Economics

The Stimulus Bill Is Dead; Long Live the Stimulus Bill!

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The Wash Post reports:

Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy.

The legislation represents the first major test for President Obama and an expanded Democratic Congress, both of which have made economic recovery the cornerstone of their new political mandate. The stimulus package has now tripled from its post-election estimate of about $300 billion, and in recent days lawmakers in both parties have grown wary of the swelling cost.

Read the details here. It's good that Congress will not be passing (for the second time in a few months!) the economic equivalent of The Patriot Act as quickly and uncritically as, well, The Patriot Act.

But here's the rub: Let's say the GOP succeeds in lopping off, in the Post's calculation, "as much as $200 billion." Given that the Senate version of the bill is coming in (for now) around $900 billion, that means they'll be pushing a $700 billion bill. The House passed an $819 billion bill. You do the normal legislative arithmetic and that means we're likely to end up with something costing $1 trillion by the time it hits President Obama's desk with a thud. All of this sort of wrangling is a classic Washington two-step: Propose something costing a bazillion dollars. Your opponent offers a "realistic" and "principled" objection and counters with something costing a bazillion dollars minus $X. You both agree, reluctantly of course, to something that ends up costing a bazillion dollars minus $X, plus $Y so that the price tag comes is lower than your original bid but higher than your opponent's. Net result: Taxpayers are still out close to a bazillion dollars.

Some obvious points: 1. We still need to have a national conversation (or something equally uplifting) regarding the need for "stimulus" in fighting recessions in general, much less this specific one. It's far from clear that so-called stimulus spending works, even during periods that couple recession and war. 2. We still need to de-couple longer-term spending projects such as infrastructure construction/innovation from any notion of economic policies that will have immediate impact. 3. We still need to digest that last turd of a massive injection of government money into our system, the monstrosity that created TARP, etc. 4. The states need to come to terms with the idea that they, not federal taxpayers, are responsible for their own budgets. As more states project massive budget deficits, state-level legislators are more and more trying to glom onto D.C. bucks as a way of not having to fundamentally restructure the stupid way most of them do business.

So, to sum up: It's great that the stimulus bill is stalled. But until it's as dead as Tom Daschle's cabinet dreams, it's only going to get worse.