The U.S. economy is tanking. Another 598,000 jobs were lost in January, and the best-case scenario now is that the nation faces the worst recession in 25 years. After the financial panic in September kicked the global recession into high gear, other countries have passed dramatic stimulus packages to get their economies back on track. Conservatives in the U.S. Congress, however, continue to stall President Barack Obama’s American Recovery and Reinvestment Act arguing their myths about the superiority of tax cuts in spurring economic growth and leveling spurious charges about the integrity of the proposal—as the crisis continues to deepen daily.
Renovations to golf courses and insurance for honeybee farms have become the latest items used by conservatives to belittle the spending measures in the recovery bill currently before Congress. But let’s look at the facts. The total Senate package totals about $920 billion as of this moment. This includes $247 billion for investments in health, education, and training; $191 billion for infrastructure, green energy, and science; $342 billion for tax cuts to working families and businesses; and $99 billion for the hardest hit from the recession. So where do the so-called “pork” items come from?
The renovations to golf courses come from a United States Conference of Mayors report released on January 17 when the ink was barely dry on the initial House proposal. The mayors’ report includes 18,750 ready-to-go infrastructure projects at a cost of $150 billion. Less than half that amount is allocated to local infrastructure in the package and that will be spent by a combination of governors and mayors.
Indeed, the proposal listed in the Wall Street Journal from the mayor of Austin to build a 36-hole “disc” golf course is competing with $80.2 billion worth of other projects on the mayors’ list in addition to state-level projects in spending categories for which the Senate package only allocates $10.2 billion. It’s a pretty safe bet to assume that Austin’s new leisure facility won’t be in place any time soon—at least not at federal taxpayer expense.
The reason these measures made the mayor’s list was explained by Greg MacLean, public works director in Lincoln, Nebraska, who said in the Wall Street Journal that, “Our approach has been to list everything, because we don’t know what the final guidelines will be or what the final dollar amount will be.” Thankfully, the recovery plan before Congress does not adopt a “kitchen sink” approach and has extremely stringent accountability arrangements in place.
As outlined by Reece Rushing, the plan requires regular, public reports and disclosure of detailed data on investments made and progress achieved. A Recovery Act Accountability and Transparency Board will meet at least once a month to coordinate and examine spending, and to prevent waste, fraud, and abuse. It will submit quarterly and annual reports on its findings to Congress. Finally, Obama has created a website, www.recovery.gov, to provide detailed data on each contract awarded and, crucially, monthly updates on investments in each state and congressional district.
The bottom line: If states or municipalities try to use the money for golf courses, then they will be held accountable.
So what about honeybee insurance? As Michael Hiltzik of the Los Angeles Times unearthed, the furor turned out to be more a red herring than a pot of honey since it was just part of a disaster insurance program for all livestock producers. Beekeepers were a minor recipient. Indeed, Senators Mitch McConnell (R-KY) and David Vitter (R-LA), who railed against the provision, voted for it in 2008.
There are other examples circulating that purport to show other crazy spending—special tax breaks for industries and money for sons of congressmen. As with the golf courses and honeybee insurance, the accusations all turn out to be the result of wildly tortured logic.
The truth behind all these claims is that conservatives are pecking through the small print of the bill and the wish lists of mayors to come up with measures that discredit the wider bill. But analysis from the Center for Economic and Policy Research shows that programs criticized by conservatives on TV or in a letter they sent to the media total just $19.5 billion—less than 2 percent of the total package. So even if these complaints were legitimate, they’re small potatoes.
Measures in the senators’ letter included $6 billion to weatherize federal buildings and reduce their carbon emissions, and $1.2 billion to provide summer jobs for some of the 3.8 million 18- to 24-year-olds out of school and out of work. It is hard to see why programs such as these would be wasteful spending at such a critical time. Writ large, the money will be spent to create new jobs and buy new products and services from companies, which in turn will hire new employees and order more materials and services from other companies—in a virtuous circle that will help the economy recover, boost economic growth and, eventually, allow the government to pay down its debt.
The truth is hard for conservatives to take. Interest rates are at about zero so monetary policy no longer works. Tax cuts to individuals have their place in this package—because we need a very large stimulus and we, in fact, don’t want to expand our spending to areas that truly are irresponsible and because middle- and low-income people are struggling—but a large portion of those tax cuts probably will be saved or used to pay down personal debts. Tax cuts to corporations are even less justified. The best way to help businesses is to provide them with customers—by getting the private economy growing again. Businesses are unlikely to make investments or start hiring because of tax breaks until they again have customers for their products
What is needed is a significant economic stimulus and recovery package that saves jobs, creates jobs, helps people who have lost their jobs, and lays the foundation for future jobs. The bill before the Senate does that. Conservative senators should set aside their unsupported arguments and support the Recovery Act.
Will Straw is Associate Director for Economic Growth at the Center for American Progress. To read more of the Center’s analysis and policy recommendations for economic recovery and growth, please go to the economy page of our website.
More from CAP on economic recovery:
Interactive Map: Beyond the Beltway: Helping Those Most in Need
Interactive: Build Your Own Stimulus Package