A Mind-Boggling Jobs Bill

There is a powerful op-ed (A Jobs Bill That Boggles the Mind) in the Sept 21 Wall Street Journal by Harvey Golub of the American Enterprise Institute in which he skewers President Obama’s jobs bill, perhaps better known as Stimulus 2. As a foretaste of what’s in store, Golub’s opening paragraph, in which he accuses the Obama administration of promoting antigrowth economic policies, contains the sentence:

He [Obama] apparently has not learned from the failure of his first trillion dollar stimulus package that no amount of government spending will achieve self-sustaining economic growth…”

There are a number of fiery sentences in the article – one of which I will supply momentarily – in which Golub lambasts Obama for economic malfeasance. However, I think the most valuable part of the essay is a specific example in which Golub illustrates the economic illiteracy of Obama and his advisors. Specifically, he points out that Obama’s plan is to allot approximately half of his nearly half-trillion Stimulus 2 package to projects that will aid States and localities. But the president and his henchmen seem to fail to understand that the $1.5 trillion increase in taxes will saddle those states and localities with a bill that exceeds the amount of stimulus largesse that Obama proposes to divert toward them. In short, when the “millionaires” find that the tax savings for municipal bonds is no longer available to them, they will quit buying those bonds unless the localities increase the rates to match what investors can earn in the corporate bond market. The extra interest the localities will have to pay will more than offset the “bonuses” they are to receive from Stimulus 2. The inability to understand simple economic lessons like this is rampant in the administration. Obama and his advisors are hypnotized by their misguided Keynesian tax and monetary policies, and by their blind ideological pursuit of a redistribution of wealth – no matter how badly those policies fly in the face of historical evidence.

By the way, here is one of those fiery passages:

And what exactly are those [antigrowth] policies [of the Obama administration]? First and foremost, the president has promised to raise taxes on the “millionaires”…Meanwhile he’s ignored entitlement reform, retarded the development of our energy resources, and added new layers to our regulatory burden. He’s also increased the uncertainty inherent in an already dysfunctional and perverse tax code, added trillions to our national debt, spent taxpayer money ineffectively and inefficiently, tried to micromanage the economy, and acted as an incompetent venture capitalist by investing in “green jobs” and high-speed rail….From green jobs to “cash for clunkers,” many of us have suspected that economic illiterates were setting the economic policy of this administration. The president’s jobs plan proves the point.
This post also appeared in The American Thinker at: