Monday, January 19, 2009

Analyzing the Democrat's Stimulus Plan



The Democratic legislature, in consultation with the incoming President, have announced their own stimulus plan. In my opinion, not only is this a spending spree gone wild but its purpose is totally disingenuous. Here is what Nancy Pelosi said was the focus of the plan.

Immediate job creation and continuing job creation" are the twin goals, Speaker Nancy Pelosi, D-Calif., said at a news conference. Joblessness has risen sharply in recent months, and Obama has warned it could reach double digits unless action is taken to invigorate the economy.


Taking a look at the plan, there is clearly all sorts of priorities besides job creation. Let's look at some specifics.

The measure calls for $87 billion to help the states meet the rising cost of providing health care for the poor in the recession, and another $39 billion to subsidize coverage by out-of-work wage-earners who cannot afford the cost of their employer-covered health care.


Now, providing poor folks with health care maybe a laudable goal, but it won't create any jobs. Here's another part.

More than $100 billion is ticketed for education, including money for school districts to shield them from the effects of state cutbacks in services. Democrats also provided tens of billions in spending and tax breaks designed to lessen the nation's dependence on oil as a principal source of energy.

It is debateable whether or not tax breaks for energy independence will create jobs, but it is beyond debate that beefing up education spending will NOT create any jobs. Here is yet another part.

With unemployment rising, and applications for various forms of federal aid keeping pace, the legislation calls for increased spending on food stamps, unemployment insurance and job training. It also proposes an increase in Pell Grants for college students of $500.

Now, while providing food stamps and Pell Grants are also both laudable goals, they create no jobs. On the other hand, the Alternative Minimum Tax will continue in place and that continues to eat further and further into the middle class. As such, millions of Americans will soon be hit with an unexpected tax increase through the AMT, while poor folks get more money for food stamps, states more money for free health insurance, and college students more money for college grants.

Let's call a spade a spade. This is no job creation plan. Rather, this is entitlement spending for each and every demographic the Democrats want to target. We have a bill valued currently at about $800 billion and almost half that money will go to things that will create ABSOLUTELY ZERO JOBS.

If this thing passes nearly as is what we will do is balloon our deficit while creating little if any stimulus to actually create jobs. What this will do is throw our economy further into a recession while also providing plenty of inflationary stimulus. This "stimulus", if you can call it that, is a highway straight to stagflation.

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