The White House has now proposed a massive $850 billion stimulus package. This money should not be wasted on special interests or unrelated social priorities.
In 2009, Congress passed the American Recovery and Reinvestment Act. The law called for approximately $550 billion in new spending. The money included an additional $144 billion in transfer payments to state governments to temporarily shore up potential shortfalls in public employee salaries and pensions. Another $86.8 billion was given to Medicaid. And $25.8 billion went to subsidize health care premiums for the unemployed.
Under the category of “education,” $53 billion went to prevent layoffs or salary reductions for teachers. $15.6 billion increased the size of Pell Grants. Some $13 billion was allocated, vaguely, to low-income public school children. And another $40 billion extended unemployment benefits and increased the amount received by $25 per week. In addition, $19.9 billion went to the Supplemental Nutrition Assistance Program (a.k.a. food stamps) and $14.2 billion was given as a bonus to people already receiving Social Security payments.
How much is $550 billion? Let’s consider some things that could be done with that much money.
The George H. W. Bush (“the Bush”), a Nimitz-class supercarrier, cost $6.2 billion to construct. It stretches 1,092 feet, can speed through the waves at 30 knots, and can operate 20 years without refueling her two nuclear reactors. The ship bristles with missiles and can hold up to 90 fixed-wing and helicopter flying craft. It has electronic warfare capability, sensor and processing systems, and makes a home for more than 3,000 sailors and airmen. The Bush is in the same class as the Nimitz, which was commissioned in 1975. The Nimitz is still in service. One can reasonably expect the taxpayers will receive 40 years of use out of the Bush.
In 2008, the European Organization for Nuclear Research (CERN) successfully fired the first protons in the Large Hadron Collider (LHC), the world’s largest and highest-energy particle accelerator. The facility required the excavation of 17 miles of tunnels and thousands of special magnets beneath the French and Swiss borders. It cost approximately $4.75 billion to build and it is capable of accelerating protons three meters per second slower than the speed of light. If nothing can travel faster than the speed of light, this modern marvel approaches the outer-bounds of theoretical physics and produces fantastic particle-smashing experiments that once could only be imagined. The experiments generated from this structure advanced science adding value to humankind for decades to come.
But we didn’t spend the 2008 stimulus on ships or scientific achievements. Nearly 12 years later, what do taxpayers have to show for this massive expenditure?
Unlike an aircraft carrier, a building, or a supercollider, these well-intentioned payments do not produce tangible, lasting, products. America could have built 80 aircraft carriers for the price of the stimulus. Society’s capacity to absorb well-intentioned transfer payments to the needy, elderly, poor, and unemployed is simply limitless. But our capacity to borrow or print money to pay for social benefits is not.
Years later, the vast surge in federal largess dissipated without significantly changing unemployment. Worse yet, the fiscal crisis of the states returned as soon as the stimulus ended. The poor, disabled, unemployed, and sick, remained more or less as they were without appreciable improvements in their numbers. What could we have built with that money? High-speed rail networks? A new space program? Modernization of the nuclear deterrent?
Ironically, had we demanded more value for the public for the money we spent, we also would have procured the meaningful and highly-compensated skills necessary to deliver this value. Instead, the only jobs needed to disperse the money were those of low-paid paper-pushing bureaucrats.
If you ask to see some tangible proof of the great tidal wave of stimulus money that washed ineffectually over our nation, what could you find? Nothing.
And that is all that remains of most of the $550 billion.
Building great public works is not anti-capitalist. “The third and last duty of the sovereign or commonwealth,” Adam Smith wrote, “is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain.”
When the government uses stimulus money to buy or build something it actually needs, it creates meaningful jobs and grows viable companies. Handouts, in contrast, increase dependency and slow economic recovery.