Read What the (Bleep) Just Happened? Online
Authors: Monica Crowley
Most Americans want to get back to what the Founders gifted to us: a limited federal government, restricted to certain enumerated powers, with all others reserved to the states, governed by fiscal responsibility and staying largely out of the way of the free market and the individuals operating in it. We want to awake from the Keynesian coma. After all, the fight over the size of government is really a fight about individual liberty and opportunity. And right now, liberty is losing.
Size matters.
In December 2010, a printing press problem forced the federal government to shut down the production of the new $100 bills and quarantine more than one billion of them—more than 10 percent of all existing cash—in a vault in Fort Worth, Texas. The new hundreds were apparently so Jetsons futuristic that the presses could not actually print them properly. Many of the bills creased, leaving a blank space, making them look like Monopoly money (which, after all of this printing, is probably worth more than our
actual
money). Because the correctly printed bills were mixed in with the flawed ones, all one billion bills needed to be sorted. The Treasury Department reported that if this were to be done by hand, it would take twenty to thirty years to complete. Imagine how many jobs could have been created over those two decades! Clearly Team Obama dropped the Keynesian ball on this one because they turned it over to an automated system that took just over a year to do it. The flawed bills, which cost us $120 million to print, were burned. The only way the leftists can deal with their insane deficits is by printing money, and their beloved government can’t even do that right.
If you are looking for a metaphor that sums up perfectly the Obama era, complete with its Lucy Ricardo Take-a-Bad-Situation-and-Make-It-Worse approach to the economic crisis, that one takes the cake. It’s too bad that those flawed bills had to be destroyed. They could have come in handy during Obama’s unprecedented spending blowout. U.S. dollars are growing increasingly worthless. The numbers associated with Obama’s spending orgy are so big as to be tragicomic. In 2000, the entire federal budget rang in at $1.8 trillion. Spending under Obama in fiscal 2011 hit a new high of $3.7 trillion, up $141 billion from 2010. That is an increase from the previous record in 2009 of $3.5 trillion. Obama has increased federal spending 30 percent above the normal modern level. During the sixty years prior to his presidency, spending averaged approximately 19 percent of gross domestic product. Under Obama, it has ballooned to nearly 25 percent, and that’s before the Mother of All Entitlements, ObamaCare, fully kicks in. Forty-three cents of every dollar the federal government spends is now borrowed.
The roughly $3.8 trillion in annual spending is made up of three categories: discretionary spending, mandatory spending for entitlements and welfare programs, and net interest on the debt. The three biggest budget monsters drive the mandatory spending: Social Security at an annual $727 billion, Medicare at $491 billion, and Medicaid at $275 billion. They eat up about 70 percent of total mandatory spending, 40 percent of the entire budget, 67 percent of tax revenue, and 10 percent of GDP. When other mandatory spending such as welfare, food stamps, unemployment insurance, child nutrition programs, and Supplemental Security Income are factored in, it amounts to 14 percent of GDP. Throw in the cost of Michelle Obama’s secret burger runs and the cases of Nicorette that Barry orders online and you’ve got yourself a serious fiscal crisis.
Since the beginning of Johnson’s Great Society War on Poverty, government has spent $15.9 trillion (in inflation-adjusted 2008 dollars) on these social welfare programs. By comparison, the cost of all military wars in U.S. history comes in at $6.4 trillion (in inflation-adjusted 2008 dollars). Despite the massive amounts of money already earmarked for them, Obama called for the largest increases in welfare-related programs in U.S. history.
In 2007, the year before the financial crisis, the government took in $2.568 trillion in revenues and spent $2.728 trillion, leaving a $160 billion deficit. In 2011, the government took in roughly $2.230 trillion and spent $3.629 trillion, leaving a deficit of $1.399 trillion.
The nearly trillion dollars in additional spending did not all come from entitlements, although spending there went up as well. Obama has increased
discretionary
spending by a whopping 84 percent. That discretionary spending would only be at 80 percent, but the extra 4 percent went toward a White House investment in Just for Men Touch of Gray, so the president can maintain the urbane Cornel West look that he so admires.
In the first few months of the Obama administration, he breezed the following big-ticket items through his compliant Democratic Congress: the $862 billion “stimulus”; $3 billion for Cash for Clunkers; hundreds of billions of dollars in additional omnibus spending and for bailouts of the financial, automobile, mortgage, and insurance industries; and even $12.1 billion in new funds for the Internal Revenue Service. He also proposed a $3.5 trillion initial budget. Not bad for a few months’ work.
As soon as he entered office, Obama instructed congressional Democrats to come up with a bill that would “stimulate” the economy and jump-start job creation. Left-wing economists such as the
New York Times
’s Paul Krugman and others argued for a massive Keynesian spending spree, and when the Democrats produced their nearly $1 trillion package, Krugman and other kooks argued that it was too small and wouldn’t have the desired economic impact. Go really big or go home, they said. As designed, the “stimulus” was meant to first buy off Democratic political constituencies, such as government-sector unions, by making transfer payments to state and local governments to prevent public-sector layoffs. If new jobs were created as well, then that would have been an added benefit. They proclaimed the “stimulus” an immediate spur for millions of “shovel-ready jobs,” but after most of the money had been dispersed, only 6 percent went for supposedly “shovel-ready” infrastructure. That guaranteed that Team Obama and the Democrats could constantly ask for more money for infrastructure, since so little of it was ever finding its way to those projects.
