Why we should all reject the 'stimulus'

"By such examples, by instances of the perpetrators of such acts going unpunished, the lawless in spirit, are encouraged to become lawless in practice; and having been used to no restraint, but dread of punishment, they thus become, absolutely unrestrained.--Having ever regarded Government as their deadliest bane, they make a jubilee of the suspension of its operations; and pray for nothing so much, as its total annihilation." - Abraham Lincoln's Lyceum Address

Imagine a soccer game in which every player of only one team is allowed to pick up the ball and run with it whenever they want. The other team is held to the traditional rules of soccer, where no player except the goal keeper is allowed to handle the ball with his hands, and even then, only in the goal box. What's more, going into the game, each team expected to be held to equal standards, and it was solely the discretion of the referees to grant a special favor in the interest of 'stimulating' their victory count.

When questioned about it, the Director of All Things Soccer testily rebuffed, "What do you think a 'stimulus' is? That's the whole point!"

Any organized team sport is predicated on adherence to certain rules. These rules let the players know their limits, and referees are present to enforce penalties when any team violates the rules.

An evenhanded and unbiased enforcement mechanism gives the players faith in the integrity of the outcome as well as their chances of success, relative to their respective skills and strategies.

The rules and integrity are critical to the success of the sport. Without the faith they engender, the players would be less likely to participate. - Cam Beck

Image credit, "ref"

Comments

[Joe]

I guess I'm not following the analogy...are you suggesting that economics is a team sport? The economic crisis is not a competition between two teams.

In the absence of private spending in a free market economy the government is to only entity that has the power to fill the void.

This isn't a soccer match it's a wildfire. Either we try our best to put out the fire or we let it burn and hope it doesn't kill too many people in the process.

[Cam Beck]

Joe - The free market works as a competition. Just as the referees in a soccer match should not pick winners and losers, nor should the government pick winners and losers by offering special favors to particular industries, classes of citizens, or individuals. Like the referee, it's there to enforce the rules.

[Paul McEnany]

Are you talking about the stimulus or the bailout? You lost me here.

I would say that our economy is a little more complicated than a soccer analogy, or stacked bills, or whatever, but I'd rather not lose my job because bankers didn't play by the rules.

[Cam Beck]

Paul The (insert air quotes) "stimulus."

You're right. It is more complicated than a soccer analogy, which is exactly why I didn't address it in its entirety here.

However, ignoring for a moment the lack of Constitutional authorization to taxpayer money this way (a debate for another time), when you look at how the money is being spent, you'll see that it's little more than a bailout for certain special interests at the expense of the rules of the game that are critical for the free enterprise system to endure.

An awful lot of economists agree it will do nothing to stimulate the economy, but apparently Congress and the administration believe it's so crucial that it be passed now that the American people don't deserve a chance to even examine it and voice their opinions before they start spending their money carelessly.

[Paul McEnany]

Cam

"Enter Fox News talking points here"

:)

Dude, 95% of the bill has been on the internet for weeks. If you didn't read it, it's because you didn't take the time, not because it wasn't available. Either way, every dollar spent will be on recovery.org for you to see where it goes.

The constitutional authorization thing probably has less to do with this bill and more to do with deficit spending in general (if I'm correct on where you were heading).

The economists thing - the overwhelming majority actually don't say it will do nothing to stimulate the economy, it's actually quite the opposite. Would love to see all the economists saying "it will do nothing." There's not a whole lot of debate on whether or not there's a stimulative effect, more of a question of the long-term consequences (which is probably a more important argument).

And the comment on special interests, it's about 40% middle class tax cuts, another 30% on unemployment spending, and then 30% in additional spending for things like infrastructure etc. So yes - there is a lot for the umm, unemployed or middle class lobby, then "democrat" initiatives like energy independence, broadband lines, roads & bridges, etc. You know - all that stuff that makes our economy work better. But that's what happens when people vote, priorities change.

With all that said, if this is about "following the rules" it sounds like your beef is with the bank bailout, not necessarily with taking steps to help all those that were screwed by it.

[Cam Beck]

I'm not sure where to start. You're presuming that when 95% of something we knew was changing in some way, but in a way hidden from the public, somehow turned out to be somewhat what people were talking about means we all knew with any reasonable certainty what the bill was going to be. I mean, other than a lot of spending.

I wouldn't mistake talk about the bill for having a verifiable bill to effectively scrutinize. According to all sources, they were changing things up until just about the last moment, with the particulars of what has been changing shielded from us. There was a dire rush to pass the bill because to do otherwise, according to the administration, it would be irresponsible, but he was in no rush to sign it.

If he was in no rush to sign it, then why was there such a rush to pass it without giving us the opportunity to examine it? (By the way, last I heard, 60-something% of the people disapprove of it in some way -- either because it's too big or because it doesn't focus on the right things -- so much for popular opinion and priorities).

In truth, the spending isn't about the changing priorities of the people, and it isn't about 'stimulating' the economy. It was about Congress and the administration inducing an economic panic to effect social change.

