Sunday, January 04, 2009

Obama's "Stimulus" Plan

Sure, sure, Joe Biden swears up and down that it’s not pork, Washington business as usual, etc. etc. etc. Technically, Biden is leaving a huge loophole here – merely saying that there won’t be any “earmarks”. As we’ll see below, then entire bill is going to be one big, gigantic earmark from start to finish.

When you line up to spend about a trillion dollars over two years, it’s pretty much guaranteed that almost all we’ll see is old timey pork barrel spending just like Trent Lott used to make.

From a pure administrative view, if we are starting with ”shovel ready” projects that are only awaiting funding, by definition we’re talking about stuff that wasn’t deemed important enough to do earlier. Right off the bat, we’re limiting the initial search to things that somebody somewhere thinks would be nice to have, but couldn’t convince even their Congressman to spend the taxpayer’s money on.

Additionally, it’s going to take a very large number of projects to consume a trillion dollars, unless the government decides to replicate the “Big Dig*” in New York City.

Administration of hundreds of thousands of projects will require an enormous bureaucracy. Experienced managers, engineers, and analysts will be needed to vet the proposals, evaluate contractor bids, provide oversight on invoices, contracting, billing, accounting, etc., as well as audit the results, keep the projects on schedule and within budget. It takes a significant amount of time and effort to create an effective management structure and team.

There's not going to be time to review the package – Obama has yet to specify anything, yet Pelosi wants something on his desk immediately after inauguration. Could be $675 billion; the governors want a trillion. At present, nobody knows. Once he does, a legion of congressional aides will lay out a bill. Congressmen will line up to stuff it with goodies for their districts. No one is likely to have the time, even if they had the inclination, to read, much less analyze the thing.

Putting aside any philosophical differences about whether or not a deficit spending stimulus plan is a good idea, from a practical standpoint, this is simply too big to be administered effectively.

* And for that matter, the “Big Dig” is a classic case of government infrastructure investment gone bad – years behind schedule, billions over budget, contractor fraud, and bad design. Nicole Gelinas of the City Journal provides a nice summary of the Big Dig's pluses and minuses.