Massive PORK spending, very Little Stimulus. Wow Wow, lies and deception in the form of a so called stimulus package.
Minority Views of Hon. Jerry Lewis, Hon. C.W. Bill Young, Hon. Harold Rogers, Hon. Frank R. Wolf, Hon. Jack Kingston, Hon. Rodney P. Frelinghuysen, Hon. Todd Tiahrt, Hon. Zach Wamp, Hon. Tom Latham, Hon. Robert B. Aderholt, Hon. Jo Ann Emerson, Hon. Kay Granger, Hon. Michael K. Simpson, Hon. John Abney Culberson, Hon. Mark Steven Kirk, Hon. Ander Crenshaw, Hon. Dennis R. Rehberg, Hon. John R. Carter, Hon. Rodney Alexander, Hon. Ken Calvert, Hon. Jo Bonner, Hon. Steven C. LaTourette, and Hon. Tom Cole
America's economic crisis continues, and there is an immediate need for Congress to produce a strong and definitive plan to help weather this financial storm.
As Republican Members of the House Appropriations Committee, we want to express our willingness and desire to work with President Obama to help our economy out of its current economic decline. In fact, Ranking Member Lewis appealed to the President in his opening statement at the Committee mark up of this legislation, saying: “Mr. President, each of us wants to see you be successful. As we celebrate this historic moment in our nation’s history, we welcome the opportunity to work with you and your administration. The challenges we face as Americans — not Democrats or Republicans, but Americans — are great. We have much work to do. It is our sincere hope that we will work together — across party lines — to restore confidence in our economy and create a climate conducive to job growth. We can no longer afford to point fingers and cast blame. If there was ever a time for our country to come together, it is now.”
There is no greater challenge facing working families today than our nation’s struggling economy. Each of us can speak passionately — and with great empathy — of people we know in our own districts who have lost their jobs, are unable to pay their mortgage, don’t have health insurance, and are struggling to make ends meet. They are asking for our help.
As we demonstrate our compassion, let us also be mindful of our responsibility to assist those in need without creating an untenable situation for future generations. That is the balance we must strive to achieve.
The centerpiece of any stimulus bill ought to be near-term job creation. Government has a role — but our constituents are not asking for an unlimited expansion of government. They are asking Congress to focus on specific sectors of our economy and to provide solutions that will offer tangible, near-term results.
Most of us would agree that the recent $700 billion Troubled Asset Relief Program (TARP) bill is an illustration of how good intentions don’t always deliver desired results. Many Members would like to have that vote back.
When Congress spends too much, too quickly, it doesn’t think through the details and oversight becomes more difficult. The TARP bill is only the most recent example. The lesson learned was this: We cannot manage what we do not measure. We simply cannot afford to make the same mistake again.
Public dismay over the lack of transparency in TARP implies a public desire for more openness and thoughtful consideration of stimulus spending. The majority’s proposed $14 million reporting website is not oversight. Posting $550 billion worth of federal spending on a website does not ensure that these funds will be well-spent.
Each and every agency should be required to submit a spending plan to Congress —on the front-end and not after-the-fact — to ensure that every dollar is spent as intended. Our constituents deserve no less.
These taxpayers — who will repay this debt over time — also deserve specific answers before we spend another nickel of their money. They deserve to know how many jobs will be created in six months, 12 months, 18 months, and beyond. These are thoughtful, reasonable questions deserving a thoughtful, reasonable response.
Many have described this legislation as a transportation and infrastructure investment package. However, the fact remains that only $30 billion — or three percent — of the funding is directed toward “shovel ready” road and highway spending. The backlog for these projects is $64.3 billion.
Similarly, $4.5 billion is allocated for the Corps of Engineers for improved flood protection and navigation when a $61 billion backlog exists for Corps projects that are fully authorized. These are the types of targeted infrastructure investments that will create sustainable jobs and should be given even greater priority within this package.
Many Republicans support wellness programs, analog TV conversion coupons, and the NEA — but these and many other items in this bill don’t create jobs and ought to be funded through our regular appropriations process. They do not belong in a stimulus bill.
Nor should a stimulus package be used to establish 32 new government programs at a cost of over $136 billion — which this bill does. Thirty-seven percent of the total funding in the portion of the bill under the Appropriations Committee’s jurisdiction — more than one out of every three dollars — is dedicated to creating new government programs. Are we fostering job creation and economic stimulus or are we simply growing the size of government?
