The MGH Report

Michael G. Haran, Proprietor


Posted by on Feb 26, 2009

Most of the time legislative “pork,” the process of lawmaker funneling taxpayer dollars to pet projects back home, is looked upon as not a good thing. But with the country teetering on the biggest meltdown since 1929 it is critical that Congress use all of its political skills to implement the stimulus package. Some times bad is good.

Now that the legislators are through beating their chest as to who’s the biggest stimulus pork cutter in Congress and the bill has passed, you just watch those same politicians fight to get their hands on that money.

In 2007, congress overhauled the ethics rules requiring lawmakers to disclose, for the first time, their earmarks – taxpayer dollars that are doled out as favors. But being the good politicians that they are, and since the scandals had died-down, they managed to exploit loopholes in the rules or just ignored them altogether.

The 2008 defense bill contained $8.5 billion in earmarks of which $3.5 billion were hidden. The amounts, which were cut by about 25%, still accounted for 2,043 earmarks. Give a politician a bill and they’ll earmark it. The 2009 $410 billion omnibus spending bill has approximately 9,000 earmarks totaling about $5 billion.

Independent Senator Joe Lieberman and Democratic Senators Christopher Dodd and Jack Reed all took credit for a new submarine that will be built by General Dynamics in Groton, Connecticut. The military never asked for the $588 million project which was the largest earmark in the defense bill.

This congressional cat and mouse game of “button, button who’s got the button” is as old as politics. It’s kind of crazy since everybody knows what’s going on but it’s really what they were elected for – to bring home the bacon. But at this time the whole nation is now every congressman’s “home” district. Regardless of where they are located the stimulus money has to go first to where home forecloses are the worst and the unemployment rates the highest. Places like Fort Meyer, Fla., Sacramento, Ca. and Elkhorn, Ind.

Now a teapot museum in Sparta, North Carolina isn’t exactly a big job creator but, as an example, the Ketchikan, Alaska “Bridge to Nowhere” could be. The “Bridge” project would create immediate jobs and it would stimulate the private sector. But it would have to be disqualified because there are other areas in the nation where foreclosures and unemployment are more critical and because the project would fail to create long term growth.

This money should go into projects that will create not only primary jobs but also private sector ancillary and tertiary jobs. The more jobs created the more taxes are generated which will go toward repaying this massive debt. Because of the size of our economy (say $13 trillion) at full employment we should be able to grow out of this mess.

Infrastructure is the quickest way to get people to work and revive retail trade. Labor is that sector of our society which will spend their paychecks because they can’t afford to save. There are over 3,000 infrastructure projects permit ready and they only need the money to get started. Congress should focus on those projects that can create three to five secondary jobs for every direct job created by a stimulus project.

The WWII stimulation of the private sector is what finally ended the Great Depression. This time around “Green Technology” should be our WW. The jobs that create not only immediate stimulus but also lead to long term economic growth should take priority. We should get a “and that’s not all” for our buck.

In Ithaca, N.Y., Connect Ithaca is trying to make this college town the first podcar community in the U.S. These driverless, electric, lightweight vehicles ride on their own networks separate from other traffic. A rider enters a destination on a computer pad and a car would take the person nonstop to the location. They reduce the use of fossil fuels, reduce traffic congestion and free up space now used by parking.

How about putting those metal strips in all new roads. These “smart” strips can communicate with the future generation of cars for such things as traffic, weather and alert information. If someone falls asleep on their way home wouldn’t it be wonderful if that person woke up in their garage rather than wrapped around a tree?

And isn’t it about time we built a water pipeline delivery system that will crisis-cross the country? The Great Lakes hold the world’s largest body of fresh water. It looks like climate changes are going to cause wider swings in drought/rain whether cycles so why not build a water infrastructure that could take the flood waters from the Midwest to the water starved areas in the West and Southeast. We could utilize the oil and gas pipeline right-a-ways that are already in place. It could be today’s federal highway system of the 1950’s.

And what ever happened to putting a solar panel on every flat roof commercial building in America?

A $588 million submarine project is not a bad deal as long as it creates a slew of ancillary jobs. Building some thing that the military actually needs would be nice but now we don’t need nice – we need jobs. No nice; no back scratching; nothing hidden just get he job done!

Is it the stimulus package big enough? Who knows – if not, we can always add to it later. Will it work? Who knows – the Great Depression bailout didn’t work until FDR started guaranteeing consumer credit at department stores which, by the way, started the old lay-away plans that caused a boom in the sale of home appliances. But don’t bet against the American businessperson. Give them an opportunity to make money and make it they will.

Our continuing credit stagnation is because we are still in a deflationary cycle. The stimulus is meant to artificially bottom out this cycle by jolting the private sector to life. So the money should be shoved down the economy’s throat as quickly as possible. And who best to do this? Why the only segment of our government experienced in this sort of thing – the U.S. Congress, of course. Oink!

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