[L]ess than a month into his presidency, Obama has made a complete hash of economic policy, utterly squandering his mandate in a series of missteps that suggest he has not made the transition from campaigning to governing. This, even as Obama never stops reminding us in his constant televised appearances that the economy is slipping fast and time is of the essence.See also Chris Edwards at CATO and Conn Carroll and the Heritage Foundation.
The problems began with the inexplicable decision by the administration not to submit its own economic stimulus package, but instead delegate the job to Nancy Pelosi and the barons on the House Appropriations Committee. Appropriations is the reptilian brain of the political process. It is where all the back scratching, logrolling, and pork barreling gets done. Macroeconomic coherence is just not part of the skill set of House Appropriations members. So even rebuilding the nation's infrastructure got short shrift. Instead, the package was loaded with largesse for fellow politicians and civil service employees back home. The standard was not the proclaimed "shovel-ready" but "social-worker ready."
This package was marginally improved by the House Ways and Means Committee. Ways and Means gave money directly to workers as opposed to local politicians. It also ramped up the various medical spending conduits, which will push more money to health care providers--though not necessarily provide more health care. But there was no improvement in the tax system, which might, say, encourage job creation and retention by lowering the tax burden on employment or investing.
So the package the House produced was not "stimulus" in any normal understanding of the word. Of the $820 billion package that emerged from the House, only 20 percent would be spent in fiscal 2009 and only another 40 percent in 2010. That left 40 percent of the package to be spent in 2011 or later, when even the more pessimistic forecasters (of whom I am one) expect the economy to be in full recovery. This plan delivers the stimulus at precisely the wrong time.
(via reader Doug J.)