The Light at the End of the Tunnel Is an Oncoming Train

by Douglas Holtz-Eakin

The news today is that 89,000 stimulus checks — totaling $22 million — got sent to people who were dead or in jail.  My first instinct was, of course, to giggle at the government’s business-as-usual incompetence. I mean, seriously, dead people? And my second (perhaps revealing) thought was to wonder about the policy implications. What are the “multiplier effects” for dead people? It might not be so bad. Stimulus didn’t work for the living so is it really any worse to try the dead?

Having checked those boxes, I turned to the fact that $12 million of the invalid checks were returned. This is truly astonishing and a tribute to the character of America. It’s a silver lining in an otherwise bad-news story.

Get ready, because the bad news is going to turn horrific. With stimulus checks, the goal was to send seniors $13 billion in checks, one time, using a well-honed check-writing machine (the Social Security Administration) to an easily-defined group. And it didn’t go so well.

So imagine what will happen with the new health-care law. Recall, the goal is to distribute about $466 billion in insurance subsidies over the next decade. This will require identifying who is eligible based on their income and whether their employer offers insurance (or perhaps offers “unacceptably costly” insurance). The subsidy amount will depend on income. It will have to be sent to the state of the individual’s exchange. It will have to be transmitted to the insurance company of the recipient’s choice. And it will have to be sent monthly in advance of the payment due date. So, the U.S. Treasury will have to parse through 300 million Americans; verify their income, employment, insurance status, location, and potential insurer; cut correctly over 10 million checks for just under $4 billion; and do so on a monthly basis.

It will never happen. 

The first duty of any committee doing real oversight of the new law should be to ask the Treasury if it can implement the law as written. Its honest answer will have to be “no.”  Perhaps this will be part of the unraveling of Obamacare, which is essential because it is an integral part of the excessive government overhang that is dragging down the private sector. 

The other news was the jobs report for September, which showed “more of the same” in the U.S. labor market.  The top-line numbers showed a decline of 95,000 jobs — predictable because of layoffs of temporary Census workers — and an unemployment rate of 9.6 percent, unchanged from August. 

The better indicator of the labor market is the modest 64,000 increase in private sector jobs. This growth is accompanied by other modest signs of expansion, namely a rise in jobs in temporary help — typically a leading indicator of greater labor market strength — and 141,000 jobs in the household survey — typically associated with strength at turning points.

This report is another strike against fear of a double-dip recession, but shows no indication of robust growth. The economy continues to grow but at an unacceptably slow pace and unemployment will remain stubbornly high. It is no surprise. The fact that there is no robust expansion in sight speaks volumes for the need of a new approach to economic policy in Washington.

– Douglas Holtz-Eakin is President of the American Action Forum.

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