As economic writer John Crudele has repeatedly pointed out, if a project were truly “shovel-ready”—meaning, on the verge of hiring workers—it would have already been funded. So federal money from the “stimulus” would have only replaced funds already allocated by the states for projects. That means there would be no net gain in jobs, just a movement of money from state to federal budgets and vice versa—which is what happened, hence the lack of real job creation. What was always ironic about Obama’s claims of shovel-ready jobs was that the man pushing them looks like the most Unhandy-man with a toolbox in all of America. How can you be Mr. Fix-It when you’re really Mr. Break-It? If Obama were ever asked to
get
shovel-ready and actually dig a ditch, there’s a pretty good chance he’d have no idea on which end of the shovel the handle was located.
Before it passed in mid-February 2009 with no Republican votes in the House and just three GOP votes in the Senate, the then House Minority Leader John Boehner referred to the “stimulus” as a “trillion-dollar crap sandwich.” Even at that early date, the American people agreed. A Gallup poll published on February 3, 2009, showed that only 38 percent of Americans believed that Obama’s “stimulus” bill should be passed “as Obama proposed it,” while another 37 percent believed it should have undergone “major changes.” Seventeen percent believed the bill should have been “rejected outright.” A separate Associated Press–GfK poll in September 2009 showed that half of those surveyed said deficit reduction should be the priority over increased spending on health care, education, or alternative energy. Nearly six in ten Americans said they were not confident that the $862 billion “stimulus” would do any good.
Did Team Obama, Team Reid, and Team Pelosi listen to the clear wishes of the American people? No. They passed the Spending Bill That Ate Tokyo and wheeled out White House economics adviser Christina Romer to proclaim that their glorious spending achievement would keep unemployment at or below 8 percent. We were also promised $1.50 or even up to $3.00 of economic benefit from every $1.00 the government spent. This was supposed to be the “Keynesian multiplier” in full bloom. Never mind that for the government to spend $1.00, it needs to take that dollar out of the private economy that is supposed to create jobs. Furthermore, the leftists hamstrung the states by attaching all kinds of strings to the “stimulus” money, including what they could spend it on, what they were prohibited from cutting, and a requirement to keep “stimulus” projects going once the “stimulus” money ran out, which most cash-strapped states could not do. This was redistributionism with Corleone muscle.
The kooks also were wholly unembarrassed that their ginormous “stimulus” contained ludicrous porktastic spending items such as:
Mmmmm … bacon! Pass that Worcestershire!
The results of the “stimulus” were dismal; for each “job” it supposedly “created or saved,” it cost us $430,000. The “stimulus” was always meant to be a political act, not an economic one, which is why it was a mountain that produced a mouse.
But the kooks remained unembarrassed about the bill’s failure to generate any significant job creation or economic growth. In fact, the failures of “stimulus” grants reinforced that the entire exercise was an epic waste of taxpayer money. A “stimulus” grant of nearly $500,000 to grow trees in Nevada (thanks, Harry Reid!) created a whopping 1.72 jobs, according to the administration’s own website, Recovery.gov. According to the
Wall Street Journal
, that’s quadruple the cost of creating a job in a nonsubsidized private farm. Massachusetts-based Evergreen Solar got millions in “stimulus” cash in addition to $58 million in state aid, only to lay off eight hundred workers in March 2011 and file for bankruptcy. A Seattle-based “green energy” company used its $20 million in “stimulus” funds to create fourteen jobs, weatherize all of three homes to the tune of $6.66 million per home, and then declare bankruptcy. And let’s not forget the $75 million that went into genetic research to determine whether Kathy Griffin and Andy Dick are really the same person.
Perhaps the greatest example of Obama cronyism coupled with epic “stimulus” failure is Solyndra. Solyndra was a Fremont, California–based solar panels company that received a stunning $535 million in “stimulus” low-cost loans and loan guarantees from the Department of Energy. Two years later, in August 2011, it laid off 1,100 employees, declared bankruptcy, and was raided by the Federal Bureau of Investigation. How did a single company manage to get its hands on over a half billion dollars in taxpayer money? It turns out that one of Solyndra’s primary investors, Tulsa billionaire George Kaiser, was a key Obama backer, and he and other Solyndra board members and executives donated a total of $87,050 to his 2008 campaign. Kaiser made several visits to the White House and appeared at White House events with administration officials. Within ten days of Obama’s own Office of Management and Budget saying, “This deal is not ready for prime time”—echoing warnings from the Bush administration not to proceed with the massive infusion of taxpayer dough—Solyndra scored the loan.
Immediately after the loan went through, Biden appeared via satellite at the groundbreaking for a new Solyndra facility, and Obama touted it as being on the cutting edge of his vaunted “green jobs” agenda. As the scandal unfolded, the White House invoked executive privilege to avoid having to turn over some e-mails involving sensitive internal discussions about Solyndra, which one official referred to as a “(bleep) mess.” So much for Obama’s promise of see-through “transparency.” Perhaps once that official was done looking at the Solyndra debacle, he should have surveyed the entire Obama agenda and asked, “What the (bleep) just happened?”