CBO: Stimulus package too much, too late

posted at 8:25 pm on January 21, 2009 by Ed Morrissey
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While the Obama administration and Democrats in Congress keep upping the ante on the new stimulus package, the Congressional Budget Office thinks the entire exercise is pointless.  Their new report states that at least half of the money will come too late to have any effect on the recession.  Most of the money gets spent far too late to boost the economy in the short term:

Less than half the money dedicated to highways, school construction and other infrastructure projects in a massive economic stimulus package unveiled by House Democrats is likely to be spent within the next two years, according to congressional budget analysts, meaning most of the spending would come too late to lift the nation out of recession.

A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended. …

But the CBO analysis appears to confirm the complaints of many Republicans and other critics, who have long argued that spending money on highway construction and other infrastructure projects is ineffective at quickly jolting a sluggish economy. The report was distributed to reporters yesterday by aides to Senate Minority Leader Mitch McConnell (R-Ky.)

Barack Obama has named his priorities for rebuilding America as infrastructure and alternative energy.  The stimulus supposedly will rebuild the economy by focusing the government spigot towards these two areas.  If so, that spigot seems a little narrow.  The CBO notes that only $4 billion of the $30 billion for highways gets spent in the first two years.  On energy, less than $3 billion of the $18.5 billion will be used before 2011.  Only half of the $14 billion budget for school construction and renovations will get spent before then, too.

In other words, the stimulus package appears to be nothing more than a big pork product designed to benefit Congress and Obama much more than the economy.  While economists believe that the recession will be long and harsh, few have predicted that it will last for more than two years.  And if we need to pass a stimulus bill with such urgency, why does it allocate most of the spending in years 3 and 4 of the Obama administration?  The idea of government stimulus packages is to create jobs now, not three and four years from now.

We’d be better off leaving the money in the private sector in the form of massive tax cuts, matched with cuts in government spending.  Private capital creates jobs much faster than anything proposed in this package.

Interestingly, the Post ran this on the front page of their business section, page D-1, rather than on the front page of the newspaper.  The media keeps telling us that the economic crisis is the most important story at the moment.  If so, pushing this highly critical look at the Obama administration’s economic centerpiece to section D makes little sense … or perhaps it does.

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