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Six Reasons Why Economic Stimulus Bill Isn't Temporary

By Conn Carroll

Pushing for deficit spending as part of his own economic stimulus package in 1971, President Richard Nixon famously told ABC News, “I am now a Keynesian in economics.” Increasingly, it seems that everyone on Capitol Hill is adopting Nixon’s economic views … but a thousand times worse. Where Nixon wanted to deficit spend by mere billions, President Barack Obama wants to deficit spend in the trillions.

Keynesian theory, suddenly back in style, holds that government can stimulate economic growth by temporarily increasing government spending. Problem is, there was nothing temporary about increases in government spending under Nixon — and there is nothing temporary about the trillion dollars in new spending being debated in Congress.

Speaker Nancy Pelosi (D-CA) yesterday told Politico: “Yes, we wrote the bill. Yes, we won the election.” The House bill perfectly demonstrates how the left is using the economic stimulus bill as cover to accomplish its long-held desire to permanently increase the size of the federal government, with little or no benefit to the American taxpayer.

Today’s top six disastrous highlights are:

1. Medicaid Bailout: The House bill includes an $87 billion bailout for state Medicaid spending. Supposedly, this federal spigot will expire in two years. But there is simply no reason to believe states will be prepared to meet their Medicaid obligations any more in 2011 than they are today. Medicaid is funded by a formula that matches state spending levels with federal dollars. If we keep bailing states out, they will have every incentive to continue irresponsible spending. For example, Gov. Rod Blagojevich (D-IL) significantly expanded health care spending in Illinois while Gov. Mitch Daniels (R-IN) prudently made “hard choices” to maintain adequate reserves. When the bailout comes, Indiana taxpayers are going to have to pay for the Illinois governor’s mistakes.

2. Medicaid Expansion: The House bill expands Medicaid eligibility to cover unemployed workers whose income does not exceed 200% of the Federal Poverty Line. This provision is supposed to expire in two years, but does anyone really expect political will at the state or federal levels to kick new populations off the Medicaid rolls once states put them on? No. States will push for indefinte expansion of the program and neither the White House nor this congressional leadership is ideologically predisposed to say no. Mark our words, this is a permanent expansion.

3. Family Planning Loophole: Section 5004 of the Medicaid expansion includes language that smuggles the left’s social agenda into law under the guise of stimulus. This section undercuts parental authority, increases control over taxpayer dollars by family planning clinics, and expands exactly who is eligible to receive the benefits.  Contrary to current law, the income of parents or even a spouse would not be counted in determining eligibility. So a child in a family at any income level could be eligible for free family planning services. And thanks to a “presumptive eligibility period” in the legislation, no parent ever needs to be notified that his or her child applied for Medicaid. Finally, applicants would not have to prove citizenship before “presumptive eligibility” is determined.

4. Education Bailout: The House bill creates a $79 billion State Fiscal Stabilization Fund to help states pay for public services, 61% of which must be spent on education. Not only does this money encourage states not to make tough budgeting decisions, it also comes with new federal restrictions designed to please leftist constituencies. For example, the bill forbids bailout funds to increase school choice by specifying that “no recipient of funds under this title shall use funds to provide financial assistance to students to attend private elementary or secondary schools."

5. Education Shopping Spree:
Besides that $79 billion, the House bill includes more spending for a slew of other programs, bringing the total price tag for education “stimulus” to $142 billion. Winners of this round include $1 billion for Technology Education, $1.5 billion for Pell Grants, $6 billion for higher education institutions, $2.1 billion for Head Start, $2.5 billion for the National Science Foundation, and $2 billion in Child Care Development Block Grants. Are any of these increases intended to be temporary? Can you imagine Democrats in Congress standing up to cut Head Start and Pell Grant funding in two years? Of course not. This $142 billion increase in education spending would nearly double total outlays in 2007 for the Department of Education.

6. New Jobs? President Obama has said the stimulus could create as many as 3 million jobs, but Speaker Pelosi said yesterday that 4 million jobs will be created or saved. Yet, when pressed by Rep. Dave Camp (R-MI) earlier this week, Tax Committee staffer Thomas Barthold could only shrug and admit to having no estimates that any jobs or economic growth would be created. The video is priceless.

Some legislators are beginning to catch on to the left’s game. Sen. Chuck Grassley (R-IA) says he opposes the Medicaid bailout “because some governors would use the money to mask poor decisions in other portions of their budgets.” Rep. Heath Shuler (D-TN) says he is “concerned about returning fiscal responsibility to Washington” and adds that  the stimulus bill “can’t be the pet projects of the House and Senate.”

It’s time to wake up. This stimulus bill is nothing but the permanent implementation of the pet projects of the House and Senate. And that is exactly why Speaker Pelosi doesn’t want you to know what’s in it, and certainly doesn’t want it to be debated. “We’re on our timetable.” she said unapologetically yesterday.

There is nothing temporary about any of the spending increases in this bill. They are all designed to make the American people more dependent on the federal government. And there is nothing stimulating about that. Let’s hope Congress gets on the timetable of the American people before it’s too late.



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