Stimulus II: Blowing Smoke...
Our economic problems are caused by irrational actions and government interference in the free market; they won't be solved by more of the same. Our problems won't be solved with expanded national debt and the inevitable crush of interest payments and spiraling interest rates to follow.
Ignoring the abject failure of last year's "Stimulus" spending spree, which snowballed the now staggering Federal debt, this week the House of Representatives passed a second stimulus bill. "Blue Dog" Democrats who touted their opposition held back their votes for just a day or two before joining their party's "Progressive" leadership in moving this bill to the Senate for final passage. Public attention to the flaws and consequences of this legislation have been kept at bay, in part, by the bill's numerous name changes on its way to passage. Retitled six times H.R.4213 is now named the "American Jobs and Closing Tax Loopholes Act of 2010." However, the loopholes this legislation contains far outnumber any which it corrects.
Like its cousins, Obama Care, Serve America, Financial Reform Act, etc. this legislation exceeds a thousand pages. Thus, as these other Obama's make-over-of-America laws, its momentous scope and long term destruction will further derail the American way before most of us ever get to review its actual contents. Excerpted from opencongress, even this brief summary reveals that "Stimulus II" is weighted down by the same fuzzy math that has typified the Progressives disregard for reality and ineptitude for economic problem solving:
- Emphasizing that this is a "smaller stimulus" Stimulus II comes in at a cost of about "$127 billion in new short-term spending." The ruling Democratic party, undeterred by the multi-generational debt they continue to multiply, once again contradicted themselves by its passage. Take, for instance, this pre-passage comment made by VA Democrat, Rep. Gerald Connolly, the day before it sailed through: "But it is not paid for. Until somebody shows me a path for this being paid for, I am a no." Yet, Connolly, like his fellow Democrats, voted "Stimulus II" quickly through the very next day anyway! With a vote of 240 to 170 (all GOP Representatives voted Nay) not one single Democrat voted against its passage.
- Translating the bill's inspiring title into actual fact, its largest single pay-out provides extension of unemployment benefits to the end of November, 2010. It also extends COBRA health care benefits for the unemployed for the same period. This makes it self-evident that its Democratic support serves a primary purpose of vote-getting from the 9.5+ % of Americans who are out of jobs! Evidently, "hoping" We the People just won't notice that, even with its dollar juggling distortions, "Stimulus II" increases the national debt by a minimum of $31 billion dollars! (Even that figure does not take into account that expenditures are immediate while its potential revenue is protracted over the next decade.)
- As for the rest of the $127 billion dollars it draws out of thin air, "Stimulus II" claims it will collect about $47 billion dollars in new taxes over the next ten years. An elementary school child could calculate that spending so much money (that doesn't even exist) now for a fraction of a return in the future, just doesn't add up. So, why can't a Congress of educated adults see that obvious outcome?!
- And where are these tax dollars to come from? In part, from a revised tax code for hedge fund managers. Current law allows these financial moguls to file at "capital gains rates rather than regular income tax...(this) creates situations where billionaires end up paying a lower tax rate than their secretaries." Under "Stimulus II", these individuals will pay normal income tax - but only on "the first 60% of their income." The remaining 40% of their revenue will "still be taxed at the lower rate." This part of the bill conveys the double talk that's trademark of Obama's administration by appearing to address inequities while actually catering to their Wall Street supporters.
- "Stimulus II" 2nd largest expenditure "delays a scheduled 21.2% cut in doctors Medicare reimbursements until January 2012." This huge pay cut for physicians, repeatedly forestalled since 2003, by the Democratic controlled Congress, thus borrows non-existent funds to delay the inevitable for this calendar year. Thus, another unresolved crisis is swept under the rug until after November's elections.
- The other main "tax loophole" addressed closes American companies ability to operate offshore for tax savings and prevents S corporations from avoiding Social Security taxes. It's noteworthy that this Act corresponds to Secretary of State Clinton's public statement this week that she still believes "the rich" are not paying enough in taxes.
- The bill's 3rd largest item is about $25 billion more for Bulld America Bonds (from the original "Stimulus") with reduced rate loans for state and local governments to undertake infrastructure and highway repairs. Is anyone on Capitol Hill noticing that those governmental bodies are already broke and have no means to repay such loans?
- As for any actual "Stimulus" in this Act, it is said to provide "some small business tax credits . . . a new summer jobs program . . .and tax incentive for clean energy development." Has no one told Congress that forestalling the unemployment crisis, expanding the national debt and generating (again, pre-election only) summer jobs are not viable ways to build up an economy?
The above overview of this House passed nonsense is from Open Congress. Other sources indicate numerous large pay-outs for teacher's pensions, labor unions, Native Americans, etc. Combined, these expenditures warrant a truer title of this bill to be "Protect the Party Pay Out Act."
No doubt more secreted land mines still lay in wait, once this sweeping new Fed package is examined. At first glance, we know this much: the Democrats are back to the press printing billions more dollars. What for? "Hoping" to hold pre-election favor with party patrons and the long-term unemployed; to temporaily plug one hole in their Health Care mess; to shore up their youth vote with part-time, short term jobs and to enable their politically driven "green drive" while giving a semblance of support for state infrastructure. Whose to pay the bill for these self-serving objectives? Certainly not the Congressmen who voted through the fiasco they call "Stimulus II."
It doesn't take an economist to see nothing of note in this massive spending spree meaningful to buoy real job creation. What it reveals, instead, is a short-sighted one sided political agenda that brings unfunded mandates to a whole new level of precipitating total national economic disaster. Adding to the travesty of this insane legislation is the fact that any pretense from Blue Dogs of fiscal responsibility has crumbled with "Stimulus II" passage. Only 16 Democrats did not vote for this bill, choosing instead to abstain from voting - the political equivalent of hiding behind a tree and hoping that no one will notice.
Ironically, other media reports seem more concerned with the one-week gap in funding unemployment (which expires June 2) than this bill's absence of meaningful employment creation. Pretending a political magic Act (with the word "Jobs" in the title) can substitute for sound math, H.R. 4213 will go before the Senate on June 7 (after that weary body returns from their week long Memorial Day holiday.) Every concerned American should contact your Senators now - at their in-state offices. Let them know you are paying attention to the national debit, even though Capitol Hill isn't!
OpenCongress link to information on this bill: http://www.opencongress.org/bill/111-h4213/show
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