It was typical of President Obama to demand that Congress “pass this bill”–Stimulus II–when there was, in fact, no bill to pass. Remarkably, the administration has yet to explain in coherent fashion what the budget impact of its latest waste-fest will be. This morning ranking Budget Committee member Jeff Sessions wrote to the Director of the Office of Management and Budget, complaining that OMB has yet to analyze the fiscal impact of Stimulus II. The letter is worth quoting in its entirety, for the light it sheds on the wanton irresponsibility of the Obama administration:
Dear Director Lew:
Last week, the president delivered an address to a Joint Session of Congress announcing a second economic stimulus package. News reports have stated the total cost of the proposal nears $450 billion. The president assured us that every penny of it would be paid for.
Following the president’s address, White House Press Secretary Jay Carney declared that “the president will submit a bill early next week, the American Jobs Act, which will specify how he proposes paying for the American Jobs Act.” Meanwhile, the president urged on Monday: “No delays. I’m sending this bill to Congress today, and they ought to pass it immediately.”
When we received a copy of the legislation yesterday, we were expecting the Office of Management and Budget–which enjoys a five hundred person staff–to provide a precise and detailed estimate of the fiscal impact of the president’s proposal. But no such information was provided.
This is not satisfactory.
Perhaps even more troubling, however, is that despite the emphatic promise that we would learn yesterday how the bill would be offset, this information is missing too.
Given the depth of the economic crisis we now face–slow growth, high debt, and chronic unemployment–the lack of fiscal detail that has been provided to Congress is both disappointing and irresponsible.
The president is asking America to borrow half a trillion dollars for a second stimulus package–one that exchanges a short term infusion of federal cash in exchange for a potentially permanent increase in taxes and debt.
OMB must provide to Congress and the American people, at a minimum, the basic information that demonstrates in detail, as promised, how this bill will be funded. This information should be provided without delay. Specifically:
— A table showing the expected budgetary impact, by specific policy, of the legislation on an annual basis for fiscal years 2011 through 2021 (the period covered by the president’s most recent budget submission).
— A schedule showing the added interest that the federal government would have to pay on an annual basis and the resulting change in the federal debt (because it is unlikely that the specific offsets contained in the legislation would equal the effect on the budget of the specific proposals intended to encourage economic growth).
— A table illustrating projected changes to the deficit for each of the next ten fiscal years as a result of this legislation. (The bill would presumably create a sudden increase in near-term borrowing, but the offsets are stretched out over a decade. The debt limit agreement saves $7 billion in budget authority or next year’s annual appropriations; this bill, regardless of the offsets, would wipe those savings out.)
We may have raised our legal debt limit but we have breached our economic debt limit. America’s $14.5 trillion gross debt is now 100 percent of GDP. A prominent study from economists Rogoff and Reinhart–praised by Treasury Secretary Geithner as “excellent”–shows that when a nation’s gross debt reaches 90 percent of GDP they lose, on average, a percentage point or more in GDP growth each year. Our debt is depressing growth to unexpected levels and destroying jobs today.
When the president submitted his budget in February you declared: “our budget will get us, over the next several years, to the point where we can loo the American people in the eye and say we’re not adding to the debt anymore.” In reality, the budget would have increased our debt by $13 trillion. Rhetoric alone will be insufficient during this time of crisis. We need numbers. And they should be provided at once.
Very truly yours,
UPDATE: An editorial in yesterday’s Washington Examiner adds these observations:
Lew kicked off Monday’s White House presser by saying he wants to limit tax deductions for individuals making more than $200,000 a year (and families making more than $250,000 a year), raise taxes on capital gains, raise taxes on oil companies and slow down tax depreciation of corporate jets. If that sounds familiar, that’s because it is the exact same list of tax hikes that Obama pushed Congress to include in its debt limit deal this summer. At that time, Obama was pushing these tax hikes as part of the “shared sacrifice” needed to reduce the debt. Now he’s using these same provisions to pay for even higher deficit spending.
Pressed to explain how Obama could use the same tax hikes to both meet the debt deal’s deficit reduction targets and pay for his new stimulus plan, Lew admitted that even Obama can’t count the same tax increases for two separate purposes. Instead, Lew said that Obama would be introducing a whole new slate of tax hikes next week, when he plans to give yet another deficit reduction speech.
Obama again insisted Monday that his second stimulus will be “fully paid for.” This is problematic on several levels. If Stimulus II is fully paid for with immediate tax hikes, then it isn’t the kind of deficit spending that Obama’s Keynesian logic demands. If it is only paid for later, at the end of the 10-year horizon, then this amounts to a budget gimmick, because Obama will be long gone from office by then.
So which is it? Is Obama’s Stimulus II really just a complicated wealth redistribution scheme accomplished through the tax code? Or does it leave difficult tax hikes to be implemented by future presidents? Whatever the answer, do not expect to hear it from Obama during his next two stimulus speeches.