Our opposition to this package is not based on partisan politics but on economic reality. There is tremendous pressure on Congress to maintain funding for existing programs even before we create new ones. Again, let’s take off our partisan hats and look at the sobering facts.
Congress recently provided $700 billion for TARP. It’s now considering an $825 billion stimulus bill. There is talk of the Senate adding another $70 billion to address the AMT fix. Congress will soon be considering nine of the remaining FY09 spending bills at a cost of $410 billion. And, before long, we’ll be considering another emergency supplemental spending bill.
Let’s be perfectly honest — all of this spending is placing a tremendous burden of debt on present and future generations. Our projected deficit for 2009 is already approaching $1.2 trillion — the largest in history — even before we consider this proposal.
So, what can be done to make this a better and, perhaps, even a bipartisan bill?
1. Narrow the focus of the appropriations to those items that provide measurable economic stimulus or produce jobs. Spending should be targeted to key infrastructure investments that will create jobs over the next two years. We do not question the urgency of this package; we question its priorities and its price tag.
2. Address public concern over adequate transparency and accountability by requiring agencies to submit a spending plan to Congress—as we did with the 9/11 relief bill—on the front-end and not after-the-fact. This will ensure that every dollar is spent as intended.
3. Ensure that this bill captures the full costs associated with waiving cost-share requirements and the hiring of additional federal employees. Proper safeguards are needed to prevent the unintentional growth of government over time.
4. Limit the use of the stimulus bill as a vehicle for increasing base funding of popular domestic programs. Large increases in these programs create unrealistic expectations for future spending.
Just the size of the total bill, some $825 billion, should and does raise serious concerns. Without a clear assurance of how, why and if this proposal will create jobs and promote economic recovery, Congress cannot simply write an $825 billion blank check at taxpayer expense and hope for the best. We should demand that there be some clear, unequivocal assurance of the desired outcomes, in the form of a revitalized economy.
Unfortunately, the evidence from past attempts at stimulating the economy through government spending does not lead to this needed measure of certainty.
Previous attempts to use this redistribution strategy did not work. Over the 1990s, Japan engaged in massive, multiple stimulus efforts and saw its economy remain stagnant and its per capita income go from the world's second-highest to the tenth-highest, behind Austria, Australia, Belgium, Canada, Denmark, Finland, Ireland, Holland, Switzerland, Sweden and the United States. We ignore this lesson at great risk to our society.
With respect to this legislation, the majority leadership claims that this bill will create or save about 3 million jobs, but the cost for this is a shocking $275,000 for each new job created (assuming they actually materialize). Even worse, this calculation is only a partial measure of cost. In reality, the cost of each government-sponsored job should reflect how the private sector would have spent the $275,000 if the government had never gotten its hands on it in the first place. More than likely the private sector could have created many more than one job for $275,000 - especially considering the average U.S. household income is around $45,000.
Finally, we must not forget that this massive government spending doesn't come out of thin air and that we run the perilous risk of leaving a terrible fiscal legacy for future generations. Based on Congressional Budget Office (CBO) recent figures, by 2019 we will have to spend $750 billion per year just on the interest we will owe on current debt - and this does not include the addition of $825 billion in new "stimulus" spending. To borrow these funds and pay the interest on the ensuing debt, the government will have to raise its implicit interest rates by more than four percentage points over the next decade. This is the legacy created by this bill – a significant increase in interest rates that we, our children, and our grandchildren must all endure in the future.
Overview of Appropriations Within the Bill
What follows is a brief description of the flaws in the Committee passed bill, a summary of the various programs funded in the legislation, and a description of the Committee Republicans’ attempts to improve various portions of the bill through the mark up process.
Immediate Economic Assistance is Needed - Not Massive, Extraneous Spending Under the Guise of Stimulus
American workers, businesses and families need real help, not a windfall of deficit spending under the guise of stimulus with no guarantees of economic relief. To help prevent further economic decline, the government has a responsibility to provide common sense investments that will help stabilize the aspects of our economy which put us in the greatest peril, and provide temporary relief to American families who are bearing the brunt of this crisis. Despite claims the stimulus legislation contains “targeted” and “prioritized” investments, in reality this bill will blanket government programs in spending with little thought toward real economic results, job creation, or respect for the taxpayer.
