The Corner

Streamlining the Stimulus

With Democrats stuck playing defense on health care and President Obama set to deliver a major address to revive his push for reform, now is a good time for Republicans to open a second line of attack. They should use the opportunity for a reexamination and paring down of the stimulus bill passed earlier this year.

Hastily written and thrust upon the American people after almost no debate, the “stimulus” provided for hundreds of billions of dollars of non-stimulative spending. It contained, for example, many billions of dollars for money-losers like Amtrak, grant-makers like the National Endowment for the Arts, and Democratic pet projects like global-warming research and purchasing hybrid vehicles for federal employees — hardly the kinds of outlays that come to mind when the goal is to accelerate an economic recovery. What’s worse, much of the stimulus money will not be released until several years from now, making it plain that the bill was not a rapid response to an acute financial crisis but rather an excuse for a government spending spree.

And so the bill, unsurprisingly, has become deeply unpopular with the American public. Recent polls by Rasmussen Reports indicate that only around 30 percent of voters believe the stimulus has helped the U.S. economy. This is part of a broader backlash against reckless government spending that, according to the Congressional Budget Office, is now likely to add $9 trillion to our national debt over the next decade. This disturbing prognosis was a wake-up call to Americans, for whom the $787-billion stimulus has become emblematic of the government’s wholesale abandonment of fiscal restraint.

The prudent course is to go back and streamline the stimulus. Rep. Eric Cantor (R., Va.) has already suggested that some stimulus dollars should be redirected toward assisting small businesses, which is a good start. But Republicans also need to push for cutting down the stimulus’s overall size by removing wasteful expenditures.

The result would be a reduction in the budget deficit and thus a boost to the economy. One of the reasons the United States is not recovering as fast as it should be is the private sector’s reluctance to make substantial investments, fearing that the government will soon impose a more onerous tax burden in order to pay for its ballooning debt. If, instead, there is some indication that the government intends to close the budget gap not by raising taxes, but by reducing wasteful expenditures, then the private sector will be much more willing to spend its money. Consumers will purchase more goods and services, and companies will expand and hire more workers, all of which will help the economy to grow.

Republicans would also benefit politically from advocating a streamlining of the stimulus. For one thing, the resulting debate will distract Democrats at a time when they are eager to focus the country’s attention entirely on health-care reform. Instead, they will find themselves having to defend a highly unpopular stimulus bill. The debate will once again draw attention to all the embarrassing expenditures provided for in the bill — expenditures that will appear all the more shocking to Americans in the context of the recently released prognoses about our national debt.

For another, if Republicans are able to pressure Democrats into accepting revisions to the stimulus, they will deny Democrats the opportunity to later argue — incorrectly — that their stimulus was responsible for the economic recovery. There is little doubt that the U.S. economy will at some point begin to grow again, as it always does after a recession simply because of normal business cycles. If at that time Democrats are able to argue that the stimulus they designed (and Republicans opposed) catalyzed the economic recovery, it will not only provide a major boost to Obama entering the 2012 election, it will also help Democrats in the larger debate over the appropriate level of government intervention in the economy.

But the situation is reversed if the economy begins to grow after Republicans streamline the stimulus. This would serve as ammunition for a Republican argument that the stimulus as designed by the Democrats was actually slowing the pace of economic recovery.

This last point is a critical one. Much will depend on who can claim credit for an improved economy when it ultimately arrives. Streamlining the stimulus would be a concrete accomplishment to which Republicans could point as the first major step toward restoring fiscal sanity and clearing the way for bottom-up economic growth. Rarely do good politics and good policy coincide so neatly.

— Alexander Benard, a New York attorney, is a regular contributor to National Review Online.


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