Peering Into the Details of The Stimulus Bill

The CBO is out with its scoring of the stimulus bill (pdf).  Kevin Drum seems to think it refutes my statement that it would be impossible to have any kind of real infrastructure impact in the next 1-2 years.  Drum says:

Specifically, they estimate that in the spending portion of the bill, $477 billion out of $604 billion would be disbursed either this fiscal year or in the next two fiscal years. That's 79% of the total.

I guess opinions can vary on this, but that strikes me as pretty good. What's more, most of the spending that comes in FY2012 or later is either for projects that simply take more than two years to complete (highways, school repairs) or infrastructure improvements that have long-term paybacks (renewable energy programs). There are a few other items in the out years that are more arguable, but they add up to a pretty small portion of the bill.

This is correct on its face.  But here is the issue, and what drives me crazy about politicians and their enablers like Drum.  This is being sold as an infrastructure bill.  And even by Drum's admission, all the infrastructure spending is in the out years, well beyond any reasonable time frame for the recession.

Picking through the report, the "spending"  (I object to calling tax cuts "spending") in the next two years, the recession window, is mainly in these categories ( I get slightly different numbers than Drum)

  • Tax cuts of $223.2 billion (lost revenue + outlays)
  • Transfer payments $202.2 billion
    • Unemployment & Child Support:  $42.2 billion
    • Health Insurance Assistance:  $36.6 billion (lost revenue + outlays)
    • Medicaid: $76.9 billion
    • Food Assistance:  $10.8 billion
    • Health and Human Services (unspecified):  $14.9 billion
    • Employment and job training:  $2.9 billion
    • School/College loans:  $14.7 billion
    • Housing assistance:  $3.2 billion
  • State government "stabilization":  $31.4 billion
  • Defense:  $6.2 billion
  • Other: $62.5 billion
    • Increase in department budgets  $28.4 billion (estimated, may be low)
    • Real infrastructure spending (mainly schools, federal buildings, highways, and other transit)  $26.7 billion (at most!)
    • Green energy / energy programs  $7.4 billion (at most!)

So do you see my point. The reason so much of this infrastructure bill can be spent in the next two years is that there is no infrastructure in it, at least in the first two years!  42% of the deficit impact in 2009/2010 is tax cuts, another 44% is in transfer payments to individuals and state governments.  1% is defense.  At least 5% seems to be just pumping up a number of budgets with no infrastructure impact (such as at Homeland Security).  And at most 6% is infrastructure and green energy.  I say at most because it is unclear if this stuff is really incremental, and much of this budget may be for planners and government departments rather than actual facilities on the ground.

So don't call this an infrastructure bill.  This is a tax cut and welfare bill, at least in 2010 and 2011.   I guess I can understand a rush to do things like the welfare pieces, but that would argue for splitting the bill, into an emergency transfer payment appropriation and a infrastructure appropriation that can be studied and debated in more depth.

But that is never going to happen, because what we see is a unique kind of political synergy.  The bundling of these two very difference spending streams gives yields two political advantages:

  1. The infrastructure piece, despite being less than 10% of the bill, allows politicians to call this "investment" and "green energy" and "infrastructure" which sell better with sections of the public than "welfare" and "transfer payments."  The minority infrastructure pieces allow Congress and Obama to call the bill new and forward looking, rather than the imitation of 1970s legislation that it really is.
  2. The emergency pieces of the bill allow politicians to stuff numerous bureaucracy increases and pork spending into the bill that would not stand up to scrutiny.  Despite the fact that much of this spending will not occur for years, they can keep saying "rush, emergency, hurry" to deflect scrutiny and criticism.

Update: The National Review has a lot more detail here.

  • tarpon

    I sure hope the sandbag Republicans don't just lie around the Democrats and give them cover. Probably all they are good for anyway, but it's a waste of the bags.

    The “Stimulus” Bills Your Family – $825 Billion is equivalent to borrowing $10,520 from EVERY FAMILY IN AMERICA. This money has to be paid back.

    More here:

    The single word for all this is "STUPID".

  • Mike

    "(I object to calling tax cuts "spending")."

    I don't. Tax cuts without spending reductions (which these unquestionably are) are just like spending increases. They are just as irresponsible and the budgetary impact is the same, except that the necessary tax increases will come down the road while we enjoy the consumption now.

  • Bill Goodwin

    Quaere: Would the stimulus bill profit your biz since it will double NPS's budget?

    The money included in Mr. Obey's recovery bill $2.25 billion was about equal to the National Park Service's total yearly budget, and marks a staggering increase.

  • http://www.wildthingstodo.com Teresa

    This astounding ridiculous amount of money given to the National Park Service is for one reason, and one reason only...Mark my words:

    They will be designating interstate highways as part of the NPS. Why?

    Because you cannot carry firearms in National Parks. Thus eliminating the transport of guns.

    If you hunt, you'd better take back roads!!!