True Cost of the So-Called “Stimulus” Bill
By Paul Ryan
Representing Wisconsin’s 1st Congressional District
February 13, 2009 7:49 am
With Congress poised to vote on the so-called “stimulus” bill today, it is worth noting more precisely what it is we are voting on. As a result of budget gimmicks and hidden costs, Congressional leaders successfully produced headlines across the nation claiming that this bill weighs in at only $790 billion. While it is a sad state of affairs in Washington that the word “only” precedes a figure of that magnitude, even more worrisome is that the true costs will be far greater – in both its final price tag and its painful consequences.
In addition to shutting out Republican input, Congressional leaders have also sought to hush up the dirty little secret of this spending package’s true cost. Prior to the House of Representatives first passing the $820 billion package two weeks ago, I asked the Congressional Budget Office (CBO) how much it would cost to finance the new debt we’d incur should H.R. 1 become law. According to CBO Director Douglas Elmendorf, the additional interest costs would add $347 billion to the total cost of the bill, putting the tab at above $1.2 trillion. This amounts to over $10,000 per American family.
The more alarming hidden costs take the form of artificial funding cliffs: temporary spending increases that lead to abrupt, and sharp, spending reductions after 2 years. These programs include health care benefits for the unemployed, early childhood education, nutrition programs for seniors, and funding for state and local law enforcement agencies. Due to immense pressure that will mount to maintain the funding levels in these programs, the reductions are highly unlikely to occur. As Milton Friedman presciently lamented, “Nothing is so permanent as a temporary government program.”
If these programs are extended as expected, CBO Director Elmendorf estimates that the total additional budgetary impact of H.R. 1 will be $1.7 trillion above the $820 billion sticker price. The CBO goes further to add that the additional interest costs on the new debt would amount to an additional $745 billion. When we strip away the budget gimmicks and funding cliffs, this is a $3.27 trillion bill! This amounts to roughly $30,000 per American family.
The urgency of our deepening recession requires a better path forward. I share President Obama’s concerns with the consequences of inaction, but he is selling the false choice of his three trillion dollar bill or nothing. After my amendments to improve the package were rejected, I worked with my fellow House Republicans in drafting an alternative economic recovery package – focused on extra assistance for those hit hardest, responsible infrastructure investments, and fast-acting tax policy that provides job-creating incentives – not one-time rebate checks – for small businesses, entrepreneurs, and working families. This alternative was voted down by the Congressional Majority, and I acknowledge that the party in power can legislate as they choose. But what they can’t choose is their own sets of numbers and their own sets of facts. The fact is that this legislation will cost hard-working Wisconsinites far more than they’re being told.
For more on H.R. 1’s funding cliffs:
To read CBO Director Elmendorf’s letter specifying these hidden costs: http://www.house.gov/budget_republicans/press/2007/pr20090212cbo.pdf