The 2009 Stimuless Plan

“We have tried spending money. We are spending more than we have ever spent before and it does not work.” – FDR’s Treasury Sec. Henry Morgenthau Jr.

All of the power brokers in Washington are bringing their ideas to the table about how we should “stimulate” the economy, but maybe they should consider the above statement. Should we support this economic stimulus plan? It’s similar to the idea that we should support change, just because it is change. This may not be such a good idea.

Let’s look at some facts. The Congressional Budget Office (not Rush Limbaugh) has said that only 7 percent of the funds proposed can be spent in 2009. So much for the urgency. The fact is that this is a spending bill, in its purest form. The devil is in the details of this bill:

• $50 million for the National Endowment for the Arts. I guess eventually some of this money will get to the artist, and he can purchase a canvass, paints, and brushes.
• Only $48 billion (of the 825 billion), or 13 percent goes towards pubic works projects. These are projects to improve the country’s infrastructure.
• $600 to replace government vehicles with hybrids
• $200 million to repair the National Mall ( how much of this was damage from last Tuesday’s “party”)

These are just a few of the inclusions that don’t exactly pass the smell test. Another is the President’s “tax cut” in the form of refundable tax credits. Obama’s proposal offers a tax credit of $1000 to a couple. If the couple’s actual tax liability is only $700, they will receive a check for the $300 difference. There are several problems here. First, this goes into effect for 2009. That means this “tax cut” will not be realized until early next year. Again, what happened to urgency? Second, this plan offers another opportunity to give tax money back to people who do not pay income tax. With a little research on the White House website, we discover that the government has already mailed checks for over $57 billion to people who pay no taxes. These refunds are a result of the Earned Income Credit and the Child Tax Credit. This is nothing more than spending disguised as tax cuts. You cannot cut the taxes of an individual who does not pay tax.

All of this leads to one question. If, as the President believes, we can solve the problem of a recession through government spending, how would we ever go into a recession?