Partisan, Pandering, Permanent
From The New York Times:
The economic stimulus plan that Congress has scheduled for a vote on Wednesday would shower the nation’s school districts, child care centers and university campuses with $150 billion in new federal spending, a vast two-year investment that would more than double the Department of Education’s current budget.
…by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government.
…One provision, which was sought by the student lending industry and went unmentioned in early Congressional summaries of the stimulus package, would temporarily increase subsidies to banks in the guaranteed student loan program…
“This just continues the well-established tradition of welfare for the student loan industry,” said Barmak Nassirian, an expert in student lending.
Chairman Henry Waxman (D-CA) inserted a provision that would “decouple” utility rates from the amount of electricity or natural gas that the utilities sell. According to the “decoupling” provision, states that accept federal energy efficiency grants from the economic stimulus package will have to ensure that utilities recover the revenue lost when consumers use less energy.
In other words, in states that accept the energy efficiency grants, utilities that use the grants to help consumers lower the energy consumption will be able to raise their rates to compensation for the loss in revenue.
The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in [spending] would go to state and local governments. Another 17.3% would go to health and education
the House declares on page 257 that “No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.” Horrors: Some money might go to nonunion teachers.
…it’s hard — no, impossible — to believe that Congress will cut spending next year on any of these programs from their new, higher levels.
They had better pass the stimulus bill quickly, before more people read it.
UPDATES below the fold:The Washington Post reports,
Alice M. Rivlin, who was President Bill Clinton’s budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.
In other words, the “permanent” part of the package ought to be separate from the “stimulus” part. Logically, it makes sense.
Neither the White House nor Congress has offered the public a scenario of how the proposed mega-deficits will affect the budget and government programmes beyond the next 12 to 24 months. [Actually, a lot of the spending will take place beyond that point–AK] Without a sound medium-term fiscal framework, the stimulus package can easily do more harm than good, since the prospect of trillion-dollar-plus deficits as far as the eye can see will weigh heavily on the confidence of consumers and businesses, and thereby undermine even the short-term benefits of the stimulus package.
Read the whole thing. What is said is not so remarkable as the fact that Jeff Sachs is saying it.