Saturday, January 31, 2009

What kind of fool am I (are we?)

OK. Pass 'em. Pass ''em fast. Maybe if it's done fast enough no one will see what it's in 'em. Stimulus Bills - full stimu-steam ahead...

Faster than a speeding bullet.
More powerful than a presidential veto...
Look up in the sky!
It's a BIRD!
It's a PLANE!

Yes the stimulus plan is here when pigs fly!

It's a porkadelllic wonder!

That of course should cause us all to wonder what is in these bills. Republicans shunned the bills. Are they being obstreperous or do they have a point?

Cushion, Agenda and Stimulus
These are the holy trinity of the Obama plan: spending on his agenda, spending to cushion the blow of recession and spending to stimulate the economy, plus tax cuts. All spending comes under the name of stimulus but just because you call your cat "Fido' doesn't mean it will be happy eating dog food.

The Senate Plan - It is hard to categorize the spending. But I have looked at the Senate plan in more detail and my rough estimate is that its $365bln of spending is roughly 24% stimulus, 36% cushion and 40% agenda. Admittedly, constructing these categories is quite subjective but let's understand the idea first. 'Stimulus' is something intended to propel the economy ahead. 'Cushion' is something that will not propel the economy but will soften the blow of recession on parties injured by the recession in various ways. 'Agenda' is the pursuit of polices endorsed by the administration that are not clearly linked with helping the displaced or with cushioning the blow, although admittedly most dollars spent will have some positive role of cushioning the impact on somebody.

The House Plan - The CBO has scored the HOUSE plan and has found that of the House plan's $819 bln of spending and tax cuts only 21% will have impact in 2009 and by the end of 2010 only 64% of the plan will have had its impact on the deficit. Almost by definition then, we can say that 36% of the House plan is 'Agenda' since it is going to have its impact beyond the year 2010 and can't be categorized in any reasonable way as a recession buster.

A reading of these plans which are for 'special spending' leads me to think they will not be as stimulative as the CBO expects since a lot of what Congress seeks to do in its bills is stuff that, in in the bill's absence, would have been pursued in the context of a normal budget by a new administration with an AGENDA. So if the normal budget is smaller because 'stuff' has been crammed into a stimulus bill (a bill with the the ingredients of cushioning, agenda and stimulus we could also call a Cush-Da-Lus bill) maybe the actual stimulus we get from that bill is even less than the CBO calculates. CBO, of course, calculates the stimulus as though it is in addition to the normal budget, but since we don't know what that is yet I'd argue that the risk is that passage of this as-it-is Cush-Da-Lus bill will leave the primary Obama deficit smaller than it otherwise would have been.

How to tell one type of spending from another
There are all sorts of clear Democrat agenda items in the spending portion of this bill. Much of it is on social welfare type plans. But the monies being spent in pursuit of Green also look much more agenda-like that stimulus-like. I say that because the markets, left alone, don't do Green. They don't because Green is not economic. So spending in which you spur that which is not economic surely is 'agenda' driven.

I am not taking agenda as a category that is bad. It is simply 'agenda' and not 'cushion' and not 'stimulus'. We have a new president and clearly he was elected to pursue a new agenda. My point is that a lot that is really agenda is getting mixed into the stimulus bill and it won't help to stimulate very much. It may even cut back on the amount of agenda spending that gets into the ordinary budget this year.

Angry Republicans have a point...but they did lose the election
It is no wonder Republicans are angry about how this is being done. You can disagree with my numbers but clearly there is a lot of Democrat policy that is whizzing past us in the sheep's clothing of stimulus.

Deja Vu baby...Deja Vu
This is the sort of thing that happens with stimulus bills as we saw last year. It is EXACTLY the SAME THING that the BUSH administration did with the IRAQ WAR VOTE, too a vote that Democrats hated so much. Well, what goes around comes around. Maybe it's a bit clearer why I have no love lost for either of these parties. Both like to kick the other when its down. Congress just can't help itself. Every emergency is an opportunity for someone to get a pet project or two - or maybe their favorite war - crammed in. Only the Senate and House know how the system works that determines who gets to attach the barnacle to the ship. Yeah, the ship will still sail, but not as efficiently.

I guess it's the American way. But when I use that term this is not what I have in mind...