We must not pour hundreds of billions of dollars into government programs, saddling future generations with the debt, without having a clear understanding of what we are willing to sacrifice for the hope - but no guarantee - of economic recovery today, or even tomorrow.
This legislation should contain the highest degree of fiscal restraint and discretion - especially considering that this spending will bypass customary oversight, public scrutiny, and debate by circumventing the normal authorization and Appropriations process. We must ask ourselves, is each and every program in this bill really stimulative? Do they create jobs (and how many and for how long)? Are they worth the cost? Are they one-time costs, or are they programs that will have to be funded year after year? And, are they things that must be done immediately, or could they be done more effectively and efficiently under the normal funding process?
If we fail to protect the interest of the taxpayer and make decisions without these common sense questions, the result will be continued economic decline, vast government waste, long term budget shortfalls and shortages, and a perilous national financial future.
Undoing Decades of Proven Policy
The Pelosi-Obey stimulus bill contains massive shifts in federal policy. These changes have not been approved by the relevant authorizing committees, and do not take into account the fact that established policies in place for decades are usually still there for two reasons – because they work, or because they are extraordinarily difficult to change.
Government agencies will have serious difficulties implementing these new, broad policy changes – especially without the normal instruction and guidance that comes from a proper authorization and regulatory process. This difficulty will make it nearly impossible for agencies to adopt these changes in a prompt fashion – thereby negating any time savings gained by tacking these provisions onto an emergency Appropriations bill instead of allowing them to be approved by the normal legislative process.
The government’s role in public housing is one of these massive policy shifts. Thirty years ago, the government decided to get out of the business of building public housing. The large failure of the program had led to over-crowding, poor sanitation, high crime rates, and a general lower quality of life for residents. Instead, the government turned to the voucher program, which gives low-income residents better housing options - allowing them to live closer to their jobs and better schools, and providing an escape from deteriorating conditions and concentrations of poverty. To date over two million families receive assistance through the voucher program. As public housing stock has decreased, vouchers have replaced that stock.
The stimulus bill ignores the lessons of history and attempts to preserve and perhaps reverse this trend. This bill spends $5 billion to modernize and upgrade the existing public housing stock - propping up unsuccessful and problem-ridden housing authorities and prolonging bad policy. In contrast, this same amount of money could provide voucher assistance for over 100,000 families for five years.
Another policy shift occurs in changing the role of the Department of Energy (DOE). The Pelosi-Obey stimulus bill shifts the role of DOE from a research and development agency into a grant and loan making body. Roughly $30 billion is included in this bill to accomplish this goal. For example, this bill begins entirely new grant programs to states and localities, turning the DOE into nothing more than a pass-through for taxpayer dollars and throwing accountability go out the window. The losers? The American taxpayers and their hope for energy independence.
The changing role of the federal government in education and healthcare is yet another massive policy shift included in this stimulus bill. While some investments in health care and education are regularly included in the federal budget, the Pelosi-Obey stimulus bill goes far beyond the firmly established and authorized role of government in these areas – including creating 9 new programs for a total of $106 billion. For example, this bill contains $20 billion to insert the federal government into school construction which, until this bill, was exclusively the responsibility of state and local governments. And, this bill includes $24.7 billion to lay the groundwork for a highly controversial shift to universal healthcare (which has yet to be approved by Congress).
Circumventing PAYGO
This stimulus legislation contains $224 billion that under the regular legislative process would be subject to the Pay-As-You-Go (PAYGO) rule. This rule was put in place by the Democrat majority at the beginning of the last Congress, and requires any new spending to be offset by increased taxes or budget cuts in other areas.
The Pelosi-Obey stimulus legislation, being an appropriations bill, circumvents this rule and includes this massive spending which would normally be subject to PAYGO. By tacking on these provisions, the Democrat majority will attempt to avoid potentially embarrassing public in-fighting down the road, and fast-track party and administration priorities without proper public scrutiny and oversight.
Piling Money on Money – Can We Even Spend This Much?
