Sunday, March 08, 2009

Smoke & Mirrors

One side uses smoke, the other side uses mirrors. In a crashing economy the Republicans say the solution is to cut spending and lower taxes. Democrats say the solution is for the government to spend money. I think both are wrong, and that what is needed is for the government to focus on creating jobs. The latest stimulus bill has some grandiose talk about “creating or saving” four million jobs, but where does it actually do that?

When FDR decided that it was time to kick the economy in the ass, he did not say that it was time to design an Interstate Highway System. He bought millions of shovels and put them in the hands of millions of men who were out of work, and told them to build some roads, campgrounds, dams and canals. The roads were not grand works carrying vast numbers of cars at high speed, but that didn’t matter because the roads were not the point. The millions of shovels in the hands of millions of workers was the point.

No one can point to anything in the stimulus bill and say, even to within a degree of magnitude, how many jobs that item will create.

Defenders talk about the greatness of the projects in the bill, and how well the projects serve the needs of the nation, but economic recovery is not about projects. Economic recovery is about jobs. We should not be talking about projects at this point, and FDR got that. FDR didn’t talk about road building, he talked about jobs and specifically how many jobs would be created and when they would materialize. They would be available immediately, he promised, not some indefinite time in the future.

The stimulus bill contains $8 Billion for high speed rail. It’s not the “magnetic levitation from Disneyland to a Nevada bordello” that the Republicans tout. It is very much the worthwhile and valid social expenditure that the Democrats claim. But how many jobs will it create, and when? No answer. This project is not only not off the drawing board yet, it is not even on the drawing board yet. No one even knows where the money will be spent. It will create some jobs, certainly. What state will get these jobs? How many jobs? When? No answers.

It’s a great project, a worthy project. But what does it contribute to current economic recovery? No one knows the answer to that, and the answer may be, might be, “nothing.”

As such, it detracts from the economic recovery bill, because that $8 Billion could have been spent on something that has a known ability to stimulate immediate economic recovery; something that creates a known number of jobs in a definite time period.

Given that we do not know specifically what the project(s) will consist of or where it (or they) will be located, how did Congress arrive at that amount of $8 Billion? What makes $8 Billion the right amount to spend on this effort? Did the Democrats come up with it the same way that Henry Paulson came up with the $700 Billion for the original TARP? You may recall that the only answer we ever got from Treasury to that question was something to the effect of, “It sounded like a good number.”

That $8 Billion was put in the bill not because it would create any jobs, but because Congress was focused on the grand idea of simply spending money. The whole stimulus bill is about spending as much money as possible and hoping that some jobs will result. That’s rather like signing the mortgage before you even look at the house. It’s the ineffable “cart before horse” philosophy.

This is the Democratic version of “Trickle Down Economics.” Spend money and hope that it trickles down and creates some jobs. They should be focused on creating jobs and then allocating funding to make those jobs possible. There’s nothing wrong with spending money, but it is just plain stupid to spend it merely for the sake of spending it and wind up buying the proverbial “pig in a poke” with it.

Throw money up in the air and hope somebody creates jobs with it.

There is the portion of the stimulus bill that provides money to states; money to allow states and municipalities to continue operations. That portion of the bill, a portion rather much smaller than it should be, does have a significant focus toward jobs; albeit one of saving jobs rather than creating them. There has even been solid evidence of its efficacy in 25 police cadets restored to an academy and graduated this past week as a direct result of the passage of this bill. So 25 police officers will have jobs.

But 25 doesn’t stand up well to the 651,000 jobs lost the same month.

And $8 Billion in high-speed rail funding is still unspent.


  1. Anonymous4:50 AM

    Excellent site and I am really pleased to see you have what I am actually looking for here: this... As it's taken me literally 2 hours and 51 minutes of searching the web to find you (just kidding!) so I shall be pleased to become a regular visitor :)

  2. Anonymous9:36 AM

    My biggest thing is similiar to your concern, just what are we getting for all this spending? Most if not all lawmakers of all levels love spending money - of course none of it is theirs, so what's the problem? Wasteful, is the problem.

    This money comes from somewhere... how and when and with what are they planning on paying it back? Or is this just the Great Fathers of Washington dispensing truth, justice and largesse the American way?

  3. Anonymous2:31 AM

    The classic objection to democracy - and by classic, I mean Aristotle's - was that the "people" would vote themselves cake and cookies (or wine and circuses), and not vote themselves, or anybody else, the bill. It seems to me that Aristotle knew what he was talking about!