President Obama used some pretty gloomy language in his radio address over the weekend: "Americans know that our economic recovery will take years -- not months. ... Rarely in history has our country faced economic problems as devastating as this crisis."
Let's say your house is burning down, and you have a water hose in your hand. Do you a) try to put out the fire; b) start filling up your pool; c) sprinkle your lawn; or d) some combo of "a," "b" and "c." To the Obama administration's credit, it didn't choose "b" or "c." Unfortunately, it went with "d." Although there has been a sense of urgency in getting the stimulus bill passed, the bill itself shows little urgency in doing much to help the economy.
Economist Robert Brusca of Fact and Opinion Economics analyzed the House and Senate versions of the stimulus plan and categorized the main elements as either Cushion (they make the downturn feel less painful), Agenda (they are items from a Democratic policy wishlist) or Stimulus (they are actually intended to boost the economy.) Here is his take on 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.
And here is his take on 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.
His bottom line:
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. ... 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.