In one bill, the Pelosi-Obey stimulus contains almost as much funding as the entire federal government spends in one year. It is without a doubt the most expensive single piece of legislation Congress has considered. This bill even dwarfs the $700 billion Troubled Asset Relief Plan (TARP) bail out that passed Congress last fall.
Because of this bill’s unprecedented size, federal agencies will have a difficult time spending this money. Federal bureaucracies are notoriously slow, unresponsive, and unwieldy, which makes this bill’s exponential growth in existing programs extraordinarily difficult to implement in a short period of time. These agencies have neither the staff nor the organizational capacity to handle this influx of funds. To make matters more complicated, this bill contains 32 new programs (totaling $137 billion), but does not include the kind of legislative language and guidance which normally comes from a proper authorization process.
In addition, many of the projects funded in this bill could take years – not months - to complete. For example, this bill includes $7.7 billion for the General Services Administration (GSA) building fund. The GSA’s target average completion dates for construction projects is 8.5 years. (Further, of the GSA’s project funding that can get out the door in 120 days, 36% will go to projects in Washington, D.C.)
Also, many provisions in this bill fund programs that are already sitting on large, unspent pots of money. The amount of unspent funds already sitting in federal coffers raises serious questions about the economic benefit of piling on even more money. If federal agencies can’t spend the money they already have, does the economy really benefit by giving them more? If we require the agencies to spend this stimulus money in a short period of time, won’t they just pass over their existing funds, resulting in no real additional “stimulus” spending? And, if these agencies have been sitting on funds in accounts that have “stimulus” potential, why hasn’t this money already been spent?
The Congressional Budget Office (CBO) – a non-partisan entity that provides unbiased budget analysis for Congress - produced a report of the Pelosi-Obey stimulus bill that indicates that the legislation will not provide the kind of immediate results that will boost our economy in the short term. The following table highlights when the funding contained in the Appropriations stimulus legislation will actually be spent. According to the CBO, only 7% of the discretionary spending in the stimulus bill will be spent in the first year, while the bulk of the funding won’t be spent for years – including 18% which won’t be spent until five, ten, or even more years after this bill is enacted.
STIMULUS PACKAGE SPENDOUT ($ in thousands)
FISCAL YEAR
Budget Authority by Year
Outlays by Year
Cumulative Outlays
Total % Spent
FY09
273,986.0
26,156.0
26,156.0
7%
FY10
66,529.0
110,167.0
136,323.0
38%
FY11
4,147.0
103,048.0
239,371.0
67%
FY12
3,575.0
52,948
292,319.0
82%
FY13-19
9,852.0
63,213.0
355,532.0
99%
After FY19
-
2,557.0
358,089.0
100%
Total
358,089.0
358,089.0
Following is a CBO summary of the legislation, received by the Appropriations Committee on January 19th at 3:00 pm. This report shows the CBO estimate of the American Recovery and Reinvestment Act of 2009 as posted on the Appropriations Committee majority website on January 15, 2009. This estimate assumes a mid-February, 2009 enactment date.
Effectiveness of Government Spending to Help Our Economy
Over the last year, Congress has pumped massive amounts of government spending into the economy with limited results. To make matters worse, much of this spending has not gone to the uses that Congress intended, and was spent without proper oversight, transparency or accountability to the taxpayer.
For example, Congress approved $700 billion in TARP funding last fall to help financial companies deal with the fiscal burden created by the housing crisis. However, those funds were redirected, without the consent of Congress and behind closed doors, to other purposes -including an auto industry bail out.
This questionable record of spending raises serious red flags. Before approving an additional $825 billion, we must ask: If government spending hasn’t worked to stabilize the economy throughout this year or in the past, why should we think it will work now? Do we have any guarantees that the agencies will spend the money the way Congress intended and the American people expect? Or is a “bait and switch” spending approach going to be the precedent for future stimulus funding?
“Accountability” Measures
The draft stimulus legislation contains several “accountability” measures to provide spending oversight. These measures include the creation of a new “Recovery Act Accountability and Transparency Board,” public notification, certifications, and descriptions of funding decisions, a new $14 million website, and additional resources for the Government Accountability Office (GAO) and various agency Inspectors General (IG).
While we applaud the attempt at oversight, these measures are all designed to take effect after the funds are spent. Limited attempts were made to address critical budgetary concerns – including efficiency of the programs, past effectiveness, and long-term costs – that should addressed before funds are spent as a part of a responsible budget process.
