Any regular reader of this blog knows that I have been critical of the “stimulus” legislation and the government response to the current recession, which has featured lots of spending. In the interests of being even-handed about it, attached is an op-ed piece in today’s Philadelphia Inquirer from the chief economist of Moody’s Analytics that defends the stimulus bill and other actions taken by the federal government.
I’ll let readers judge for themselves, but I don’t find the defense especially convincing. It seems to be short on objective proof, and long on the notion that if nothing had been done things would be worse than they are. That argument is tantalizing because it is impossible to prove or disprove.
What we do know is this: when the stimulus legislation was passed, we were told that it would keep unemployment below a certain level, and it didn’t. We know that much of the money went to keep government workers employed, and in some instances to give them raises. We know that the “jobs created and saved” statistics cited in defense of the stimulus legislation often were phony and unreliable. And we know that the stimulus legislation, and the other federal bailouts that have occurred, have added enormous sums to our federal debt — sums that will burden our economy for decades to come. In the face of such hard realities, the argument that things would have been worse without the stimulus bill seems very thin, indeed.
The New York Times recently ran a good article on GM’s blatant shell game in claiming that it had “repaid” “in full, with interest” the loan it received from the federal Troubled Asset Relief Program. GM ran a TV ad boasting of the loan “repayment,” and Treasury Secretary Tim Geithner also touted GM’s “repayment” as indicating that the company “is on a strong path to viability.”
As the Times article notes, it turns out that the “repayment” was a sham, because GM used money from a taxpayer-financed escrow account to repay the TARP loan. Check out the protestations from GM and the Treasury Department that their statements about the “repayment” have not been misleading — particularly the statement of a “senior adviser” to Geithner, who says: “We have never not been clear about exactly what we paid, exactly the terms of the investment. I’m finding it hard to find anyone obfuscating about this.” Double negative aside, only a federal bureaucrat would claim not to see something misleading about bragging about “repayment” of a loan from the federal government without disclosing that taxpayer funds also were used to make the “repayment.”
Of course, a key remaining question is whether taxpayers paid for the deceptive GM commercial touting the phony loan “repayment.” Since GM seems to be largely propped up by tax dollars, the answer is probably “yes” — which is itself infuriating.
This article reports on the idea of having a “Pay Czar” to oversee executive compensation at entities that have accepted TARP funds. (The proposed czar in this instance, Kenneth Feinberg, was one of my professors at Georgetown University Law Center.) So far, President Obama has designated a number of “czars,” special envoys, and other non-confirmed officials to exercise extraordinary Executive Branch powers. I don’t know how many czars the President has designated — it seems like a lot, which is why I can hear Carl Sagan of the Cosmos TV show era speaking of “billions and billions of czars” — but what is significant is that identifying people to act as “czars” skirts the confirmation mechanism that applies to other powerful Executive Branch officials. If the President can routinely appoint officials who do not need to be confirmed by the Senate but who can nevertheless exercise wide-ranging powers, some of the essential “checks and balances” that are part of the constitutional process are lost. The President is popular right now, and the same party controls the White House and Congress. How would Congress feel if an unpopular President of another party were designating non-confirmed “czars” to exercise sweeping authority?
Another fundamental issue, of course, is why we need to designate (and pay) special individuals to oversee these programs. Is the Treasury Department really so busy that there is no Assistant Secretary who can be held responsible for enforcing executive pay regulations as they apply to TARP fund recipients?