Obama's New Stimulus Won't Stimulate

Leadership: The Obama administration's latest idea for "stimulating" the economy is - you guessed it - more spending. Is this just a campaign ploy, or is the White House ruining the economy on purpose?

The president's latest plan calls for another $50 billion in stimulus for infrastructure. As the White House puts it, this represents a "bold vision for renewing and expanding our transportation infrastructure - in a plan that combines a long-term vision for the future with new investments."

But why in the world do we need another stimulus when we're not even close to exhausting the funds allocated for the last one?

According to Darrell Issa, ranking member of the House Committee on Oversight and Government Reform, $275 billion of the initial $787 billion cost of that stimulus remains unspent. And of the $512 billion that has been spent, just $18.5 billion - or less than 7% - has been paid out by the Transportation Department, the main government infrastructure provider.

This is strange, since the stimulus was originally sold to us as a way to create "shovel-ready" jobs on infrastructure. Instead, much of the money was drained away for financially strapped states to keep their public unions and Medicaid programs afloat.

Here's what President Obama said about the stimulus bill he signed into law Feb. 17, 2009:

"Because of this investment, nearly 400,000 men and women will go to work rebuilding our crumbling roads and bridges, repairing our faulty dams and levees, bringing critical broadband connections to businesses and homes in nearly every community in America, upgrading mass transit, building high-speed rail lines that will improve travel and commerce throughout our nation."

Sounded great at the time, but few, if any, of those things got done. Moreover, since the recession began, federal employment has jumped by 10%, or nearly 200,000 positions, while private-sector employment has plunged 7%, or 7.8 million jobs. So who really benefited from the stimulus? Big Government and its unions.

The stimulus did do one thing, however: It set the stage for massive spending and an unprecedented expansion of the role of the U.S. government in the American economy. This, in retrospect, appears to be the real aim of the Democratic stimulus - not jobs or infrastructure or any other real-world accomplishment.

Even as the president released his latest stimulus ideas, the Congressional Budget Office quietly issued its own estimate for spending over the next 10 years. We were struck by the sheer size of it: $44.5 trillion from 2010 to 2020 - an 82% jump from $24.5 trillion spent in the last decade.

That, in a nutshell, is the real problem - not too little stimulus, but too much spending. Over 10 years, the CBO sees deficits of $6.25 trillion. And to keep the projection that low, the agency had to pretend the Bush tax cuts all expire, that Congress does nothing about fixing the Alternative Minimum Tax, that Social Security and Medicare are allowed to fester, and that after all this stimulus is done, "future annual appropriations will be kept constant in real (inflation-adjusted) terms."

Not one of those things is likely to happen.

A more realistic appraisal of the deficit comes from the Concord Coalition, which expects deficits more than twice as large - $15 trillion over 10 years, or $1.5 trillion a year on average. That could push U.S. publicly held debt from last year's level of $7.5 trillion, or 53% of GDP, to as much as $25.1 trillion, or 108% of GDP, in 2020.

These numbers may not mean much now, but they will soon: Such abrupt changes mark an economy careening towards bankruptcy. Piling on more spending now isn't just unwise policy, it's a form of fiscal insanity.