I wrote a quick note to my senators and congressman expressing my opposition to the so-called Stimulus Package just passed by Congress and signed into law yesterday by our President. This is the response (with which I tend to agree) I received from Senator Orrin G. Hatch of Utah. This is one of the times I agreed with his vote! I am glad to have his written answer.
Dean
[extracted from Senator Hatch's email response.] Thank you for contacting me to share your concerns about the economic stimulus bill. I appreciate hearing from you.
As you are probably aware, on February 13, 2009, both the House of Representatives and the Senate passed the $787.2 billion American Recovery and Reinvestment Act of 2009 (H.R. 1). The Senate vote was 60 – 38, with the Senate’s Democrats and just three Senate Republicans voting for it. Only Democrats voted for the bill in the House. President Barack Obama signed the bill into law on February 17th.
I voted against this so-called stimulus law. It is not the right solution for America, either for today’s generation of citizens, and especially not for our children and grandchildren. It is ironic but perhaps fitting that the bill was passed on Friday the 13th. Let me detail some of the reasons I opposed this bill while pointing out a few pertinent facts about this massive piece of legislation.
One reason for voting no is just the sheer inefficiency of the law. According to the Congressional Budget Office (CBO), which is a nonpartisan agency of Congress, by the end of 2011, the number of jobs this bill will have created or saved is estimated to range from a low of 600,000 to a high of 1.9 million. With a total estimated cost of about $1.1 trillion (including interest), this means that the cost of each job saved or created ranges from $414,000 to $1.3 million. This is outrageous and falls far short of the 4 million jobs the President said we needed from this legislation.
What is even worse is that after ten years, the CBO projects there will be no greater employment in the United States than if we had passed no bill at all. Thus, the law is expected to have a small effect in the short-run in helping to turn around the economy, but the overall cost over ten years and longer makes it an extremely bad bargain.
The stimulus law leaves out some very important and obvious provisions that are badly needed right now. Our economic downturn began with a crisis in the housing market. You would think that if we were going to pass a massive law to turn around our economy, it would address the housing situation directly. Unfortunately, this is not so.
The Senate did adopt an amendment, which I and many senators of both parties supported, that would have spent about $35 billion on a tax credit for home buyers. It would have doubled last year’s home buyers’ credit and removed many of the restrictions that have made it less effective than what it has been. Unfortunately, the conference committee slashed this provision to less than a fifth the size it was in the Senate bill. Thus, it will have less than a fifth the impact on the housing market.
Even worse, in my view, the one provision in the Senate and House bills that would have helped struggling businesses to keep from having to lay off employees was also decimated in conference. This was the provisions extending the period for carrying back a net operating loss from two to five years. In the final law, this relief is available only for very small businesses.
Sadly, the law devotes less than 1 percent of its resources for tax relief for businesses. This gets to the heart of what is wrong with this legislation. It provides virtually nothing to help save or create private sector jobs, while devoting almost everything to the public sector. The problem with this is that government jobs and government assistance are not self-sustaining, while private sector jobs are.
This law also has a long-term impact on federal spending and our deficit. You would think that if we were going to pass the largest public spending bill in the history of the world, with dollars of almost unimaginable magnitude that the economy should be better off because of it in ten years. Unfortunately, because we must borrow every one of the $787.2 billion dollars that is included in this law, plus interest, there is going to be a very significant and negative effect on our long term economic prospects.According to the Congressional Budget Office, the massive amount of new government debt from this law will effectively crowd out private investment and leave us weaker financially in ten years than we would be had we not passed this law at all. CBO estimates that this legislation will have no permanent effects on the incentives that increase economic growth in the long run, but will have negative effects on private investment. The net effect, according to CBO, is a slight reduction in GDP over the next ten years, compared to where we would be without the law.
In other words, our $1.1 trillion law will leave us with a little less than zero growth over the next ten years. This is a bad deal for Utahns and for all Americans.