Minority Views of Hon. Jerry Lewis, Hon. C.W. Bill Young, Hon. Harold Rogers, Hon. Frank R. Wolf, Hon. Jack Kingston, Hon. Rodney P. Frelinghuysen, Hon. Todd Tiahrt, Hon. Zach Wamp, Hon. Tom Latham, Hon. Robert B. Aderholt, Hon. Jo Ann Emerson, Hon. Kay Granger, Hon. Michael K. Simpson, Hon. John Abney Culberson, Hon. Mark Steven Kirk, Hon. Ander Crenshaw, Hon. Dennis R. Rehberg, Hon. John R. Carter, Hon. Rodney Alexander, Hon. Ken Calvert, Hon. Jo Bonner, Hon. Steven C. LaTourette, and Hon. Tom Cole
America's economic crisis continues, and there is an immediate need for Congress to produce a strong and definitive plan to help weather this financial storm.
As Republican Members of the House Appropriations Committee, we want to express our willingness and desire to work with President Obama to help our economy out of its current economic decline. In fact, Ranking Member Lewis appealed to the President in his opening statement at the Committee mark up of this legislation, saying: “Mr. President, each of us wants to see you be successful. As we celebrate this historic moment in our nation’s history, we welcome the opportunity to work with you and your administration. The challenges we face as Americans — not Democrats or Republicans, but Americans — are great. We have much work to do. It is our sincere hope that we will work together — across party lines — to restore confidence in our economy and create a climate conducive to job growth. We can no longer afford to point fingers and cast blame. If there was ever a time for our country to come together, it is now.”
There is no greater challenge facing working families today than our nation’s struggling economy. Each of us can speak passionately — and with great empathy — of people we know in our own districts who have lost their jobs, are unable to pay their mortgage, don’t have health insurance, and are struggling to make ends meet. They are asking for our help.
As we demonstrate our compassion, let us also be mindful of our responsibility to assist those in need without creating an untenable situation for future generations. That is the balance we must strive to achieve.
The centerpiece of any stimulus bill ought to be near-term job creation. Government has a role — but our constituents are not asking for an unlimited expansion of government. They are asking Congress to focus on specific sectors of our economy and to provide solutions that will offer tangible, near-term results.
Most of us would agree that the recent $700 billion Troubled Asset Relief Program (TARP) bill is an illustration of how good intentions don’t always deliver desired results. Many Members would like to have that vote back.
When Congress spends too much, too quickly, it doesn’t think through the details and oversight becomes more difficult. The TARP bill is only the most recent example. The lesson learned was this: We cannot manage what we do not measure. We simply cannot afford to make the same mistake again.
Public dismay over the lack of transparency in TARP implies a public desire for more openness and thoughtful consideration of stimulus spending. The majority’s proposed $14 million reporting website is not oversight. Posting $550 billion worth of federal spending on a website does not ensure that these funds will be well-spent.
Each and every agency should be required to submit a spending plan to Congress —on the front-end and not after-the-fact — to ensure that every dollar is spent as intended. Our constituents deserve no less.
These taxpayers — who will repay this debt over time — also deserve specific answers before we spend another nickel of their money. They deserve to know how many jobs will be created in six months, 12 months, 18 months, and beyond. These are thoughtful, reasonable questions deserving a thoughtful, reasonable response.
Many have described this legislation as a transportation and infrastructure investment package. However, the fact remains that only $30 billion — or three percent — of the funding is directed toward “shovel ready” road and highway spending. The backlog for these projects is $64.3 billion.
Similarly, $4.5 billion is allocated for the Corps of Engineers for improved flood protection and navigation when a $61 billion backlog exists for Corps projects that are fully authorized. These are the types of targeted infrastructure investments that will create sustainable jobs and should be given even greater priority within this package.
Many Republicans support wellness programs, analog TV conversion coupons, and the NEA — but these and many other items in this bill don’t create jobs and ought to be funded through our regular appropriations process. They do not belong in a stimulus bill.
Nor should a stimulus package be used to establish 32 new government programs at a cost of over $136 billion — which this bill does. Thirty-seven percent of the total funding in the portion of the bill under the Appropriations Committee’s jurisdiction — more than one out of every three dollars — is dedicated to creating new government programs. Are we fostering job creation and economic stimulus or are we simply growing the size of government?
