Will Stimulus Bill Be A Waste of Money?

Will the Stimulus Package Work?

Members of the House and the Senate working on the final version of the stimulus on Wednesday. The fragile consensus, and the president’s agenda, face many tests in coming months.

WASHINGTON — It is a quick, sweet victory for the new president, and potentially a historic one. The question now is whether the $789 billion economic stimulus plan agreed to by Congressional leaders on Wednesday is the opening act for a more ambitious domestic agenda from President Obama or a harbinger of reduced expectations.

Both the substance of his first big legislative accomplishment and the way he achieved it underscored the scale of the challenges facing the nation and how different a political climate this is from the early stages of recent administrations.

While it hammered home the reality of bigger, more activist government, the economic package was not the culmination of a hard-fought ideological drive, like Lyndon B. Johnson’s civil rights and Great Society programs, or Ronald Reagan’s tax cuts, but rather a necessary and hastily patched-together response to an immediate and increasingly dire situation. On the domestic issues Mr. Obama ran and won on — health care, education, climate change, rebalancing the distribution of wealth — the legislation does little more than promise there will be more to come.

In cobbling together a plan that could get through both the House and the Senate, Mr. Obama prevailed, but not in the way he had hoped. His inability to win over more than a handful of Republicans amounted to a loss of innocence, a reminder that his high-minded calls for change in the practice of governance had been ground up in a matter of weeks by entrenched forces of partisanship and deep, principled differences between left and right.

In the end, Congress did not come together to address what Mr. Obama has regularly suggested is a crisis that could rival the Great Depression. What consensus has been forged so far is likely to be tested in the months to come as he faces scrutiny over the effectiveness of the stimulus package and the likelihood that he will have to ask Congress for substantially more money to heal the fractures in the financial system. http://www.nytimes.com/2009/02/12/us/politics/12assess.html?_r=1&hp

The Real Stimulus Burden - We Will Be Paying For Many Years

The Wall Street Journal - In 2003, amid debate about the Bush tax cuts and a budget deficit of merely $400 billion, Maine Senator Olympia Snowe demanded that any tax cuts be capped at $350 billion. "At a time of growing federal deficits," the Republican declared to much media praise, "it is especially important that this plan be right-sized without putting our future at risk."

Flash forward to Tuesday: Ms. Snowe provided one of three crucial GOP votes that helped Democrats pass $838 billion in new spending and "tax cuts" -- often for people who pay no taxes. The deficit for 2009 even before this stimulus? $1.2 trillion.

If nothing else good comes from this exercise, at least Senators Snowe, Susan Collins and Arlen Specter should be laughed out of town if they ever fret about a budget deficit again.

As of late yesterday, the details of the final House-Senate stimulus bill weren't available. But this much we do know: The bill will mark the largest single-year increase in domestic federal spending since World War II; it will send the budget deficit to heights not seen in 60 years; and it will establish a new and much higher spending baseline for years to come. Combine this new spending, and the borrowing it will require, with the trillions of dollars still needed for the banking system, and we are about to test the outer limits of our national balance sheet.

Even under CBO's conservative estimate, the Senate bill increases outlays by $546 billion over 10 years. But to get this low a figure, CBO assumes that the half-trillion in spending will be a one-time wonder. We are thus expected to believe that Democrats will let these additions to their favorite programs vanish after two or three years. To believe this, you have to ignore the last half-century of budget politics. Spending never declines; at best it merely fails to grow as fast as the economy.http://online.wsj.com/article/SB123440436240475615.html

Congress Strikes $789 Billion Stimulus Deal

The Wall Street Journal - WASHINGTON -- Congress and the White House reached accord on a $789.5 billion economic-recovery package that would shower hundreds of billions of dollars in tax relief on individuals and businesses and spark an infrastructure building boom, from the nation's ports and waterways to its schools and military bases. The deal all but clinches passage of one of the largest economic rescue programs since Franklin Roosevelt launched the New Deal.

President Barack Obama, speaking at a Northern Virginia construction site, hailed an "endeavor of enormous scope and scale." The package dwarfs the military budget and exceeds the cost of the entire Iraq war since the invasion of 2003.

Defying two decades of mostly Republican-led efforts to diminish federal authority and focus on lifting the economy through tax cuts, the legislation would expand unemployment insurance, tilt federal assistance to the poor, launch major efforts to streamline health-care delivery and give Washington a larger hand in local education spending.

The plan may be only a down payment on the Obama administration's effort to turn around an economy that has shed 3.6 million jobs since December 2006. Both Mr. Obama and Democratic leaders lowered their work-creation expectation Wednesday. They had originally said their goal was to create, or save, four million jobs. Last night, they cut that to 3.5 million.

The president has framed the deal as the first leg of an economic program aimed also at unclogging credit markets, lifting the housing market and tightening regulation of the financial and banking sector.

The agreement came late Wednesday after last-minute dickering over education and school-construction funds that dramatized the intensity of negotiations. The House and Senate convened a conference committee to bless the legislation and clear the way for action in the House as early as Thursday. Both chambers are expected to pass the compromise shortly.http://online.wsj.com/article/SB123436825805373367.html?mod=testMod

House Passes Stimulus Plan Despite G.O.P. Opposition

WASHINGTON — Without a single Republican vote, President Obama won House approval on Wednesday for an $819 billion economic recovery plan as Congressional Democrats sought to temper their own differences over the enormous package of tax cuts and spending.

As a piece of legislation, the two-year package is among the biggest in history, reflecting a broad view in Congress that urgent fiscal help is needed for an economy in crisis, at a time when the Federal Reserve has already cut interest rates almost to zero.

Its cost would drive the overall package’s tally to nearly $900 billion. That would exceed the roughly $850 billion limit that Mr. Obama has set for Congress, House Democratic leadership aides said, and leave no room for other proposals that senators of both parties are poised to seek during Senate debate next week.http://www.nytimes.com/2009/01/29/us/politics/29obama.html?partner=permalink&exprod=permalink