Stimulus Plans A Disaster for Wisconsin and the Nation
By: Senator Glenn Grothman
January 21, 2009
Governor Doyle and several other governors have called upon Congress and President Obama to give states $1 trillion to stimulate the economy. Earlier today, President Obama said all sides agree we need a massive stimulus to jumpstart the economy. Governor Doyle’s request is breathtaking in its size. If granted, in one shot it would require the federal government to raise over $3,000 from each person in the country.
Since tax receipts are falling, Governor Doyle evidently wants our federal government to either borrow the money, probably from the Chinese or have the Federal Reserve print more money. Is the secret to a strong economy to have the government spend money?
Last spring, Congress either borrowed or printed $170 billion and sent out checks as part of President Bush’s stimulus plan. At the time, February 13, 2008, the Dow closed at 12,552.24 and unemployment was at 4.8 percent. In the beginning of October, President Bush announced a $700 million bailout plan -- also presumably paid for with borrowed or newly printed dollars. The day the plan was signed, October 3rd, 2008, the Dow closed at 10,325.38, and unemployment was at 6.6 percent. Today the Dow is under 8,000 and unemployment is at 7.2 percent.
Is our current economic crisis caused by a failure of the federal government to create jobs or by lack spending so far? Governor Doyle and other stimulus advocates highlight healthcare, education, and transportation (highways and mass transit) as areas in which we could stimulate the economy. In the seven years leading up to the crisis under President Bush, federal education spending went from $35 billion a year to $67 billion a year (remember when the most popular politician of my lifetime, Ronald Reagan, tried to get rid of the Department of Education?). This presumably meant all sorts of teaching jobs, testing jobs, and government bureaucrats to monitor the system. Pell grants for college scholarship went from $8.8 billion in FY 2001 to $18.8 billion in FY 2009 which meant a lot more money spent at the University. All of these figures are at least 20 percent over inflation and the education number is 60 percent.
Federal spending on Medicaid and Medicare went from $344 billion per year to $600 billion per year which presumably led to new jobs in the medical field as well as in the pharmaceutical industry (Bush’s prescription drug benefit being the biggest expansion of Medicare in over 30 years.)
What about transportation? Federal spending on highways went up from $35 billion to $53 billion a year presumably resulting in new jobs for construction workers, environmental consultants, engineers, bus drivers, etc. Indeed, all federal spending except for Social Security went from $1.4 trillion to $2.3 trillion. If stimulating the economy by spending government money actually worked, we’d all be as rich as Caroline Kennedy, and George Bush would be the favorite to win the Nobel Prize for Economics.
We haven’t touched upon small items our doubling of spending on food stamps or massive increases in child care credits. When asked to explain the difference between the Democrat and Republican parties, I try to explain that Democrats are usually for larger government and the Republicans for less. Bush sure muddies the waters. He probably should have run as a Democrat.
Governor Doyle’s major complaint is that he is going to have to slash education funding. In the last five years, he has presided over increases in programs to reduce class sizes, especially in Milwaukee, and huge increases in 4-year old kindergarten. All we know about this budget for sure is that he will change the law to presumably increase teachers’ salaries at the union’s request.
Our country is in serious trouble. The national debt (percentage of GDP) has jumped from $5.9 trillion in 2001 to $10.6 trillion at the time of writing this column in 2009. Our children and grandchildren are in danger of being in permanent servitude to the Chinese. The printing of money by the Federal Reserve to bail out the bankers (which Bush signed and Obama voted for) threatens us with huge inflation.
America became the greatest country in the world under a Constitution put together with the intent to restrict the growth of government and the loss of freedom which will inevitably follow. If Obama really thinks all sides agree on a huge stimulus package, that’s scary. The current crisis was caused by big government Republicans and Democrats encouraging excessive borrowing not by too little spending. It’s time to get back to what made this country great. Governor Doyle and the governors should be embarrassed to suggest that Washington should borrow more money to help the states.
Please let me know what you think on this issue. Contact me in Madison at 1-800-662-1227 or email me at Sen.Grothman@legis.wisconsin.gov.