More Priority

"We got plenty of money in Washington. What we need is more
priority."

George W. Bush, June 2, 2008

Notwithstanding his grammar, and the apparent lack of awareness of the fact that he nearly doubled the National Debt in only eight years, there's a grain of truth in Bush's statement.

Nowhere is this more evident that in the reaction to the economic stimulus plan (American Recovery and Reinvestment Act of 2009) that cleared the House this week. With a ten year cost of $787 billion, this is definitely a "big ticket" item, and deserving of close scrutiny. But those who cried "pork" without an alternative solution did nothing to help the process.

Is it worth it? One way to look at it is to consider the benefits. The non-partisan Congressional Budget Office has estimated that it will create 3.6 million jobs next year and as many as 11.6 million over the next five years.

The latest estimate from the CBO also shows that the stimulus includes $288 billion in tax benefits, so the "spending" part is just under $500 billion.. Tax credits generally provide less economic stimulus than direct spending, and the least stimulative of these is the Alternative Minimum Tax (AMT) patch for 2009. At a cost of $70 billion, The Tax Policy Center has said this change provides "virtually no economic stimulus," because it benefits only upper middle income taxpayers.

The AMT fix was inserted by our own Sen. Chuck Grassley. In his defense, this issue has been around for a long time. If we're going to "patch" the AMT every year, as we have since 2001, maybe we should make the patch permanent. But let's not count the $70 billion cost for the 2009 AMT patch as part of the stimulus; this would have been done anyway.

Another way of looking at the stimulus is to compare it with other "big ticket" items in recent years:

- The Bush 2001 tax cuts (EGTRRA): $1.35 trillion (mostly to top 10% income levels)

- The War in Iraq: $1.7 to $3 trillion

- The Bank Bailouts: $2 trillion+

It's worth noting, that a number of Republicans in both houses of Congress offered up extending the Bush tax cuts beyond their 2010 expiration as the primary solution to our economic woes. The estimated cost according to the Center on Budget and Policy Priorities: $4.4 trillion over 10 years. How exactly is this going to stimulate the economy? This sounds more like the definition of insanity: "doing the same thing over and over again and expecting different results.”

Since the Senate Republicans objected so strongly to the stimulus plan, it's worth taking a look at the voting on the 2001 Bush tax cuts for wealthy Americans. (click here) Only two Republican Senators voted against the 2001 tax cuts for wealthy Americans (including, to his credit, John McCain). But for some reason, many of these same Senators feel they can't support spending half this amount to create almost 12 million jobs during an economic crisis.

Like the man said, "what we need is more priority," or at least different priorities.