Despite White House efforts not one Republican Congressman voted for what Rush Limbaugh has called Barack Obama’s "porkulus" plan. Eleven Democrats voted ‘no’ too during yesterday’s successful passage of the bill in the House of Representatives.
America’s Republicans – like Britain’s Conservatives – have chosen to
gamble that the stimulus will either not work or the long-term indebtedness will be hugely expensive (economically and electorally).
A range of concerns motivated Republicans. Fiscal conservatives worried about the scale of borrowing. Supply-siders were unhappy at the amount of tax cuts relative to spending increases. Social conservatives were unhappy about an "extra $50 million allotted to the National Endowment for the Arts and an untold amount of Medicaid dollars for states to spend on contraception and other forms of family planning." Partisan Republicans just wanted to give Obama a bloody nose.
The remarkable thing is that Obama was unable to win the backing of a single Republican Congressman. Democrats had hoped for at least ten supporters and the President’s Chief of Staff had dined with a ‘moderate eleven’ at the White House just 24 hours ago. Some Republican Senators may be more consensual when the bill reaches them.
Two analyses of the Obama stimulus plan doubt its effectiveness on (a) timeliness and (b) inducing others to reduce their spending.
(A) Jim Manzi notes that "substantially more of outlays occur in 2012 or later than occur in 2009." He continues:
"If this is a “normal” length recession, the spending bill will have the classic problem that fiscal stimulus does—namely, it comes too late to do much good, but right on time to help stoke inflation and mis-allocation of resources that are suddenly in high demand as the economy enters a recovery. And if this is a very long-lasting recession, more like a U.S. 1930s Depression or Japan 1990s “lost decade”, then the problem is so long-lasting that we’re not really debating a stimulus bill, we’re debating a near-permanent shift of control of resources to the government, which doesn’t exactly have a sterling track record of success."
(B) Alan Reynolds on National Review:
"When the government spends money, or gives it away in rebate checks, that undoubtedly “stimulates” those who receive the cash. But it has the opposite effect on those who pay the bills. Karl Marx, in his 1852 critique of Louis Bonaparte, explained that “the people are to be given employment: initiation of public works. But the public works increase the people’s tax obligations. . . . Taxes are the life source of the bureaucracy. . . . Strong government and heavy taxes are identical.” When the government borrows from Peter to pay Paul, taxpayers then have an obligation either to pay interest to Peter (forever) or to repay the debt. Government money does not become free money simply because it was borrowed. True, the U.S. government has been able to borrow at extremely low interest rates lately, but that never lasts for long. The extra debt the new administration plans to dump on the backs of future taxpayers will have to be rolled over at higher interest rates, sooner or later (more likely sooner) and the rising cost of debt service will be borne by taxpayers unless the government defaults (which is already the subject of some speculation)."