"Common Sense on Spending" - Opinion Editorial by Ranking Member Lewis

Apr 12, 2011
Press Release

The following op-ed by Ranking Member Lewis ran today in the Washington Times:

LEWIS: Common sense on spending



America's economic crisis continues, and there is an immediate need for Congress to produce a strong and definitive plan to help weather this financial storm.

In reviewing the Pelosi-Obey stimulus proposal released last week, I was struck (along with many others) by the sheer magnitude of the numbers before us. Just the size of this bill, some $825 billion, raises serious concerns. Without a clear assurance of how, why and if this proposal will create jobs and promote economic recovery, Congress cannot simply write an $825 billion blank check at taxpayer expense. We should demand that there be some clear, unequivocal assurance of the desired outcomes, in the form of a revitalized economy.

Unfortunately, the evidence from past attempts at stimulating the economy through government spending does not lead to this needed measure of certainty.

In part, this is a debate over how, not how much is needed, to stimulate the economy. This bill represents the theory that the economy can be boosted if the government borrows money and then gives it to people so they will spend it. This supposedly "primes the pump" as the money circulates through the economy. The theory sounds good, and it would be nice if it made sense, but it has a glaring logical fallacy. It overlooks the fact that, in the real world, government can't inject money into the economy without first taking money out of the economy.

More specifically, the Pelosi-Obey stimulus proposal only looks at half of the equation - the part where government puts money in the economy's right pocket. But we must also ask where the government gets that money? Ironically, the answer is that it borrows it out of the economy's left pocket. This scheme doesn't boost national income, it merely redistributes it. The pie is sliced differently, but it's not any bigger.

Previous attempts to use this redistribution strategy did not work. Both President Herbert Hoover and President Franklin D. Roosevelt dramatically increased spending, and neither showed any aversion to running up big deficits, yet the economy was terrible all through the 1930s. Stimulus schemes also were tried by President Gerald Ford and President George W. Bush and had no impact on the economy.

And over the 1990s, Japan engaged in massive, multiple stimulus efforts and saw its economy remain stagnant and its per capital income go from the world's second-highest to the tenth-highest.

To be fair, the failure of stimulus spending to boost growth may not necessarily mean government spending does not create jobs. Moreover, the argument that government can create jobs is not unique to "stimulus" bills and is often a significant component to other types of legislation.

Nevertheless, no matter how the issue is analyzed, the more relevant question is how the government might destroy jobs.

For example, if the government decides to build a bridge, it is very easy to see the workers who are employed on that project. But what is less obvious is how many of those workers have been taken from jobs in the private sector, and thus are no longer available for other, perhaps better and more "stimulative," uses.

Based on the Pelosi-Obey jobs claims, this bill will spend a shocking $275,000 for each new job created (assuming they actually materialize). Even worse, this calculation is only a partial measure of cost. In reality, the cost of each government-sponsored job should reflect how the market would have spent the $275,000 if the government had never got its hands on it in the first place. It is more than likely the private sector could have created more than one job for $275,000 - especially considering the average U.S. household income is around $45,000.

Finally, we must not forget that this massive government spending doesn't come out of thin air and we run the perilous risk of leaving a terrible fiscal legacy for future generations. This comes at a time when we are already staring down a trillion-dollar deficit. Based on Congressional Budget Office (CBO) recent figures, by 2019 we will have to spend $750 billion per year just on interest alone on debt that has accumulated - and this does not include the addition of $825 billion in new "stimulus" spending.

I fully understand that prompt action is needed, but there are more than enough reasons for caution on this "stimulus" legislation. While there may be a few folks who think a big increase in the burden of government somehow is a recipe for job creation, the facts show they may be missing the mark.

In order to make the best possible decisions regarding economic stimulus legislation, we must ask ourselves some common sense questions. Are the programs in this bill really stimulative? Do they create jobs, (and how many and for how long)? Are they worth the cost? Are these one-time costs, or we committing our nation to years and years of heightened government spending? And are these things that must be done immediately, or could they be done more effectively and efficiently with more deliberation and study?

If Congress fails to ask these questions, protect the interest of the taxpayer and remember our economic history, and exercise common sense, we will find ourselves in worse economic shape than we are today. An $825 billion free-for-all based on flawed policy will not be our rescue - it will shackle our country to continued economic decline and a perilous national financial future.

Jerry Lewis of California is the ranking Republican member of the U.S. House of Representatives' Appropriations Committee.

















112th Congress