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Morning Bell: Christmas in September

Posted By Conn Carroll On September 16, 2008 @ 9:03 am In Ongoing Priorities | Comments Disabled

For most Americans, there are 100 shopping days left until Christmas. But for the special interests in Washington, there are only 10 shopping days left with Congress tentatively set to adjourn for the year on Sept. 26 [1]. One would hope the financial turmoil on Wall Street would give legislators pause to revisit past mistakes. No such luck. Even though the last $170 billion stimulus did nothing [2] to help the economy [3], liberals in Congress are now pushing for upward of $75 billion in new deficit spending. The left has been preparing this deficit spending plan for weeks [4], but it has gotten nowhere. Now liberals are using the latest headlines from Wall Street to push their plan.

In their more honest moments, both presidential candidates admit the current crisis on Wall Street is rooted in the falling value of real estate [5]. Conservatives believe the market should be allowed to correct itself. One would hope responsible liberals would keep their proposed legislative fixes to addressing the housing market. No such luck. They are pushing for a wide array of goodies for their special interest allies, including new infrastructure spending, bailouts for states that can’t manage Medicaid costs, subsidies for alternative energy, subsides for home heating oil, increased unemployment benefits, and a bailout for the auto industry [6]. None of these items is designed to help stabilize home prices in the short or long term.

The biggest piece [6] of the left’s plan is billions in deficit spending for infrastructure projects liberals say will create jobs. And they are right, the government’s checkbook can create as many jobs as it wants. But at what cost? A 1986 Government Accountability Office (GAO) study [7] of a multibillion dollar infrastructure spending plan found that each job created by the government cost $546,136 in 2007 dollars. There simply is no such thing as a free lunch. For every job “created” by government spending, there are offsetting job losses due to decreased private consumption and investment [8].

A taxpayer bailout of the auto industry [9] makes even less since. Many Americans are facing tough times [10], but we cannot spend our way out of the problem. Lower tax rates [11], reduced barriers to trade [12], an end to systemic risk in housing markets [13], and fewer government restrictions on American energy production [14] are a better way to go.

Quick Hits:


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URL to article: http://blog.heritage.org/2008/09/16/morning-bell-christmas-in-september/

URLs in this post:

[1] Sept. 26: http://www.thecapitol.net/FAQ/cong_schedule.html

[2] did nothing: http://online.wsj.com/article/SB121642192042866621.html

[3] to help the economy: http://www.latimes.com/news/nationworld/nation/la-na-rebates28-2008jul28,0,4449719.story

[4] preparing this deficit spending plan for weeks: http://thehill.com/leading-the-news/crisis-spurs-2nd-stimulus-2008-09-15.html

[5] both presidential candidates admit the current crisis on Wall Street is rooted in the falling value of real estate: http://www.politico.com/news/stories/0908/13481.html

[6] new infrastructure spending, bailouts for states that can’t manage Medicaid costs, subsidies for alternative energy, subsides for home heating oil, increased unemployment benefits, and a bailout for the auto industry: http://online.wsj.com/article/SB122152277104639601.html

[7] study: http://archive.gao.gov/f0102/132063.pdf

[8] For every job “created” by government spending, there are offsetting job losses due to decreased private consumption and investment: http://www.heritage.org/Research/Budget/bg2121.cfm

[9] A taxpayer bailout of the auto industry: http://www.foundry.org/2008/09/10/bailing-out-detroit-wrong-vehicle-for-change/

[10] tough times: http://www.heritage.org/Research/Economy/wm2008.cfm

[11] Lower tax rates: http://www.heritage.org/Research/TradeandForeignAid/wm2065.cfm

[12] reduced barriers to trade: http://www.heritage.org/Research/TradeandForeignAid/wm1830.cfm

[13] an end to systemic risk in housing markets: http://www.heritage.org/Research/Economy/HousingandFinancialMarkets/wm2055.cfm

[14] fewer government restrictions on American energy production: http://www.heritage.org/Research/Economy/wm2051.cfm

[15] Oprah Winfrey is telling her 44 million viewers to pressure Congress: http://thehill.com/leading-the-news/senator-no-is-facing-his-toughest-foe-senator-o-2008-09-15.html

[16] the U.S. Army general who presided over Iraq’s pullback from the brink of all-out civil war: http://www.usatoday.com/news/world/iraq/2008-09-16-petraeus-departure_N.htm

[17] decline in crime in almost every category: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091503079.html

[18] Iran has stopped providing information to U.N. nuclear inspectors: http://www.csmonitor.com/2008/0916/p25s05-wome.htm

[19] has substantially improved the efficiency of its centrifuges that produce enriched uranium: http://www.nytimes.com/2008/09/16/world/middleeast/16iran.html?ref=todayspaper

[20] suddenly become ill in their final year of work: http://www.washingtontimes.com/news/2008/sep/16/sick-leave-misuse-by-federal-workers-costs-68-mill/

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