Tuesday, May 25, 2010

Yet another phony "stimulus" bill

The WSJ is especially scathing about the new spending of $190 billion that the Democrats are proposing this week. Of course, they don't plan to use "Pay-as-you-go" for this spending. Instead it will be characterized as "emergency" spending. The spending bill is an entire crazy quilt of spending for various purposes that the Democrats haven't fit into any other bill.
There's $24 billion to help states pay the exploding tab for Medicaid, the same program that ObamaCare expands by some 16 million new recipients. The bill also offers $1 billion for summer jobs for teens, whose jobless rate is 25.4%. Congress could do far more to create teen jobs if it merely suspended last year's minimum wage increase to $7.25 an hour, which priced millions of young workers out of the labor market. But that would be too rational.

The biggest item is $65 billion to prevent a 21% cut in Medicare physician reimbursements. Democrats promised this to the American Medical Association in return for its ObamaCare support, but they left the $65 billion out of the health-care law to make it look less expensive. Now they're pushing it through under separate cover when they assume the press corps won't notice.

The $47 billion to extend unemployment insurance to nearly two full years will bring the total spent on this program to $137 billion during this recession—five times more than in either of the prior two recessions. That's nearly as much as the federal corporate income raised in 2009.

The sages in Congress continue to claim that these payments for not working will lead to more work. Representative Jim McDermott recently declared on the House floor that jobless payments are "one of the most effective forms of economic stimulus" because "every unemployment dollar spent returns $1.64 of economic benefits." So let's lay off everybody, pay them for not working, and watch the economy really boom. Where do they teach this stuff?
So somehow spending money to fix a totally expected need to prevent Medicare physician reimbursements that everyone knew that Congress was going to have to spend since they keep doing it every year will be classified as "emergency" spending so they can do it outside paygo provisions.

Then there is a bunch of corporate giveaways that will get subsidies or tax credits while other businesses will get tax increases.
This bill is also one of the most expensive corporate welfare giveaways in recent years with subsidies for municipal bond traders, cotton farmers, yarn producers, sheep growers, Hawaiian sugar cane cooperatives, motor sports businesses, renewable energy firms, the steel lobby, and so on. Any industry that doesn't get a tax credit or other handout in this bill should fire its lobbyist.

All of this is "paid for," in the Beltway lingo, with a net tax increase on business of about $40 billion and at least $134 billion of new debt. There's a new 24 cent a barrel tax on oil companies, which would flow to consumers in higher gas prices, because Congress says the industry's profits are excessive....

Managers of private equity and venture capital firms that provide the start-up and expansion funding to businesses would see their tax rate rise to as high as 35% from 15% today—a huge tax increase when businesses are starved for capital. And small, often family-owned Subchapter S companies that provide professional services would be required to subject more of their profits to the self-employment tax. These firms already pay up to 35% tax on these profits, so under the Democratic plan their tax rate could reach 50%.
And this is the emergency bill that is so important to get through that Congress can't be bothered to pass a budget resolution. And they still will spout their support for pay-as-you-go provisions when what they really mean is that they'll increase taxes for businesses while pretending that the rest is simply emergency spending to pay for any tax credits that they're giving out while adding the rest of the spending on to the deficit.

With the public already so upset and disgusted with the way that the government spending, will the Democrats be able to push through this bill by pretending all of this mish-mash of spending will somehow increase jobs? As if they've found the magic bullet of spending money to increase employment with their last mash-up of a stimulus bill. Will endangered Democrats vote for this junk?