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Citizens for a Sound Economy
October 9, 2001
Stimulate the Economy, Not Big Government
by Brandon Arnold
The events of September 11 forever changed our country. For most Americans, nearly every aspect of our lives has been affected somehow by the horrible national tragedy. Congress, however, appears to be one of the few places largely unchanged by the terrorist attacks. After the initial shock and a few patriotic moments of bipartisanship, many lawmakers have reverted to their favorite habit of wasting taxpayer dollars.
Accordingly, a rash of new spending items is being railroaded through Congress in the name of national security and economic stimulus. While it would be difficult to oppose legislation to protect Americans from future terrorist attacks or help our struggling economy, one must ask if this spending surge actually achieves those goals.
For instance, the newest version of the agriculture bill, which has recently been renamed "The Farm Security Act of 2001," would increase federal spending by $72.1 billion over the next ten years, according to the Congressional Budget Office. This includes $202 million in taxpayer dollars for marketing assistance for wool and mohair, $101 million for marketing assistance for honey, $773 million for milk price supports, and $3.5 billion for peanut provisions. (So as you work hard at your job to pay your taxes, feel confident that you are, in fact, working for peanuts!) In spending billions of dollars, this bill creates new subsidies, reinstates subsidies that have expired, and extends current subsidies – despite the fact that Congress pledged to eliminate farm subsidies by 2002. Clearly, this bill would spend far too much taxpayer money and expand the size of government. However, it is unclear to anyone outside of Washington how it would increase national security or stimulate the economy.
It is true that some businesses and industries are struggling in the aftermath of the attacks. Many restaurants are half-empty, planes are carrying only a handful of passengers, and shopping malls are seeing fewer consumers. Amtrak, however, is experiencing a very different trend than most businesses. Many commuters, fearful of flying, are opting for rail service. As a result, the Washington Post reported that Amtrak ridership increased 17 percent nationally. Despite this customer boom, Congress is moving forward with a $3.2 billion bail out for the rail industry and $71 billion to help finance high-speed railways. Given the slumping economy, the possibility of war, and the dramatic increase in rail ridership, can’t Congress find a better way to use of $74.2 billion?
After witnessing the potential Amtrak bailout and the success of the airline industry in procuring $15 billion from Washington, many other industries are lining up to feed at the government trough. Bills that would provide billions of dollars to assist travel agents, hotels, and other businesses are all being considered in Congress. Unfortunately, this is only the tip of the iceberg. Hundreds of billions of dollars in new appropriations have been proposed in the wake of the terrorist attacks. This includes several ludicrous "economic stimulus" proposals – one of which would spend $62.8 billion for health and social spending and $35 billion for public works. Though some politicians may claim these spending items are necessary for national defense and economic stimulation, most are nothing more than distasteful attempts to grow the size of government and further personal political agendas.
Not only poorly timed and unnecessary, this flood of wasteful spending proposals could create real problems for America and our economy. Resources that could be used to generate growth and income might instead be used to create the Rocky Flats Museum, which would commemorate the role of Rocky Flats, Colorado in winning the Cold War. Laughably, building this museum is part of the "Department of Energy National Security Act of 2002". Such projects could detract from America’s true domestic priorities. This could, for example, jeopardize our ability to strengthen Social Security and allow individuals to own and control a portion of their retirement savings.
Rather than occupy themselves with countless new spending items, members of Congress should refocus their priorities and set an agenda to grow the economy as President Bush moves to address our nation’s security.
These priorities should include:
1. Pro-growth tax policy
Key to a strong and prosperous nation is a healthy economy. Simply increasing government spending is not the answer; strengthening the economy requires providing investors and entrepreneurs the right incentives to build the economy. Congress must pass a permanent growth package that contains tax cuts directed at increasing saving and investment in both the short and long term.
2. Energy Security
America has long had a self-imposed over-reliance on foreign sources of energy. In fact, today the United States imports nearly 60 percent of its crude oil—the highest level in history. This reliance on foreign sources of energy not only exports environmental damage to other countries, but gives foreign governments undue influence over America’s economy. We have long needed a new approach to energy policy that recognizes the need to find new domestic sources of energy. Key to this approach is the opening of ANWR and other areas to energy production. America has abundant and diverse energy sources. We should be allowed to take advantage of them in an environmentally sensitive manner.
3. Removing Barriers to Economic Prosperity
Congress has a significant role to play in restoring economic growth. Since the start of the year, the Federal Reserve has cut interest rates nine times and has injected over $100 billion of money into the economy through the purchase of securities. But this effort to boost the economy has proved fruitless because of regulatory barriers that prevent American businesses from competing in the global economy. The current economic malaise has been caused, in large part, by government policies that add excessive burdens to doing business in America, or worse, policies that favors one business or sector over another. This shortsighted political manipulation of the market process must come to an end. Congress must act to eliminate undue economic burdens and policies designed to protect particular industries, or industry subsets, that hamper economic development.
4. Maintain Fiscal Discipline
Congress has already had difficulty adhering to spending guidelines. Nonetheless, it is essential to pursue fiscal restraint if we are to avoid undermining other priorities. A war against terrorism is a costly endeavor that will require a significant share of the government’s resources. Because overall spending will almost undoubtedly increase, it is especially important to exercise fiscal discipline and avoid waste. Congress must prioritize America’s needs and avoid excessive spending on wasteful government programs that stymie economic growth.
If able to adhere to these principles, Congress could pass legislation that would revive our economy and represent a major victory for America and for pro-growth economic policies.