Obama’s Billions

The stimulus package proposed by Congress reminds me of an old Richard Pryor movie, “Brewster’s Millions”. In that movie Pryor could inherit $300M if only he spent $30M in 30 days. Sound familiar. Hand it to Paulson. He managed to spend $350B in about that time. The catch for Pryor was the he had to get value for that money but end up with nothing at the end. We don’t know yet if Paulson would pass or fail that test because while we all own a bunch of stock in various banks, we won’t know what it’s worth for a while.

The stimulus package follows much of Pryor’s solution – hire overpriced employees to do meanial and useless tasks. That is what the lion’s share of the stimulus will do. For $825B spent we will get at best $100B in infrastructure improvements, the rest will just go straight to various people’s pockets. I support those Democrats who want to remove all the tax cuts from the stimulus bill. I would remove all of the block grants for education, unemployment, and health too. While we are at it, remove all spending for things more than 2 years out. Doing all that would leave maybe $100B, if that, of infrastructure stimulus. I bet they won’t be able to spend most of that either.

Last month the Conference of Mayors put out a list of “shovel ready” transportation projects that don’t have funding. They came up with $90B worth. I can tell you that they just made up those number. $825B on the line and all that the mayors of all the cities in this country could come up with is $90B? The stimulus bill is giving them $30B. So much for infrastructure.

Why can’t the govement spend more than $30B on transporation infrastructure over the next 18 months? Too much government interference. In order to spend money this fast the government will have to suspend most of the “protections” that it places on spending. Environmental impact reports? forgot it. Multiple bid contracts, only superficial ones. It is not like there are millions and millions of skilled freeway, bridge, or road workers out there. Contractor managment will get rich, but jobs for the masses? I doubt it.

One interesting protection that must be waived is the idea of state matching funds. Normally when the feds spend on a project they require state or local governments to put up 10% or 20% of the cost. Given the state of states, this protection is going out the window for sure. Since the states are broke, maybe the federal government can instead extend its matching funds policy to the public. I heard an interesting suggestion for helping car companies: let people deduct up to $10K from their taxes for any car purchase this year, especially for a domestic car purchase. That sort of stimulus would help car companies pay us back for the last $700B bailout.

Calling this stimulus package an investment in infrastructure is a lie. Blaming the Republicans for the “tax cut” portion of the package is a further lie, but that is another post. In “Brewster’s Millions” Pryor managed to spend the $30M ending up with nothing in return. His fans who adored him when he was giving away money abandoned him when the well ran dry. Obama seems locked in the same plot.

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