This next section, covering pages 12-33, there are a few passages that hint that this Stimulus scam wasn't the best of ideas.
So far, in my reading, only one bit of forecasting in this memo seems to have held true:
"An excessive recovery package could spook markets or the public and be counterproductive."If you see the graphs I put up the last post, that seems to have been the case, and we would have been better off not having passed the Stimulus bill.
Further on down, it seems that a political agenda was a chief consideration for this stimulus bill. It wasn't necessarily doled out by need. The "Core" package included "key campaign priorities." And the "short-run economic imperative" was to address as many campaign promises as possible.
But here is another critical factor--so critical, in fact, that it was in bold, underlined, and italicized in the memo itself:
"But it is important to recognize that we can only generate about $225 billion of actual spending on priority investments over next two years. and this is after making what some might argue are optimistic assumptions about the scale of investments in areas like Health IT that are feasible over this period."In short, you have only so much money you can spend. This was a point the memo felt a need to spell out twice. Unfortunately, there seems to be nothing in this memo that takes seriously the notion that spending cuts might be something to consider for the country's economic health.
And speaking of spending, the memo's preparers had a thing or two to say about Obama's campaign promises: they were unsustainable.
"Closing the gap between what the campaign proposed and the estimates of the campaign offsets would require scaling back proposals by about $100 billion annually or adding new offsets totaling the same. Even this, however, would leave an average deficit over the next decade that would be worse than any post-World War II decade. This would be entirely unsustainable and could cause serious economic problems in the both the short run and the long run."What's more, the memo says if Obama were able to implement his campaign promises in 2007, before the crash,
"...the deficit would rise by another $100 billion annually. The consequence would be the largest run-up in the debt since World War II and the highest debt as a share of the economy since the 1950s. Figure 4 shows the projected increases."Let's have a look at that figure, shall we?
But take a look at that slump in the graph (and here, a slump is a good thing). That happened after the GOP took control of the House & Senate after Clinton had pissed off the public enough (and after just a year in office, to boot). Compare this with the 2006 Dem takeover of House & Senate (which occurs about where the red leaves off after 2005):
And this was the reason the people revolted in the form of the Tea Party in February of 2009.
People tend to want to blame the President for bad economic policy. He may have some hand in it, but according to the Constitution, the purse strings belong to the House. Which brings up another interesting point, the memo encouraged Obama to take on a familiar line that Obama has used pretty much throughout his presidency:
"With a short-term economic recovery package, the deficit in fiscal year 2009 is likely to
be about $1.3 trillion, which at 9 percent of GOP will be by far the largest deficit in American history excluding the two world wars and the Civil War. Most economists are not concerned about the near-term deficit deterioration, but the public may be more concerned. As noted above, it is therefore crucial in early January that we make it clear to the American public that you inherited this large deficit rather than created it." (Emphasis mine)
But, in comparison to the debt projections post-Stimulus, the Bush years, even at their worst, were far better than what the Stimulus slapped onto us.
You would think Obama & Company would see this clearly, but unfortunately, even the memo points out Obama's economic cluelessness as a senator, citing the failed "Hope for Homeowners Act" that he co-sponsored:
"You were an original co-sponsor of the Hope for Homeowners Act- a foreclosure mitigation policy which sought to encourage principal write-downs among investors by splitting the cost with the government. Unfortunately, largely due to the unwillingness of lenders to write down principal, the program completely failed: 400,000 mortgages were eligible for writedowns but only 111 applied."And why did it fail? Borrowers and lenders were more familiar with economic realities than pie-in-the sky idealism:
"Our conversations with industry and community groups have led us to believe thatNonetheless, the memo proposes a mortgage restructuring program that could modify 2.5 million loans, "profitably," with the caveat that 1 million of those would probably redefault.
lenders will continue to resist the idea in most cases (and hence our core proposal is the
affordability program outlined in Part 1). However, there were some flaws in H4H that remain: fees that push interest rates up for borrowers, fees that deter lenders, and requirements that lenders eat too much of the mortgage losses for them to be willing to participate."
Did you get that? 1 million of those would probably redefault! This is the sort of thinking that got us into the whole subprime cluster-schtupp in the first place! A plan that expects about a 40% rate of failure is a plan that should not be considered!
But, you know, the Proglodytes of the Left have this habit of letting their ideologies trump reality.
As a final note of disgust, the precursor to Obamacare's "Death Panel" is mentioned in this section of the memo. I've highlighted the bothersome part.
"The health board idea, proposed by Sen. Daschle in his book, allows for timely and oftentimes difficult policy changes to be made to Medicare and Medicaid and possibly other parts of the health system with a degree of independence from the Congressional process and special interests. This idea is included in Sen. Baucus's white paper on health reform. The Health and Economic Teams consider a Board an essential ingredient to improving the value of health care in the long run."Congressional circumvention. It's been a hallmark of these past three years.