90 major ports and creating a better communications network for local law enforcement and public safety officials in the event of an emergency. And it means expanding broadband access to millions of Americans, so business can compete on a level-playing field, wherever they’re located.”
Again, how is any of this creating private sector jobs? This will be great for out of work construction workers, but I don’t know how many of them are dragging the economy down.
Don’t get me wrong, much of this sounds great, but government spending for the sake of spending is not going to improve the economy. It seems more like a grand pork bill, than economic stimulus. Public sector jobs will only increase state and federal deficits by siphoning more tax payer dollars to pay for them. Growing public sector jobs while private sector jobs decrease will only lead to an unsustainable situation where each private sector worker is taxed to support multiple public sector employees. Come to think of it, it sounds like social security for the job market!
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