On February 17, President Obama signed into law H.R. 1, a bill containing $787 billion tax dollars to be dispersed throughout the country to “stimulate” the economy. Today, $67 billion of the stimulus money has been spent. $24.3 billion went to Health and Human Services to shore up flagging state balance sheets. The Department of Labor has received $11.2 billion in payments to extend unemployment benefits. Another $11.7 billion has been doled out to the states to protect teachers’ jobs. The Social Security Administration received $13.1 billion to give to seniors, and over $134 million has been paid to the Railroad Retirement Board. Retired workers tend not to be good targets for job creation. Most appallingly, $384,000 has been given to the Agency for International Development. In case you thought you read that wrong, yes, a stimulus package that has a much touted “buy American” clause also sends American tax dollars overseas.
Taking advantage of the pain caused by job losses during the first quarter of 2009 to build public support for a stimulus package that likely won’t be spent until the third quarter of 2010 is a shameful political gimmick. To hand out checks before employing 17.1 million men and women willing to work is unconscionable.
So why hasn’t all the money been disbursed? No one knows. The President said in his speech, “If we do not move swiftly to sign the American Recovery and Reinvestment Act into law, an economy that is already in crisis will be faced with catastrophe.” When will the money be paid out? I will posit a guess that this money will arrive during the summer of 2010, giving it just enough time before the November mid-term elections to kick in. Mid-term elections tend to go poorly for the sitting president’s party (see 1994 and 2006). This time the incumbent party has loaded itself a silver bullet. H.R. 1, the American Recovery and Reinvestment Act of 2009, should be named the Democratic Vote-Buying Act of 2010. In White House Chief of Staff Rahm Emanuel’s words, “You never want a serious crisis to go to waste.”
Simply treating the symptoms of a systemic failure will not prevent another. When the government borrows now, to spend on programs with no return, it leaves America’s future generations with unsustainable debt and entitlement obligations. Congress should stimulate the economy by substantially lowering America’s detrimentally high corporate tax rates and income tax rates and by ending the double taxation of dividends. Tax breaks have an immediate effect, rather than leaving 17.1 million Americans waiting for the dough.