Hussein bin Buckwheat-Obama's Trojan Horse - The Socialist Welfare State
- From: Patriot Games <Patriot@xxxxxxxxxxx>
- Date: Mon, 19 Jan 2009 07:51:05 -0500
http://www.newsmax.com/headlines/obama_welfare_spending/2009/01/18/172756.html
Obama's Trojan Horse: Bailout Signals Return of Welfare State
Sunday, January 18, 2009
President-elect Barack Obama?s proposed $775 billion stimulus package,
being sold as a cure-all for the ailing economy, is little more than a
checklist for funding the pricey social-services agenda that he
promised during his campaign.
Some experts say that the Trojan horse of pork and welfare spending
will ultimately worsen the recession and drive the nation deeper into
debt, according to financial experts.
Most of Obama?s costliest promises have found their way into the
so-called American Recovery and Reinvestment Plan, which now includes
everything from an expansion of Pell grants for college students, to
health care for the unemployed, to an expansion of unemployment
benefits, to investment in renewable energy.
?This legislation appears to blanket government programs in spending
with little thought toward real economic results, job creation or
respect for the taxpayer," said Rep. Jerry Lewis, R-Calif., ranking
Republican on the House Appropriations Committee. "I'm scratching my
head trying to determine how items like $50 million in funding for the
National Endowment for the Arts will create jobs or provide relief for
families across the country."
Lewis and other Republicans question the inclusion of items like $850
million for wildfire prevention and $600 million for new cars for the
federal government.
Lewis lists others: $200 million to ?encourage electric vehicle
technologies? in state and local government motor pools, $1.9 billion
in funding for high level physics research, $650 million to extend the
coupon program to allow analog TV owners to continue to watch TV, and
$400 to the Oceanographic and Atmospheric Administration for ?habitat
restoration.?
What do any of these expenditures have to do with creating job? They
are a far cry from the traditional tools of stimulating the economy
such as road and bridge construction, for which the bill allots $30
billion, some experts say. Their inclusion reflects Democrats'
expansive view of how the government can create jobs: helping the auto
industry by replacing government cars, for example, and hiring people
to restore areas hit by wildfires.
Far from sparking the economy, the package will send the budget
deficit soaring, crowd out private investment, and fuel a surge in
inflation and interest rates, according to Arthur Laffer, an economic
advisor to President Reagan.
The package essentially transfers wealth from those who are working to
those who aren?t, Laffer tells Newsmax. ?When you give people real
resources other than what comes from work effort, those resources have
to come from workers and producers.
?Conceptually, the government doesn?t create resources, it
redistributes resources,? Laffer says. ?Whenever you bail something
out, you have to take resources from people doing well. It?s a zero
sum game.?
Specifically, Obama is proposing spending $775 billion in government
dollars in four key areas:
Tax Relief: $310 billion. Companies could write off losses for
2008-09, small businesses could write off spending this year up to
$250,000, companies would receive a $3,000 credit this year for each
employee hired and retained. Individuals would receive $500 tax
rebates, couples $1,000. Those who don?t make enough money to pay
taxes would benefit from reductions in Social Security and Medicare
withholding taxes.
Energy. Obama seeks a national energy grid including renewable sources
such as wind, solar and hydroelectricity. Funding for the
Manufacturing Extension Partnership, which seeks new technology to
make U.S. manufacturing more efficient, would be doubled. These are
only part of Obama?s excessive $150 billion green-jobs plan.
Health Care: $100 billion. This includes more health insurance for
laid-off workers and funds for states to finance Medicaid. The program
also allocates $20 billion toward Obama?s ultimate goal of $50 billion
to modernize medical records.
Education. Pell grants for college students and spending on Head Start
programs would be increased. Funds also would be raised to help
special education students.
?I?m skeptical about green jobs. Why do we as a government propose all
this green spending? Look at what happened when the government
insisted on boosting the housing sector,? Steve Horwitz an economist
at St. Lawrence University in Canton, N.Y., tells Newsmax.
In fact, all of these pricey programs are likely to last a long time,
whether they help the country out of its economic morass or not,
experts fear.
"If all of the infrastructure and the programs to temporarily help
individuals, to temporarily [help] companies, if all of this becomes
bureaucratic institutions that are in place from now until forever,
we're in trouble," Thomas Donahue, president of the U.S. Chamber of
Commerce, which represents more than 3 million businesses told Time
magazine recently. "You stop and think of some of these things and you
say, 'All right, that's just for two years.' Well, who's going to be
in charge two years from now, saying 'We're not doing that anymore'?"
