Sunday, February 15, 2009

Stimulus Bills, Playgrounds, and Sandboxes

by Jeffrey Robbins

The recent stimulus bill, The American Recovery and Reinvestment Act has garnered much attention from Republican supporters as evidence of the divide that stands between the Democratic and Republican parties. The final votes for the bill are pointed to as clear evidence. The 246 Yea's in the House consisted of zero Republican members. The whole of the Republican House membership joined seven Democrats in voting no. In the Senate, three lonely Republican Senators joined all Democrats and Independents in voting for the bill. The version which passed was a $787 Billion bill breaking down into the following two major categories: $275 billion in tax cuts, $512 billion in spending (Education, Health Care, Unemployment, Infrastructure, and Energy were the primary categories in spending). In a vacuum, it would appear the Republican supporters have a point. How does one argue ZERO Republican votes for this monster bill in House and a mere three in the Senate? A good place to start might be to look at the "alternatives" proposed by the Republicans which have gotten little attention.

The Senate GOP alternative stimulus bill was a $713 Billion plan put together by Florida Sen. Mel Martinez, who had been working with other GOP senators. The proposal included $430 billion in tax cuts, $114 billion for infrastructure projects, $138 billion for extending unemployment insurance, food stamps and other provisions to help those in need, and $31 billion to address the housing crisis. Now, $74 Billion (the difference between the two bills) is a lot of money to be sure, but I'm not certain we are talking wholesale philosophical differences here. It is also noted that the Republicans were clearly in favor of relying on more tax cuts. However, they certainly did select most of the same areas of the economy for spending, albeit in smaller amounts than the Democrats in some cases.

The House GOP, comparative models of fiscal restraint they've proven to be, came up with its own alternative stimulus bill as well, ringing in at a mere $478 Billion. Like the Senate GOP alternative bill, it was more reliant on tax cuts than the Stimulus bill that passed. Other primary components of the House GOP proposal were unemployment benefits, and a new home buyers tax credit. The House GOP alternative bill was even nearly 33% smaller than the Senate GOP proposal. Even so, at least one major category of spending, unemployment, shows up from the Republicans in the House. To ferret out the differences, let's instead look at just a few of the similarities.

1. Both parties sought to cut taxes.
2. Both parties neglected to cut spending.
3. Neither party addressed the right of the government to access your wallet in the first place and as such we are forced to conclude that both parties believe they have power over your wallet by force. They giveth and they taketh away. Right now they giveth, tomorrow they...
4. Both parties recommended increasing spending, merely squabbling over, sometime differences in where your money is spent, but again, not in whether they can or should in the first place.
5. Both parties believe in the welfare state, including unemployment benefits in all three bills.
6. Both parties believe in the redistribution of wealth. Remember, highlighting tax cuts to one group means you are subsidizing one group of citizens over another, even per both of the Republican "alternative" bills. This also shows up again in the Republican's bill with the new home buyer tax credit, redistributing wealth from renters to home owners.

Where were these seemingly conservative Republicans when the Emergency Economic Stabilization Act of 2008 which created the $700 Billion Troubled Asset Relief Program (TARP) was passed by the Senate 74-25 on October 1, 2008? The Yea's included not the much talked about 3 GOP Senators who voted for the Stimulus Bill, but 34 Republican Senators who voted yes versus 15 that voted No. In the House, the final vote came on October 3, 2008 and was 263-171. It included not the zero GOP voters that the recent Stimulus bill had, but rather 91 Yea's from GOP House members versus 108 Nea's from GOP House members.

What's going on right now is you have two groups of kids who play in a sandbox that resides on a much larger playground. Both groups of kids generally believe the playground (and the people that vote them into the sandbox) should be "managed" in generally the same way. One group of the kids every few years, inevitably, has their feelings hurt and fewer of their group of kids win spots in the sandbox on the playground. It's sad, but don't make the mistake of thinking the two groups of kids dislikes each other's toys.

To demonstrate, let's ignore all the other toys that the two groups of kids believe you should pay for in order that they might play with them to focus on just two: WELFARE and WAR. I know, weird toys, but trust me, it's a weird sandbox! It just so happens that one of the groups of kids sometimes fancies WELFARE a little bit more than the other group of kids. Of course this leads to little "fits" to be thrown over how much should be spent on WAR versus WELFARE. These "fits" are really for the consumption of those people outside the sandbox, on the playground. We'll call them "voters." Both groups of kids agree WAR and WELFARE should be paid for by one group of people on the playground to provide to another, different, group on the playground. Philosophically both groups of kids like WAR and WELFARE and don't question whether they can or should. But, they like them to different degrees. Or at least sometimes they do. Sometimes they like them the same. Heck, sometimes, they even flip flop and the group of kids that didn't like WAR as much as the other group of kids, before you know it, a few years later they like WAR more than the other group of kids. Anyway, in order for one group of kids to "win" spots back in the sandbox next time, those "voters" outside the sandbox on the playground (you) must believe the group of kids you like doesn't really like WELFARE, for example. And we've just seen this played out masterfully. Not bad for a bunch of kids.

To review in greater detail the lack of difference between the two parties over the past decades, please review our series of posts entitled "Are Republicans Conservative?" parts one through three. They were posted on January 5, 2008. Or copy and paste the following link to go to the first of the series.

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