January 13, 2009

At Least $2.5 Trillion — and Counting, Counting, Counting …..

Filed under: Economy,Taxes & Government — Tom @ 3:47 pm

This was going to be an “I told you so” post.

After all, in my December 28 reaction to Ted Strickland’s wish list for himself and his fellow governors, I said that:

By the time they’re done spending us into oblivion in Washington, don’t be surprised if the grand total (of the stimulus) is more like $2 trillion.

When I saw James Pethokoukis’s latest post at US News’s Capital Commerce Blog, I was ready with the “told ya”:

Liberals: We Need $2 Trillion in Stimulus Spending

Economic analyst Robert Kuttner voices the liberal dream of using the recession to justify spending  trillions of dollars on loads of liberal policy wishes, all to the tune of $2 trillion over the next two years.

Kuttner’s list, per Pethokoukis:

1) Aid to state and local governments [so they can avoid layoffs or cuts in services]. Cost: $200 billion.

2) Emergency revenue sharing to states and cities by picking up half of the state share of Medicaid. Cost: $100 billion.

3) Have government temporarily pay most of the cost of COBRA coverage for laid off people who lose their health insurance, and allow people over age 55 to buy into Medicare. Cost: $100 billion.

4) Expand Unemployment Insurance to cover part time workers, extend eligibility period, and increase benefit levels. Cost: $50 billion.

5) Roll back tuitions at state universities and community colleges, and increase Pell Grants–contingent on universities not increasing costs to students. Cost: $100 billion.

6) Declare a temporary holiday on the worker share of the Social Security tax, and have government make up the loss to the trust fund, contingent on employers not cutting wages. Cost: $450 billion.

7) Continue many of the [previously mentioned] relief programs into a second year, as economic conditions warrant. Cost: $500 billion.

8) Use direct federal lending to refinance distressed mortgages, and as necessary reduce the outstanding principal amount. This can begin by mid-2009. Cost: $200 billion of subsidy; most additional debt is eventually repaid.

9) Begin planning immediately for a broad range of infrastructure programs, from traditional outlay on roads, bridges and mass transit to spending on 21st century infrastructure such as retrofitting homes, green energy, universal broadband, and smart-grid electricity systems. Spend money on worker training as necessary. Cost: $300 billion.

There’s only one “tiny” problem: Kuttner’s list isn’t the only one out there. There are at least the lists of Ted Strickland’s gubernatorial grabbers and Barack Obama’s current list to contend with. There are also others, but merely comparing Kuttner and Strickland moves me from a proud “told ya” posture to a penitent “I was wrong, I am sorry.”

Combining Kuttner with Strickland clearly moves the number way past $2 trillion, because Strickland covets quite a few additional items:

First, he (Strickland) is angling for a $250 billion increase in federal payments for food stamps and Medicaid, the government health program for impoverished Americans and, increasingly, the working poor. Second, he favors a $250 billion national investment in infrastructure projects. Ohio has a list of “shovel-ready” projects, including roads, water and sewer improvements and “green economy” investments.

Third, in search of a palatable pitch to a Congress and nation numbed by the parade of rescue packages, Strickland is teaming with a handful of other Democratic governors to seek a $250 billion infusion for education.

Comparing the two, Kuttner doesn’t mention food stamps at all. Strickland’s infrastructure list appears to contain items (at least “water and sewer improvements”) not in Kuttner’s. Finally, Strickland’s education number is a whopping $150 billion more than Kuttner’s ($250 bil vs. $100 bil).

In sum, there’s easily $200 billion, and possibly $300 billion, in what Strickland wants that isn’t in what Kuttner wants.

More than likely, there are items in Barack Obama’s $775 billion agenda that are over and above what either Kuttner or Strickland envision. Beyond all of that, there are surely additional items in municipal wish lists from places like the City of Detroit ($10 billion), Cleveland ($730 million), and others.

You can start with Kuttner’s $2 trillion and raise to at least $2.5 trillion with other items on others’ lists without breaking much of a sweat. And they certainly aren’t done dreaming.

As I said, I was wrong, and I am sorry. Because of that, I’m not going to speculate on what the upper limit of all this nonsense could possibly be by the time it’s all done.

Even more troubling, if that’s possible, Kuttner’s list includes items that would be advertised as temporary, but if enacted, will more than likely remain permanent. Does anyone believe that lowering Medicare eligibility to age 55 could be stopped once it started? Does anyone think that socializing COBRA could be undone? Would Uncle Sam’s increased share of Medicaid costs ever be cut back?

Thus, Kuttner is advocating “stimulus” items that are really major and permanent structural increases in the size and scope of Washington’s control over the economy, and our lives.

Given the quantity and quality of the opposition in Washington, we are in a world of hurt.

Do I hear $3 trillion? $4 trillion?

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1 Comment

  1. [...] of the nation’s economy: Bizzy Blog is saying, hate to say I told you so and James Pethokoukis says Big Media is (predictably) distorting Bush’s economic record. But, [...]

    Pingback by Longest. Linkaround. Evah. | The Anchoress — January 14, 2009 @ 1:14 pm

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