Strikingly, things are so bad in the economy that Obama admitted as
much in a speech earlier this month and still hasn?t engendered much
resistance to his plans. As the economy has worsened, the
president-elect has been asked repeatedly which of his campaign
initiatives he would be willing to cut. The answer? Not many.
"There is no doubt that the cost of this plan will be considerable,"
Obama said. "It will certainly add to the budget deficit in the short
term. But equally certain are the consequences of doing too little or
nothing at all, for that will lead to an even greater deficit of jobs,
incomes and confidence in our economy."
The reality of the Obama spending plan flies in the face of the
consensus has emerged among mainstream economists that the recession
can?t end without a massive fiscal stimulus program. Everyone from
Larry Summers, incoming director of the White House National Economic
Council, to Martin Feldstein, chairman of President Reagan?s Council
of Economic Advisers, has jumped on board.
But sometimes the consensus is wrong, and this, some financial experts
maintain, is one of those times.
The Congressional Budget Office predicts that the deficit will explode
to $1.2 trillion this year, even before the stimulus package, which
could another $1 trillion to the gap over the next two years.
A $1.2 trillion deficit would amount to about 8 percent of gross
domestic product, smashing the post-World War II record of 6 percent,
set in 1983 under President Reagan. If the stimulus package pushes the
deficit to $1.7 trillion this year, that would total a whopping 10
percent of GDP.
Not everyone is comfortable trading deep deficit spending for the
promise of recovery, however.
?We?re in a situation where the budget deficit will top $2 trillion
over the next two years, and they?re talking about adding $700
billion-$800 billion in new spending,? J.D. Foster, a senior fellow at
the Heritage Foundation, tells Newsmax.
?If deficit spending stimulated the economy, with $2 trillion already
out there, the economy should be performing like a double shot of
espresso.?
Instead economists are forecasting a contraction of up to 5 percent
for the fourth quarter of last year and the current quarter.
?The reason why the package is not stimulative and that the additional
deficit spending won?t help is that the federal government has to
borrow from the private sector to spend it,? Foster says. ?Whoever was
going to spend that money in the private sector won?t be able to do
so. Deficit spending just rearranges demand in the economy, it doesn?t
change incentives to produce.?
?The transfer [of wealth] drives a wedge between wages paid and wages
received,? adds Laffer. ?That larger wedge creates a disincentive to
produce.?
Laffer asks rhetorically: ?If you?re going to give some resources to
those who don?t work, why not give 100 percent? GDP would go to zero.?
Many critics have said it was deregulation that sparked the financial
crisis and recession, but Horwitz says the problem was too much
regulation, and that the stimulus package represents just another
example.
?There was this government focus on the housing market, giving power
to Fannie Mae and Freddie Mac and keeping interest rates low,? he
says. ?Now we?re repeating the problems that got us into trouble.?
And of course, bulging deficits always are accompanied by jumps in
inflation and interest rates. ?We are taking about issuing an enormous
amount of debt at the same time that governments around the world are
talking about something very similar,? Foster says.
?Globally, additional deficit spending could top $1.5 trillion this
year. That?s an enormous number, large enough to have a material
effect on real interest rates, driving them up and thereby slowing the
economy.?
As for the $310 billion of tax cuts in Obama?s program, many of them
represent temporary measures, such as a $500 rebate for individuals,
$1,000 for couples. And even those who don?t earn enough to pay income
taxes would be handed a rebate for automatic Social Security and
Medicare deductions from their paychecks.
Experts like the idea of increased tax cuts, but fault Obama for
seeking only temporary reduction. His tax plan is misdirected.
?There will be more money left in families? pockets, which is good,
but that?s not stimulative,? Foster says. ?The federal government has
to borrow to give you rebates or lower withholding taxes. It?s a
reduction in tax barriers that stimulates the economy.?
Horwitz favors a reduction in capital gains taxes to spark business
investment and Laffer would like to see a decrease in top marginal tax
rates.
Only one element of Obama?s spending plan makes sense, experts say:
infrastructure improvement.
?If you?re going to have a stimulus program, you may as well be sure
you are spending on things the government can do that others can?t,?
says Horwitz.
?If you?re going to borrow, do so for the long-term. In that sense,
infrastructure makes sense.? But that is about the only part of the
boondoggle that is defensible, he and others say.
.
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