The Final Version of Obama's Spending Bill

Well as many of you probably already know, the House and Senate have reached a compromise on Barack Obama's first major piece of legislation: his economic spending bill. Notice how I don't call this bill a stimulus. Although this bill may stimulate some economic areas, mostly the bureaucratic infrastructure of the federal government, it is truly a spending bill that will benefit the special interest groups that inevitably benefit from any type of Washington spending. The Wall Street Journal has a breakdown of the 1,073 page, $787 billion spending bill here. Just a couple of the many things that caught my eye: $6.3 billion in grants to state and local governments to increase "energy efficiency;" $20.0 billion in increased food stamp spending; $6.3 billion for "money for federal power marketing administrations in electric power transmission systems;" about $500 million to indian reservations (many native americans on these reservations don't pay taxes); $1.1 billion to compare the effectiveness of medicare, medicaid, and SCHIP; $6.4 billion for communities to upgrade waste water treatment (for an example of how the city Copley, Ohio will spend this money, see here); and $40.6 billion to states to help balance their budgets.

Regardless of what you think of the spending yourself, these expenditures can hardly be called "stimulus" spending. All that is going to occur is the size of government is sure to increase, and this money will be spent in inefficient ways, on parties chosen as the "winners of the grant" by the federal government. What gets me the most angry is even the most arduous supporters of government spending admit that most government programs are inefficient and an overall drain on the economy. Let me give you an oversimplified, but still telling, example.

One of the shows I watch on A&E is called "Parking Wars." The show sends camera crews on the road with Philadelphia Parking Authority meter maids, and films the scenes that occur at the PPA towing facility when people attempt to get their cars back after they have been towed. Now, the city of Philadelphia voted over 90% for Barack Obama in the last presidential election, and traditionally the city has been a Bastille for big spending, big government liberals (for a possible explanation for why Barack Obama received such a high percentage of the vote when democrats only account for about 75% of the city's registered voters, see here). So it is a safe assumption that most of the people on the show who are in trouble with the PPA are also supporters of Barack Obama, the democratic party, and big government. However, the reason the show is so hilarious is the amount of frustration people have when they are forced to deal with government employees. Most of the time the people become enraged when they learn the long bureaucratic process they have to go through, and the huge governmental fees they must pay to get their cars back after they have been towed. First, they show up at the impound lot. Then they learn that they have to go to traffic court before they get their car back. They then go to traffic court, plead guilty and pay their violations. Then they get back to the impound lot with the notice from traffic court allowing them to regain access to their car only to learn that they can't get it back because although the title is in their name, the car is registered in their wife's name. So they are forced to bring their wife down to the impound lot. Each time they return they are forced to wait from the back of the line, which could take several hours alone. And finally, just when they are about to get their car back, they have to pay towing and storage fees in excess of their actual violations. No doubt that various other governmental "fees" are included on the bill. And the whole time the scream about how they hate having to deal with city workers! And this is just one example of several similar scenarios that occur on the show on a routine basis. As you could guess, this cat and mouse game enrages everyone involved, government workers included, although no one seems to ask why the process needs to be so difficult.

Although this example is parking, I am sure that the bureaucratic experience is the same for many other governmental programs such as social security, medicare, and OSHA just to name a few. Privatization of such a process, where competition leads to driving costs close to those at the margin, would greatly increase the efficiency of such an experience, and lower costs overall. Now not all programs could be privatized overnight or even ever, but non-essential government functions surely could. I don't want to discuss the entire privatization issue here, but I simply want to point out that almost everyone is in agreement the government does not operate in an efficient manner. There is a tremendous dead weight loss due to administrative costs of government programs. Almost quarter of a billion dollars in the current stimulus is earmarked simply for spending oversight. Oversight alone. And that money is used to make sure that the stimulus money is used properly. It would not be used to try to increase the efficiency of government spending, just to make sure the right people in government get the money. Who are these people getting the actual big bucks in this stimulus you ask? Life long bureaucrats without no agenda other than making sure their agency looks important and that their own jobs are secure. Not to say there aren't people in these departments trying to spend the money wisely, but at the end of the day the only incentive for them while spending the money is to make sure that they will still have a job once the money is spent. Its just human nature. Until we realize that when government gets involved it only drives up costs, and theses costs hit the poorest americans harder than middle and upper class americans, we cannot as a country grow our economy at the greatest possible rate. But for now, we can all take solice in the fact that almost a trillion dollars, or about 6% of our total GDP, is going to be spent and only a small portion of Americans will actually see results. If you are one of the lucky ones who work for the government congrats on fooling everyone else out of their own money once again.