This intent was demonstrated beautifully, if unintentionally, by Rahm Emmanuel's comment, "A crisis is a terrible thing to waste."

The constitutional authorization isn't about deficit spending. There's nothing in the Constitution that prohibits it. It's about constraining one's authority to only those items where powers are enumerated, a political philosophy that Congress long ago abandoned and the Supreme Court stopped enforcing.

About a third was for tax cuts that amount to approximately $13 per week, per citizen, on average. Don't spend it all in one place. I'm not sure if that's on a progressive or regressive tax cut, but if it's either, then yes, that qualifies as a "special" (not "general") interest as well.

For more on the economic impact, see this piece by Thomas Sowell: http://townhall.com/columnists/ThomasSowell/2009/01/27/what_are_they_buying

Here's the money quote:
"Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010."

"Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire."

And finally:
"This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government's power while the people are too scared to object and before any opposition can get organized."

"That is why there is such haste to do things that will take effect slowly."

"What are the Beltway politicians buying with all the hundreds of billions of dollars they are spending? They are buying what politicians are most interested in-- power."

And, yes, I have a problem with the banking bailout, too, which I have also written about before.

And lest you think I'm playing partisan favorites (and of all people, I hope you don't), I was highly critical of it before the election was held (though admittedly, since both sides voted for it, that left me without a dog in the race).

All of this gets away from the central point of this piece, which is that government should enforce the just rules of the game, not decide winners and losers based on their dreams of social progress and want for power.

The market is more efficient at distributing money AND enacting the priorities of the people justly than anything the policymakers in Washington can dream up -- providing they have instituted proper enforcement mechanisms.

[Paul McEnany]

Well, Cam - I haven't seen the lack of support for stimulus anywhere.

Here's just Gallup:
http://www.gallup.com/poll/114577/Stimulus-Support-Edges-Higher.aspx

USA Today+:
http://pollingreport.com/budget.htm

Or the 80% that think it's either important or critically important to have one:
http://www.gallup.com/poll/114202/Obama-Upper-Hand-Stimulus-Fight.aspx

And I wouldn't necessarily consider townhall the gospel on what's happening in the real world, any more than I would consider hannity the same.

Here's from the CBO on spending:
http://cboblog.cbo.gov/?p=208
75% out in the first 18 months, as promised.

And on Obama taking 5 days to sign, that was a campaign pledge he broke on the ledbetter legislation and the children's health care act. Not happy that he skipped that part. Doesn't mean that when you're losing 600,000 jobs a month, there isn't a need to move fast. But at least now, he's fulfilling the promise to post on the web and give us 5 days.

But - the Repubs decided to vote against it before meeting with the President, so I'm not sure what would have been different. I would have loved to see the outrage before the Patriot Act was signed.

On priorities - this spending is about stimulating the economy. But how you stimulate it is a matter of a shift in priorities. In the words of John McCain, elections have consequences.

[Cam Beck]

Thomas Sowell is an esteemed economist and syndicated author whose articles Townhall runs along with lots of other publications. I could have cited any of them. Townhall just happens to be the one Drudge links to. Whatever you think of Townhall, Sowell doesn't have a credibility problem.

I may be wrong on the polls, but honestly, that isn't saying much. The question is phrased so generally as to be meaningless, for the very word "stimulus" presumes it will have a positive effect. It is an approval of the branding, not of the bill.

How much do you want to bet that many of the same people who "approve" of a bill they don't understand are the same people who voted for someone they didn't know? http://www.youtube.com/watch?v=mm1KOBMg1Y8

(Zogby was behind the polling on that study)

That is why, by the way, I put the word "stimulus" in quotes for the headline. It's not just spending, but putting the U.S. in arrears for generations. This is a real problem.

The error isn't that I heard the number -- I did -- but that the number was wrong -- though the way polls are given, it's possible that one was taken showing that number I heard, but with a question phrased less generally.

"On priorities - this spending is about stimulating the economy."

Like I pointed out, it isn't. But whether it's "about" that or not, it will not only be ineffective, but horribly counterproductive.

Yes, the economy is more complicated than my metaphor, but it's also more complicated than any 1000-page piece of legislation ever written -- such as the one that picks winners and losers of the money committed in the "stimulus," which is really what the metaphor was about.

[Gannon Beck]

This is why the economy is so bad. People are too busy arguing about it to get any work done;)

[Cam Beck]

Just for posterity, here is a poll that has a different conclusion than the one to which Paul directed us:

Rasmussen reports that 37% favor stimulus, 43% oppose.

The questions asked are slightly different. Gallup asks, "As you may know, Congress is considering a new economic stimulus package of at least $800 billion. Do you favor or oppose Congress passing this legislation."

Rasmussen asks, "Do you favor or oppose the economic recovery package proposed by Barack Obama and the Congressional Democrats."

Gallup says they surveyed American adults. Rasmussen says they surveyed 1,000 likely voters. It's possible that both are correct, which is very telling, as well.