Our opposition to this package is not based on partisan politics but on economic reality. There is tremendous pressure on Congress to maintain funding for existing programs even before we create new ones. Again, let’s take off our partisan hats and look at the sobering facts.
Congress recently provided $700 billion for TARP. It’s now considering an $825 billion stimulus bill. There is talk of the Senate adding another $70 billion to address the AMT fix. Congress will soon be considering nine of the remaining FY09 spending bills at a cost of $410 billion. And, before long, we’ll be considering another emergency supplemental spending bill.
Let’s be perfectly honest — all of this spending is placing a tremendous burden of debt on present and future generations. Our projected deficit for 2009 is already approaching $1.2 trillion — the largest in history — even before we consider this proposal.
So, what can be done to make this a better and, perhaps, even a bipartisan bill?
1. Narrow the focus of the appropriations to those items that provide measurable economic stimulus or produce jobs. Spending should be targeted to key infrastructure investments that will create jobs over the next two years. We do not question the urgency of this package; we question its priorities and its price tag.
2. Address public concern over adequate transparency and accountability by requiring agencies to submit a spending plan to Congress—as we did with the 9/11 relief bill—on the front-end and not after-the-fact. This will ensure that every dollar is spent as intended.
3. Ensure that this bill captures the full costs associated with waiving cost-share requirements and the hiring of additional federal employees. Proper safeguards are needed to prevent the unintentional growth of government over time.
4. Limit the use of the stimulus bill as a vehicle for increasing base funding of popular domestic programs. Large increases in these programs create unrealistic expectations for future spending.
Just the size of the total bill, some $825 billion, should and does raise serious concerns. Without a clear assurance of how, why and if this proposal will create jobs and promote economic recovery, Congress cannot simply write an $825 billion blank check at taxpayer expense and hope for the best. We should demand that there be some clear, unequivocal assurance of the desired outcomes, in the form of a revitalized economy.
Unfortunately, the evidence from past attempts at stimulating the economy through government spending does not lead to this needed measure of certainty.
Previous attempts to use this redistribution strategy did not work. Over the 1990s, Japan engaged in massive, multiple stimulus efforts and saw its economy remain stagnant and its per capita income go from the world's second-highest to the tenth-highest, behind Austria, Australia, Belgium, Canada, Denmark, Finland, Ireland, Holland, Switzerland, Sweden and the United States. We ignore this lesson at great risk to our society.
With respect to this legislation, the majority leadership claims that this bill will create or save about 3 million jobs, but the cost for this is a shocking $275,000 for each new job created (assuming they actually materialize). Even worse, this calculation is only a partial measure of cost. In reality, the cost of each government-sponsored job should reflect how the private sector would have spent the $275,000 if the government had never gotten its hands on it in the first place. More than likely the private sector could have created many more than one job for $275,000 - especially considering the average U.S. household income is around $45,000.
Finally, we must not forget that this massive government spending doesn't come out of thin air and that we run the perilous risk of leaving a terrible fiscal legacy for future generations. Based on Congressional Budget Office (CBO) recent figures, by 2019 we will have to spend $750 billion per year just on the interest we will owe on current debt - and this does not include the addition of $825 billion in new "stimulus" spending. To borrow these funds and pay the interest on the ensuing debt, the government will have to raise its implicit interest rates by more than four percentage points over the next decade. This is the legacy created by this bill – a significant increase in interest rates that we, our children, and our grandchildren must all endure in the future.
Overview of Appropriations Within the Bill
What follows is a brief description of the flaws in the Committee passed bill, a summary of the various programs funded in the legislation, and a description of the Committee Republicans’ attempts to improve various portions of the bill through the mark up process.
Immediate Economic Assistance is Needed - Not Massive, Extraneous Spending Under the Guise of Stimulus
American workers, businesses and families need real help, not a windfall of deficit spending under the guise of stimulus with no guarantees of economic relief. To help prevent further economic decline, the government has a responsibility to provide common sense investments that will help stabilize the aspects of our economy which put us in the greatest peril, and provide temporary relief to American families who are bearing the brunt of this crisis. Despite claims the stimulus legislation contains “targeted” and “prioritized” investments, in reality this bill will blanket government programs in spending with little thought toward real economic results, job creation, or respect for the taxpayer.
