The Dem’s Feeding Frenzy
Some kind of stimulus.

By Stephen Moore, president of the Club for Growth, and Phil Kerpen, a research assistant at the Club
October 30, 2001 8:00 a.m.

rivate charities have received between $700 million and $1 billion in response to the terrorists attacks of September 11. This is a staggering number and demonstrates the great compassion of the American people. In fact, the generosity has been so boundless that many charities are having difficulty deploying the funds. They have more money than they know what to do with. This is because most charities don't spend money frivolously.

Not so, Uncle Sam. The federal government has already allocated $50 billion, roughly sixty times the amount of money that private relief charities have received. And yet lawmakers have no trouble finding places to spend the dough. They continue to clamor for at least $100 billion more.

Mitch Daniels, the White House budget director, was dead on target when he recently commented: "With a little imagination, any straight-faced advocate can recast his pet program somewhere under the inviting headings of war, recession, or disaster recovery." And the feeding frenzy is not just for the $50 billion that has already been approved. There's a parade of elephants and donkeys lined up all the way down Pennsylvania Ave. waiting to get into the Capitol. They have their paws out and their palms up seeking dollars for pet projects that have nothing to do with the war. How else do we explain a $70 billion request for Amtrak funding the rolling tax-dollar-burning machine, or $3.5 billion for peanut farmers?

How can $2.5 billion for health insurance for unemployed workers be an economic stimulus? This will only insure that we have more unemployed workers. And something tells us that this new entitlement for unemployed workers won't be "temporary." Name any entitlement program that has been?

Ron Utt, the insightful budget analyst for the Heritage Foundation, notes that this is the biggest request for federal dollars we have seen in Washington in at least a decade. Utt documents in a new study that "lobbyists are using the tragedy of September 11th to raid American taxpayers." Even travel agents and Las Vegas casinos want federal handouts.

Democrats on Capitol Hill say they want half of any fiscal-stimulus plan to go to Keynesian federal spending programs. Fine. They've already got their half. The $50 billion already approved is all — every shiny penny of it — for federal spending. This is why the entire stimulus bill must be dedicated to tax cuts to ensure that half of all the post-September 11 response is for tax cuts.

Perhaps the worst example of opportunism to promote big government is the agriculture bill, and Republicans and Democrats are both guilty. The bill was renamed the "Farm Security Act," and the farm lobby and farm congressmen pushed hard for it based on arguments about the security of the U.S. food supply. These arguments are ridiculous; the United States is the world's largest food exporter. The bill not only extends subsidies that are scheduled to end in September 2002, it massively expands farm subsidies, including a brand new $3.5 billion support for peanuts. The total price tag for the bill is over $170 billion in the next ten years. Senator Lugar of Indiana, who is fighting a lonely but pro-taxpayer battle against the giveaways in the farm bill, notes that the agriculture budget would go up faster than the defense budget, if this expensive legislation were approved.

During the tax fight in the House, Democrats pilloried Republicans for passing tax cuts to "exploit the economic and national crisis." But the people who are truly draping their self-interest agenda around the flag are the spending parasites. More government spending cannot possibly stimulate economic growth. If it could, Japan, which has the fastest rate of growth of spending and deficits of any country in the world over the past decade, would be celebrating unprecedented prosperity, not her 11th year of depression.

Nobel Prize winner Milton Friedman is perhaps most famous for reminding us that "there ain't no such thing as a free lunch." The money to pay for the government spending doesn't fall out of Heaven. The government spending is either financed through higher taxes, higher federal borrowing, or by printing money. But all of these financing mechanisms depress the economy at least as much as the new spending stimulates it. Government taxes reduce consumer and business investment and spending. Government borrowing increases interest rates (or so we are told by Robert Rubin). Printing dollars causes inflation and therefore makes every dollar that we all hold in our pockets worth less in purchasing power. In other words, all these financing techniques make private citizens poorer, so how can the government spending make us richer?

The Republicans, of course, are guilty of running up the budget themselves. But what are we to make of the truly loony ideas that reign as economic "thinking" on the part of the Democrats? The Democratic "stimulus" plan would spend another $40 billion this year on domestic programs and finance that funding by raising taxes on the rich by increasing income-tax rates. In other words, this plan takes money from wealth producers and redistributes the money to nonwealth producers and the idea is that this scheme is supposed to create wealth and prosperity. It reduces incentives to work and therefore is supposed to create jobs. It makes the return on capital spending lower and therefore is expected to increase capital spending. Neither of us have a PhD in economics, so we confess that the sophisticated logic here eludes us. But if someone out there does get it, we want to be educated.

If in the name of bipartisanship, the White House allows Tom Daschle and Dick Gephardt to pass a stimulus bill that grows the government but not the private sector, then our nation would be much better off with no stimulus bill at all. If this turns out to be the case, pro-growth Republicans must vote no.

If freedom, trade, lower tax rates, and private charity cannot repair the damage caused by the attacks — nothing else will.