The dubious economics of the Obama plan.

• Author: Weidenbaum, Murray
• Position: National Affairs - Barack Obama

PRES. BARACK OBAMA'S economic initiative contains a significant army of positive features, along with a surprising amount of negative aspects. It is helpful to begin by putting the program in context. The Administration's economic stimulus package will succeed in spending an unprecedented amount of money. The Federal deficit will reach an all-time high, as will the public debt. The Federal government will become more involved in the business of the private sector--and of state and local governments--than at any time since World War II. This unusual flurry of public sector activity, on balance, is likely to have a positive effect on the overall level of the American economy in the short run, although not for the long term.

Anyone who has the tenacity to go through H.R. 1 (the American Recovery and Reinvestment Act of 2009) in detail, section by section, will find many attractive-sounding items in it. Aid to education, health, science and technology, infrastructure, and the unemployed all are included, as are many other items. Far more striking, however, is what seems to have been lacking in the preparation of that massive document--any attempt to establish priorities among the host of disparate spending categories.

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Although the legislation popularly is referred to as an economic stimulus program, it is useful to note that the Congressional Budget Office expects more of the money to be spent in 2011 and 2012 than in 2009. That is not surprising to anyone who has attempted to analyze the contents of the recently-passed law. Everything seems to be equally important: establishing new long-term disease prevention programs as well as expanding direct aid to the unemployed; fundamentally restructuring the domestic production of energy and alleviating the current cash drain on states and localities; responding to the long-term trend of global warming and moving ahead on "shovel ready" construction projects. Although manufacturing has been the hardest hit part of the real economy, far more money is devoted directly to fisheries.

In the accompanying verbiage, much is made of the need to rebuild the infrastructure of the nation. Yet, the list starts off with repair and maintenance funds for the Washington, D.C., headquarters of the Department of Agriculture. There is no need to pick on the USDA, just because it is listed first in alphabetical order. Repair and maintenance projects for many other government structures in the nation's capital are included in the stimulus bill, although the Washington, D.C., area is not a place of especially high unemployment.

I will spare readers any further recital of the supposed high-priority projects in the Administration's stimulus bill, although the temptation is strong. For instance, it takes approximately 55 pages to spell out the detailed conditions for spending the money assigned to medical information technology.

So much of the wasted opportunity to use the $787,000,000,000 in the new law in a constructive manner arises from an unnoticed, but key, Administrative decision made by the Obama White House. In an unusual burst of professional modesty, they delegated the task of developing the specifics of the massive stimulus bill to Congress. The responsibility wound up with the Committee on Appropriations of the House of Representatives. Those of us who have had the opportunity to meet with the members of this committee learn quickly that it is a powerful and very knowledgeable group. They and their staffs really know a great deal about the individual programs...