We must not pour hundreds of billions of dollars into government programs, saddling future generations with the debt, without having a clear understanding of what we are willing to sacrifice for the hope - but no guarantee - of economic recovery today, or even tomorrow.
This legislation should contain the highest degree of fiscal restraint and discretion - especially considering that this spending will bypass customary oversight, public scrutiny, and debate by circumventing the normal authorization and Appropriations process. We must ask ourselves, is each and every program in this bill really stimulative? Do they create jobs (and how many and for how long)? Are they worth the cost? Are they one-time costs, or are they programs that will have to be funded year after year? And, are they things that must be done immediately, or could they be done more effectively and efficiently under the normal funding process?
If we fail to protect the interest of the taxpayer and make decisions without these common sense questions, the result will be continued economic decline, vast government waste, long term budget shortfalls and shortages, and a perilous national financial future.
Undoing Decades of Proven Policy
The Pelosi-Obey stimulus bill contains massive shifts in federal policy. These changes have not been approved by the relevant authorizing committees, and do not take into account the fact that established policies in place for decades are usually still there for two reasons – because they work, or because they are extraordinarily difficult to change.
Government agencies will have serious difficulties implementing these new, broad policy changes – especially without the normal instruction and guidance that comes from a proper authorization and regulatory process. This difficulty will make it nearly impossible for agencies to adopt these changes in a prompt fashion – thereby negating any time savings gained by tacking these provisions onto an emergency Appropriations bill instead of allowing them to be approved by the normal legislative process.
The government’s role in public housing is one of these massive policy shifts. Thirty years ago, the government decided to get out of the business of building public housing. The large failure of the program had led to over-crowding, poor sanitation, high crime rates, and a general lower quality of life for residents. Instead, the government turned to the voucher program, which gives low-income residents better housing options - allowing them to live closer to their jobs and better schools, and providing an escape from deteriorating conditions and concentrations of poverty. To date over two million families receive assistance through the voucher program. As public housing stock has decreased, vouchers have replaced that stock.
The stimulus bill ignores the lessons of history and attempts to preserve and perhaps reverse this trend. This bill spends $5 billion to modernize and upgrade the existing public housing stock - propping up unsuccessful and problem-ridden housing authorities and prolonging bad policy. In contrast, this same amount of money could provide voucher assistance for over 100,000 families for five years.
Another policy shift occurs in changing the role of the Department of Energy (DOE). The Pelosi-Obey stimulus bill shifts the role of DOE from a research and development agency into a grant and loan making body. Roughly $30 billion is included in this bill to accomplish this goal. For example, this bill begins entirely new grant programs to states and localities, turning the DOE into nothing more than a pass-through for taxpayer dollars and throwing accountability go out the window. The losers? The American taxpayers and their hope for energy independence.
The changing role of the federal government in education and healthcare is yet another massive policy shift included in this stimulus bill. While some investments in health care and education are regularly included in the federal budget, the Pelosi-Obey stimulus bill goes far beyond the firmly established and authorized role of government in these areas – including creating 9 new programs for a total of $106 billion. For example, this bill contains $20 billion to insert the federal government into school construction which, until this bill, was exclusively the responsibility of state and local governments. And, this bill includes $24.7 billion to lay the groundwork for a highly controversial shift to universal healthcare (which has yet to be approved by Congress).
Circumventing PAYGO
This stimulus legislation contains $224 billion that under the regular legislative process would be subject to the Pay-As-You-Go (PAYGO) rule. This rule was put in place by the Democrat majority at the beginning of the last Congress, and requires any new spending to be offset by increased taxes or budget cuts in other areas.
The Pelosi-Obey stimulus legislation, being an appropriations bill, circumvents this rule and includes this massive spending which would normally be subject to PAYGO. By tacking on these provisions, the Democrat majority will attempt to avoid potentially embarrassing public in-fighting down the road, and fast-track party and administration priorities without proper public scrutiny and oversight.
Piling Money on Money – Can We Even Spend This Much?
In one bill, the Pelosi-Obey stimulus contains almost as much funding as the entire federal government spends in one year. It is without a doubt the most expensive single piece of legislation Congress has considered. This bill even dwarfs the $700 billion Troubled Asset Relief Plan (TARP) bail out that passed Congress last fall.
