Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

15 March 2009

The First Obama Stimulus Bill

There is talk about the need to have a second Obama stimulus bill, close on the heels of earlier bailouts for the financial and banking industries, the U.S.-based automakers, and money to help prevent mortgage foreclosures. Most economists and financial experts seem to be of the opinion that the first Obama stimulus bill has not been and will not be adequate to get the economy moving again. It certainly has not caused the private sector to invest and hire employees at what we have come to think of as normal levels. But, the first Obama stimulus bill and the Omnibus spending bill which followed on its heels did serve a purpose. They were designed to shift wealth and income from the private sector, especially the higher income side of the private sector, to the government sector. At this, they are clearly very successful. This is the primary desire of the socialists running the Obama administration and providing the leadership of the Democrat-controlled House and Senate.

Let us examine the first $787 billion stimulus bill to see how this was accomplished. Let us break it down as the Washington Post did on 14 February with costs in billions:

Health information technology (incentives for Medicare/Medicaid providers), $20.8

Health insurance for unemployed, $25.1

Assistance to unemployed families, $57.2

Tax Provisions, $73.8
  • Making Work Pay Credit, $400/year for individual, $800/yr. for family, may exceed tax otherwise owed, offered for 2 years
  • Tuition tax credit up to $2500, provided family makes less than $180,000/yr.
  • Expanded child tax credit for low income families up to $1000 per child
  • Families not owning a home in past 3 years get $8,000 tax credit to buy a home before the end of this year
Medicaid, $90

Health, Labor, & Education, $71.2
  • National Institute of Health, $9.7
  • National Coordinator for health information technology, $2
  • Other health, $9.8
  • Employment and training programs, $4.3
  • Education for the disadvantaged, $13
  • Special education, $12.2
  • Student financial assistance, $16.6
  • Other, $3.6
Housing, transportation, $61.1
  • Highway construction, $27.5
  • Other transportation, $20.6
  • Housing assistance programs, $13
Grants to states to fully fund education budgets, $54

Energy and water, $50.8
  • Energy efficiency, renewable energy, $16.8
  • Federal loan guarantees for renewable energy & electricity transmission, $6
  • Other energy, includes modernizing electric grid, $22.4
  • Army Corps of Engineers, $4.6
  • Other, $1
Nutrition, rural development, and agriculture, $26.4
  • Food stamps, $20
  • Broadband expansion in rural areas, $2.5
  • Other, $3.9
Commerce, Justice, & Science, $15.8
  • Grants to extend broadband, $4.7
  • State & local law enforcement, $2.8
  • National Science Foundation, $3
  • Other, $5.3
Defense, Homeland Security, $11.4
  • Homeland Security, $2.7
  • Military construction, $4.2
  • Defense facility repair & energy, $4.5
Environment, Interior, $10.5
  • State grants for water infrastructure, $5.8
  • Other, includes national park capital improvements, $4.7
Federal Facilities, $6.7
  • Construction & repair of federal buildings, $5.4
  • Other, $1.3
State Dept., technology & construction, $0.6

Overall, tax reductions for individuals are only $73.8 billion, not one penny of which will go to high income earners. Other than alternative energy, there are no private sector companies which will get any tax breaks. The total tax reduction part of the stimulus bill is only 9.4% of the "expenditure", so Congress got to fully direct 90.6% of the total monies use.

There is no incentive whatsoever for any industry to hire anyone, except in the construction, college & university, public school system, health care, computer & broadband, electric transmission line companies, law enforcement, vocational training, government, building materials, construction equipment, and alternative energy areas. Note that these encouraged areas are either government workers directly or private industry which has long been heavily dependent upon government funding and have been selected to receive subsidies from the remainder of the private sector through increased tax transfers of wealth. The money to be sucked out of the remainder of the private sector will fund these government-favored areas.

A great part of the money seems directed at making the medical industry still more dependent upon government. The $2 billion to set up the National Coordinator for Health Information Technology and the incentives to get Medicaid and Medicare providers to set up computerized medical records are especially interesting. It is perhaps quite rational to have more computerization of medical records and even to then use those records to better assess which medical procedures work best. However, we know that much more than this is afoot. It is very clear that the socialists now running the Federal government intend to use these computerized medical records to gain more control over medical treatments and to reduce the medical-decision power of the patient and doctor. This must happen as a part of the plan to have a single-provider (i.e., government) system of medical and health care.

It is very clear that the teacher's unions and the education establishment are being paid for their strong support of the Democrat Party and of ideological socialism. $79.2 billion is going to state grants for education, education for the disadvantaged, and special education. The colleges are making out big-time. The $9.7 billion to NIH, the $3 billion to NSF, the $1.6 billion for the office of science of the Energy Dept., the $16.6 billion in student financial assistance, and the tuition tax credit of $2500 will flood the universities and colleges with more money to continue to fuel their ever-escalating costs. A part of the $16.8 billion for energy efficiency and renewable energy will also fund university research. The NIH, NSF, Energy Dept. Office of Science money will mostly fund an increase in university research grants and new lab facilities. The student financial aid and tax credits will decrease the pressure to control tuition rate increases. There is little reason to believe that any of this money will provide more spur to the economy than that money would have if left in the hands of the private sector. While it is true that some colleges and universities are private, most are nonetheless strong advocates of much bigger government, for which they are rewarded with research money and many financial considerations already.

The construction projects to be funded are almost entirely for more government infrastructure, to be supported by tax dollars long into the future. Most investors will find little stimulus to their plans in this stimulus bill. Few wealthy individuals will have reason to invest their money in the United States. It will make more sense for them to move more of their money abroad, where the tax rates on higher income people are lower. American multinational corporations will have ever more reason to expand their operations abroad, while contracting them in the United States. Contraction of operations will mean that they will have less expense for providing health insurance and increased sick leave mandated by Congress as well. Many companies must be very worried about this.

This stimulus bill should have consisted of a major decrease in taxes to be realized by every individual and by corporations. As I have pointed out repeatedly, it is very foolish for us to tax corporations at the highest rates in the world, with the exception of Japan, with whom we are about tied. It is equally foolish to maintain a very punitive tax rate on upper income earners. These high corporate and individual rates actually decrease government revenues, so we do not need to take the claim seriously that these high rates make life better for those with lower incomes because then government can do more to help them. Indeed, we can laugh at it derisively and proclaim with assurance that the real reason for these rates is one of envy, hatred, and the desire to take down those who have achieved great success in the private, voluntary sector. Such motivations clearly controlled many of those in the New Deal of the Franklin Roosevelt administration and they now control the thoughts of the Obama administration and the Democrat Congress in their pursuit of a New New Deal. This and only this explains their carefully orchestrated snubbing of most of the private sector and of the very idea of the sovereignty of the individual.

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