The three Republican senators who struck a deal with the Democrats are touting the Senate’s stimulus bill as a bipartisan compromise. In yesterday’s Washington Post, Sen. Arlen Specter even labeled the $838 billion package cobbled together late last week the "moderates’ compromise."
But the surrender of three liberal Republicans does not make a bill a compromise. Dig into the details of the Senate bill, and it’s obvious that this isn’t a compromise but a capitulation.
Sens. Specter, Collins, and Snowe tout the spending cuts they were able to wrangle from the Democrats, but they neglect to mention all the additional spending that has been added over the past week through amendments. The ink on the House bill was not yet dry when Senator Specter himself introduced an amendment to add $6 billion in spending for the National Institutes of Health. The bill is stuffed with pork projects and spending programs that don’t even pretend to be about economic growth. One has to wonder how the "moderates" can defend $1.5 billion for carbon-capture projects, $1.3 billion for NASA, and $75 million for the Smithsonian Institution, among many other earmarks, as "stimulus." In the end, the so-called compromise bill actually costs $18.7 billion more than the bill passed by the House.
And while the moderates croon about the bill’s tax cuts, very few of those cuts are pro-growth measures that will encourage Americans to invest and produce. In fact, some are only refundable tax credits—meaning checks issued to people who don’t pay federal income taxes. There is a more accurate term for this kind of tax cut: spending.
Thanks to Specter, Collins, and Snowe, the Republican party lost the opportunity to pass a true compromise bill that would have encouraged economic growth. By unanimously voting against the stimulus bill, House Republicans empowered Senate Republicans to demand substantive, pro-growth amendments. After all, without 60 votes in the Senate, President Obama would not have been able to pass any bill, good or bad.
If Senate Republicans had united as their counterparts in the House did, President Obama would have had no choice but to include Republican proposals to cut income-tax rates, along with taxes on businesses and investment. These measures would have encouraged workers to be more productive, freed American businesses currently laboring under one of the highest corporate-tax rates in the world, and encouraged investors to support our ailing financial markets.
To be sure, Republicans would have been forced to accept a large dose of spending, but Democrats would have been similarly forced to accept tax cuts they refused to include in the current bill. That is what a real bipartisan compromise would have looked like—not this $800 billion–plus spending spree that tosses a couple of crumbs to Specter, Collins, and Snowe.
The Senate’s compromise bill is as fundamentally flawed as the original version. While its supporters claim it will create millions of jobs, they neglect to mention all the jobs it will destroy. The money for the bill has to come from somewhere—and that will be straight out of the private sector, where it could have been invested far more efficiently and productively, creating jobs in the process. The subsidies for "green jobs" will, perversely, end up destroying jobs as the country is forced to waste money producing overpriced, inefficient energy.
Whether we are talking about the original House bill, the original Senate bill, or the so-called compromise bill, the stimulus is based on the backward and discredited idea that the country can spend itself out of a recession. It didn’t work for the United States during the Great Depression, it didn’t work for Japan during the 1990s, and it won’t work now.
President Obama’s own economists admit that many of the programs in the bill will do little to stimulate the economy, and his chief of staff, Rahm Emanuel, confessed that Democrats are using the stimulus to check off their Christmas shopping list. "You never want a serious crisis to go to waste," Emanuel said. "And what I mean by that is an opportunity to do things you think you could not do before." Even the Democrat-controlled Congressional Budget Office predicts the stimulus bill will actually hurt the U.S. economy in the long run. According to the CBO, the massive amount of new debt will crowd out private investment in the future and hamper economic growth.
Senator Specter cites John F. Kennedy, who said: "In politics, nobody gets everything, nobody gets nothing, and everybody gets something." In this case, the Democrats get almost everything, and the American taxpayers get to look forward to generations of debt. We have three "moderate" Republicans to thank for that crowning achievement. Let’s remember who they are.
—Pat Toomey is the president of the Club for Growth.