Because of this bill’s unprecedented size, federal agencies will have a difficult time spending this money. Federal bureaucracies are notoriously slow, unresponsive, and unwieldy, which makes this bill’s exponential growth in existing programs extraordinarily difficult to implement in a short period of time. These agencies have neither the staff nor the organizational capacity to handle this influx of funds. To make matters more complicated, this bill contains 32 new programs (totaling $137 billion), but does not include the kind of legislative language and guidance which normally comes from a proper authorization process.
In addition, many of the projects funded in this bill could take years – not months - to complete. For example, this bill includes $7.7 billion for the General Services Administration (GSA) building fund. The GSA’s target average completion dates for construction projects is 8.5 years. (Further, of the GSA’s project funding that can get out the door in 120 days, 36% will go to projects in Washington, D.C.)
Also, many provisions in this bill fund programs that are already sitting on large, unspent pots of money. The amount of unspent funds already sitting in federal coffers raises serious questions about the economic benefit of piling on even more money. If federal agencies can’t spend the money they already have, does the economy really benefit by giving them more? If we require the agencies to spend this stimulus money in a short period of time, won’t they just pass over their existing funds, resulting in no real additional “stimulus” spending? And, if these agencies have been sitting on funds in accounts that have “stimulus” potential, why hasn’t this money already been spent?
The Congressional Budget Office (CBO) – a non-partisan entity that provides unbiased budget analysis for Congress - produced a report of the Pelosi-Obey stimulus bill that indicates that the legislation will not provide the kind of immediate results that will boost our economy in the short term. The following table highlights when the funding contained in the Appropriations stimulus legislation will actually be spent. According to the CBO, only 7% of the discretionary spending in the stimulus bill will be spent in the first year, while the bulk of the funding won’t be spent for years – including 18% which won’t be spent until five, ten, or even more years after this bill is enacted.
STIMULUS PACKAGE SPENDOUT ($ in thousands)
FISCAL YEAR
Budget Authority by Year
Outlays by Year
Cumulative Outlays
Total % Spent
FY09
273,986.0
26,156.0
26,156.0
7%
FY10
66,529.0
110,167.0
136,323.0
38%
FY11
4,147.0
103,048.0
239,371.0
67%
FY12
3,575.0
52,948
292,319.0
82%
FY13-19
9,852.0
63,213.0
355,532.0
99%
After FY19
-
2,557.0
358,089.0
100%
Total
358,089.0
358,089.0
Following is a CBO summary of the legislation, received by the Appropriations Committee on January 19th at 3:00 pm. This report shows the CBO estimate of the American Recovery and Reinvestment Act of 2009 as posted on the Appropriations Committee majority website on January 15, 2009. This estimate assumes a mid-February, 2009 enactment date.
Effectiveness of Government Spending to Help Our Economy
Over the last year, Congress has pumped massive amounts of government spending into the economy with limited results. To make matters worse, much of this spending has not gone to the uses that Congress intended, and was spent without proper oversight, transparency or accountability to the taxpayer.
For example, Congress approved $700 billion in TARP funding last fall to help financial companies deal with the fiscal burden created by the housing crisis. However, those funds were redirected, without the consent of Congress and behind closed doors, to other purposes -including an auto industry bail out.
This questionable record of spending raises serious red flags. Before approving an additional $825 billion, we must ask: If government spending hasn’t worked to stabilize the economy throughout this year or in the past, why should we think it will work now? Do we have any guarantees that the agencies will spend the money the way Congress intended and the American people expect? Or is a “bait and switch” spending approach going to be the precedent for future stimulus funding?
“Accountability” Measures
The draft stimulus legislation contains several “accountability” measures to provide spending oversight. These measures include the creation of a new “Recovery Act Accountability and Transparency Board,” public notification, certifications, and descriptions of funding decisions, a new $14 million website, and additional resources for the Government Accountability Office (GAO) and various agency Inspectors General (IG).
While we applaud the attempt at oversight, these measures are all designed to take effect after the funds are spent. Limited attempts were made to address critical budgetary concerns – including efficiency of the programs, past effectiveness, and long-term costs – that should addressed before funds are spent as a part of a responsible budget process.