Stimulus Bill Will Stimulate Inflation Only (The Bulletin)

By Colin A. Hanna, For The Bulletin

Link to Article

Monday, February 9, 2009

The Senate appears poised to vote for a so-called stimulus bill that contains more pork than a pig farm. President Barack Obama has badly bobbled his first real legislative leadership opportunity and abdicated to Nancy Pelosi and Harry Reid.  Mr. Obama originally proposed a massive infrastructure investment program.  He should have stuck to it. 

Providing infrastructure is a core function of government.  It enjoys support from conservatives and liberals alike.  Conservatives base their support on time-tested economic principles initially set forth by Adam Smith, the founding father of free-market economics. 

He argued that government’s proper role was to provide a permanent military for national defense, a police and court system to control crime and administer justice and a public works system to facilitate the flow of commerce along roads, bridges and canals. Contemporary conservative legislators who may be budget hawks on most government spending are typically supportive of spending on infrastructure. 

Our roads, bridges and railways are in a deplorable state of disrepair and deterioration.  Entirely new types of infrastructure, such as high-speed fiber and wireless data networks, could be developed to aid 21st century commerce and economic development in the same way that paved roads did two centuries ago or air transport did in the last century. 

One of the fiercest foes of most government spending is Oklahoma U.S. Sen. James Inhofe, but he is a champion of well-planned infrastructure projects.  Sen. Inhofe’s analysis of the compromise stimulus bill that was hurriedly agreed to on Friday night is that only 7 percent of it is genuine stimulus.  As the Senate adjourned following announcement of the deal brokered in part by Pennsylvania U.S. Sen. Arlen Specter, Sen. Inhofe released a statement that said: “While I appreciate the efforts of my colleagues to bring down the price tag of this bill, the fact is we still face a trillion dollar spending bill.

Making it worse, the bill is 93 percent spending and only 7 percent stimulation. Over the past few days I have fought to include more in the way of real stimulus through a higher percentage of infrastructure and defense spending, while working to cut much of the typical government waste often found in a bill of this size.”  

If President Obama had stuck to his original promise of enacting a stimulus plan focusing on job-creating infrastructure projects that were “shovel-ready” and just waiting for funding, he might have found a willing ally in Sen. Inhofe and other Republicans.  The result could have been a precedent-setting example of genuine bipartisanship. 

Instead, by abdicating his leadership role in setting the national agenda to Ms. Pelosi and Mr. Reid, he will probably be presented with a bill that would be best described as “America’s Inflation Stimulus,” because it will be inflation, rather than job growth and infrastructure investment, that is most stimulated by it.  

The proposed package of pork is the largest spending bill in American history.  Expressed in current dollars, it is roughly double the size of the entire New Deal, much of which was true infrastructure spending.  

It is also more spending than the Iraq and Afghanistan wars combined.  It is likely to garner no more than a handful of Republican votes, largely because no Republican input was sought in the House, and only two Republican deal-making senators were involved in reaching the Senate compromise.  For the new president, it was a tragic waste of an historic leadership opportunity. 

For the rest of us, it will result in the greatest transfer of debt to a succeeding generation in the history of the world.  This is not the kind of change that Mr. Obama promised.  It is a disturbing milestone in his first month.

Colin Hanna is president of Let Freedom Ring, which is on the Web  at www.LetFreedomRingUSA.com. He can be reached at ColinHanna@LetFreedomRingUSA.com