The law also contains an improper mix of spending and tax relief incentives. Congressional Republicans are not against a large and significant law to get the economy moving again, despite false statements to the contrary from some on the other side of the political aisle. However, we are against relying almost solely on federal government spending to do it. In its final form, the law is comprised of 74 percent spending and 26 percent tax relief. This is a far cry from the 40 percent tax relief that the President pledged when he started this process. Moreover, much of the 26 percent in tax relief is not the kind of stimulus that economists believe will be effective in turning around the economy.
The stimulus law really should have had two emphases. Ideally, it would have first provided immediate stimulus through temporary, timely, and targeted spending, and second, it should have provided incentives for longer-term economic growth and job creation to kick in once the spending is over. The law Congress passed gets a grade of maybe a C minus on the first part, but it deserves an F on the second goal.
Despite our new President’s promises to change the way we do business in Washington and approach things from a bipartisan basis, he walked away from that in this law and settled for the low road. I believe that a bipartisan package was in reach. There were several critical junctures where the President could have stepped in and insisted that the GOP’s concerns get better reflected in the law. But tragically, he did not do this. Instead, he implied that Republicans prefer to do nothing. Unfortunately, this is going in just the opposite direction than I had hoped things would move this year.
There is no doubt we are in a serious recession. The American people deserved a strong response from Congress, but I believe this law very much falls short. Despite this failure, I will continue to try to work with my colleagues on both sides of the aisle to improve the economy.
Again, thanks for writing.
Sincerely,
Orrin G. Hatch
United States Senator
———————————————–
Dean Crandall is a licensed REALTOR with Keller Williams Westfield Real Estate based in beautiful Utah County. He has six successful years of helping clients and friends find and sell homes, land and investment properties.
If you are looking for free advice or have questions, please contact Dean directly:
Dean Crandall
801-836-3112
———————————————–
YsGuy.com & DeanoDean, Inc. make no representations as to accuracy, completeness, correctness, current-ness, suitability, or validity of any information on this blog and will not be liable for any errors or omissions in this information or for any losses, injuries, or damages arising from its display or use; including, but not limited to, methane gases, body odor, computer and keyboard rage, and sleepless nights. All blog posts are the constantly changing opinions of the author(s) and may occasionally contain bad opinions. They are not approved to diagnose, treat, cure or prevent any disease. Please make decisions based on advice of competent, licensed professionals.
Copyright® 2009, DeanoDean, Inc. “Orrin G. Hatch and his (and my) opposition to the Stimulus Package”
2 Comments
Comments RSS TrackBack Identifier URI
Leave a comment
If a stimulus bill is no the way to create jobs then I don’t know what is. It’s very simple Obama is using a Keynesian approach. The government gives people jobs by investing into the infrastructure and who then spend money. Also those people will be employed by private companies contracted by the government. The Republican approach by giving tax breaks to large companies and business people is just not going to work. It did not work under the Bush Administration and has never worked in the past. Republicans can remember Reaganomics all they want but let them not forget that it did bring down unemployment between 1982 and 1987 only to have it triple in 1988. It was also Ronald Reagan who nearly quadrupled the national deficit in the 1980s. Giving money to private citizens clearly isn’t the right direction for the economy. It’s time for the government to put some money into the economy. Republicans can also scream about Obama’s stimulus bill but they never asked a single question when Bush proposed this massive and deceptive war in Iraq.
I don’t recall Orrin Hatch standing up and bringing up a single question or making any effort to oversee Bush’s fiscal policy. He and all the other Senate Republicans sat quietly with their arms crossed as he spent billions of dollars deceiving the American people by leading into a war on fabricated intelligence. He also ignored the undoing of Clinton’s surplus and the deficit was tripled. Where was Orrin Hatch then? He can only come and criticize Obama’s efforts after watching Bush create this economics crisis.
Orrin Hatch can go back to Utah and sit quietly. No further insight is needed from him.
Mr. Sukharev:
Your first sentence says it all. NO country has ever succeeded in being a socialist nation and sustained it. But we won’t let logic cloud your thinking. It’s tedious to try to even attempt to reason with someone who’s more intent on arguing about a party’s being right. The best thing our government could do is allow a TRUE free market system function and simply GET OUT OF THE WAY!
You and I will probably never agree about politics or economics. I do appreciate your taking the time to write your thoughts.