The CBO has issued a report stating that the legislation charitably known as the stimulus package won’t produce much stimulus this year. This isn’t shocking. People need to stop looking at this as something to stimulate the economy. People need to see this as the Obama administration’s best opportunity to dramatically alter the federal government’s relationship with the private sector. Here’s what you need to know about the stimulus package:
Less than half the money dedicated to highways, school construction and other infrastructure projects in a massive economic stimulus package unveiled by House Democrats is likely to be spent within the next two years, according to congressional budget analysts, meaning most of the spending would come too late to lift the nation out of recession.
A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended.
Here in Minnesota, the DFL is banking heavily on the stimulus package to wipe out Minesota’s deficit and create jobs. They’re especially banking on public works projects to create or maintain jobs. Considering the fact that “less than half the money dedicated to highways, school construction and other infrastructure projects” are “likely to be spent” this biennium, it’s apparent that the DFL’s plan is best characterized as being built on shifting sand.
Few argue that we need economic growth to balance Minnesota’s budget. That’s why it’s important that we do everything possible to spur economic growth immediately, not the next biennium. Here’s some of the breakdowns:
Still, the report from the CBO, the nonpartisan arbiter of congressional spending measures, offers a stark assessment of some of the Democrats’ top priorities. For example, of $30 billion in highway spending, less than $4 billion would occur over the next two years. Of $18.5 billion proposed for renewable energy, less than $3 billion would be spent by 2011. And of $14 billion for school construction, less than $7 billion would be spent in the first two years.
This bill is more trojan horse than short term economic shot in the arm. That’s alot of spending for so little stimulus. It’s also highly inflationary.
When an economic plan adds trillions in debt, increases inflation and doesn’t increase private sector productivity, isn’t that the worst of all possible worlds?