Saturday, August 7, 2010

WaPo Disguises an Editorial for a Democrat for Congress as Reporting on the "Stimulus" While Showing Itself out of Touch

The Washington Post has a revealing article out titled Democrats get little boost from stimulus. Taken literally, the title suggests that they in fact got a boost from ARRA (the "stimulus" program); but I'm not sure that's true. It may in fact be that they got no boost or a negative boost. The article helps explain why. Here are some quotes from it in italics and commentary from me. The article also serves as unpaid advertising for the Democrat running against Mr. Ganley. Here's the beginning:

Republican House candidate Tom Ganley sold more than 800 cars last summer through the "Cash for Clunkers" government rebate program. But does Uncle Sam get a thank you?

"Let's talk about Cash for Clunkers," the voluble millionaire, who owns the largest auto dealership group in Ohio, told a group of voters here recently. "It created a 30-day surge in auto sales. After it ended, there was no business. It was like the faucet was shut off."
. . .

"I'm against government intervention of any kind," Ganley asserts.

Based on the last quote, maybe Ganley should be Car Czar! (But wait, he and I oppose Car Czardom; and there's a rub . . .)

Just what was the point of Cash/Clunkers, other than to raise the price of used cars by taking "clunkers" off the market? Why not let the market determine the relative value of "gas-guzzlers"? A simpler intervention would have been to have raised the gasoline tax and/or subsidize the price of fuel-efficient cars. A year later, are we glad that the Feds "stimulated"? Are you into jolts of amphetamine and then withdrawal from said jolts?

The stimulus "creates work and not jobs," Ganley told the gathering of voters. "That may sound like a contradiction, but as we drove out here today there were all the orange barrels out on the highway, and all this work was being done with money from the stimulus. But as soon as that road's finished, the work's gone."

Ganley sounds like an Austrian! Sometimes government stumbles upon spending that actually has a good return on investment, but in general I believe that Christina Romer performed valuable research prior to joining Team Obama demonstrating that the multiplier effect of government spending is less than unity. Work, not sustainable jobs: good line.

The centerpiece of the stimulus effort, the $787 billion American Recovery and Reinvestment Act approved in February 2009, included a sprawling array of policy initiatives. Obama got to deliver on campaign promises to invest in alternative energy and advance high-speed rail development. Liberals got their funding for Head Start and community food banks, and centrists got middle-class tax breaks. . .

It proved difficult to keep track of all that spending, and the White House and Democratic leaders had a hard time showing how it was contributing to the recovery.

"The branding and marketing was done very poorly," said Alan Blinder, a Princeton University economist who supported the stimulus. "When you spend that much money, there should be more recognition."

Starting backwards, Dr. Blinder makes little sense. Branding and marketing? Recognition? As if the administration didn't tout this program enough?

Moving upwards, the statement that "it proved difficult to keep track of all that spending" is anodyne. I think of Iraq War unaccountable spending and the current billions of cash U. S. dollars that now flow yearly out of Kabul airport to the Middle East; and I think of the failure of the allegedly anti-corruption Democratic Congress to investigate the apparent massive Iraq War contractor abuses. Dogs that don't bark when they should have alerted detectives over the years to otherwise unsolvable solutions to crimes.

What I suspect happened was that the ECRI's Long Leading Indicators turned up in December 2008. By January 2009 or thereabouts, I recall reading that the leaders of Big Finance had their swagger back. So I think that Team Obama knew that the Great Recession was winding down, and that they could accomplish social, political and economic objectives by passing a pork-laden program, claiming that it was averting a Depression, and sweep to a successful midterm election on the heels of this great victory over threatened economic death.

Only it didn't happen that way. Thus this article, which is preparing the Party faithful for a weak showing in November.

The pork had a large corporate component:

The list includes $400 million to replace the decrepit Inner Belt Bridge in suburban Cleveland and $25 million to expand a BASF Catalysts lithium-ion battery plant in Elyria. . .

A year ago, Akron-based First Energy Service Co. applied for a $36 million U.S. Department of Energy grant to install 5,000 high-tech meters in Cleveland area homes, a project that would turn the region into a test market for "smart grid" technology aimed at reducing energy consumption.

Energy was one of Obama's stimulus priorities. With plans to eventually reach 44,000 households, the company could wind up creating an estimated 1,200 jobs in installation services, infrastructure upgrades and meter manufacturing.

A year later, the project has yet to get underway. First Energy's application was approved in late October, but Ohio hasn't come through with $36 million in matching funds. "There is a lot that goes into preparing something like this before the first dollar is spent or the customer sees any effect," First Energy spokeswoman Ellen Raines said.

BASF is a gigantic German conglomerate. Why are Americans borrowing from Chinese to subsidize BASF? And FirstEnergy (FE stock symbol)? It only reported after-tax profits of almost a billion dollars last year.

This is outrageous stuff, and the Post runs it as if it were completely normal that our government, deep in debt, is going deeper in debt to aid massive companies.

Finally, let me remind you that the article begins with the fact Mr. Ganley is running for Congress this year as a Republican. In case there is any doubt as to who the Post is plumping for, the article ends, out of the blue, with a quote from an auto dealer competitor of Ganley calling him "duplicitous". And, referring to Cash for Clunkers, the competitor's quote ends the article as follows:

"This program woke up the market. It was an unqualified success."

Right. And I've got a great deal on a used car for you. And maybe a used bridge.

And to end in the middle of the article, how "clue-ful" is the reporter and editor who apparently with a straight face stuck this plaintive sentence in?

How can nearly $1 trillion flush through the U.S. economy, with tangible results, and still leave voters dubious?

Here's my answer. Firstly, this was a 3-year program or longer, so much less than $1 Trillion was spent. Secondly, I see no tangible results. Viz., FirstEnergy, above. And I live in heavily "blue" districts that should have been high on Obama's help-out list. Third, people "get" that there's no free lunch. Third, Americans are probably more perceptive than the writer of that question.

Unfortunately, they also "get" that the "outs" in November are the same guys they got disgusted with in 2006, and who offer nothing new.

So the national mood remains sour, and the well-fed survivors at the Post and the ever-more powerful and ever-more numerous political class in Washington just can't see why the helpees out there in the real world don't feel the love their master-helpers have for them.

Often out of touch, but never out of power; that's our permanent Establishment.

Copyright (C) Long Lake LLC 2010

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