John McCain is on to something. No stimulus bill--that is, no "economic recovery" package at all--"is better" than President Obama's bill, McCain says. Sure, he'd prefer his own alternative. At $445 billion, it would cost roughly half Obama's bill. And Republican senators unanimously voted for it. But Democrats shot it down as if it were a trifle. What Obama wants is more spending. "That's the whole point!" the president blurted out last week in a moment of candor.
McCain's stand is significant in a way no other Republican senator's would be. He's not the run-of-the-mill Republican making a partisan point. He's hardly a Limbaugh dittohead. McCain is the Senate's most relentless seeker of bipartisan compromise. His colleagues feared he might seek the media's favor by going along with Obama.
But Obama left McCain and nearly every other Republican in Congress with only one option: Just say no. That's what Republican House members said when they voted unanimously against Obamanomics. And on its merits, the Obama bill cries out for rejection. It's dangerously expensive, crammed with pork, and bereft of credible economic incentives.
But, yes, there's political risk in opposing it. An economic recovery may begin later this year not because of the Obama bill but in spite of it. Obama would step forward shamelessly to claim credit. And you can imagine the Democratic attacks on Republicans for opposing aid for college students, emergency help for strapped homeowners, funds for medical research, and all the other non-stimulative stuff in the bill. Politics can be unfair.
I'm assuming Democrats won't embarrass Obama by failing to enact his first major piece of legislation when the final vote comes this week or next. Why would they balk? Like Obama, they adore spending. Never in the congressional careers of the current crop of Democrats has there been an opportunity for a spendfest like this. They will take full advantage.
For House Republicans, fearlessly opposing the Obama package turned out to be a feel-good vote. Their popularity increased (okay, only slightly) and their self-esteem soared for the first time in years. Republican senators should experience the same rush of exhilaration by voting no.
Two facts all but forced Republicans to adopt the zero option. Partisan zeal wasn't one of them. Republicans were ready to be pawns in a bipartisan game. But Obama's promise to bring the parties together played out in form (he courted Republicans) rather than substance (he declined to compromise). Republicans got nothing in the bill. That was fact number one. And after they objected to the cost of the House version ($819 billion, not counting the debt payments), the measure grew larger in the Senate. That was the second fact.
Democrats couldn't hide their self-consciousness about the excesses of their own bill. Supporters made few TV appearances to defend it and rarely talked about specific spending items. Obama sounded like Al Gore on global warming. The more the case for man-made warming falls apart, the more hysterical Gore gets about an imminent catastrophe. The more public support his bill loses, the more Obama embraces fear-mongering. "The failure to act, and act now," the president said last week, "will turn a crisis into a catastrophe."
Enacting the Obama bill won't help. Its tax cuts are minimal and consist mainly of cash payments, not incentives to invest. Yet cutting taxes has a history worth emulating. Harvard economist Robert Barro put it this way in an interview with the Atlantic:
It worked to expand GDP, for example, in '63 and '64 with the Kennedy/Johnson cuts. And then [with] Reagan twice in '81 and '83 and then in '86. And then the Bush 2003 tax cutting program. Those all worked in the sense of promoting economic growth in a short time frame.
Obama's most serious stab at stimulus is $30 billion or so for infrastructure. But it takes many months, even years, to get highway and bridge projects going. There just aren't many "shovel-ready" projects. The remainder of the bill is stimulative only if you believe that spending for spending's sake--spending on everything from "neighborhood stabilization activities" to livestock insurance--will stir the animal spirits now dormant in the economy.
Job creation? The problem is the jobs that might be generated by the bill don't match the jobs that have been lost. True, the $200 billion bailout of state governments might save jobs. But many states don't need a bailout. I talked to state treasurers from Indiana, Nebraska, and Mississippi last week. They said their states don't need the money. But they're likely to take it: approximately $6 billion for the three states.
A fair question is whether the economy actually requires stimulus. Large, across-the-board cuts would be nice--McCain wants to slash the corporate tax rate--but there's already plenty of stimulus in place. The drop in the price of gasoline is the equivalent of a massive tax cut geared toward the less wealthy. And the business cycle hasn't been repealed.
There's also the bank bailout. A second payment of $350 billion will soon be distributed with many billions more to follow. Nor is the Federal Reserve, having reduced interest rates to near zero, sitting on its hands. The Fed is buying up tens of billions in government-guaranteed mortgage securities and Treasury bonds and increasing the money supply.
Republicans understand the recession causes pain they must deal with. Extending unemployment benefits is necessary with the jobless rate rising to 7.6 percent. For those who lose their health insurance along with their job, a bonus benefit could be added to pay at least for catastrophic insurance. All this can be done for tens of billions, not the many hundreds demanded by Obama and Democrats.
Voting against the Obama tide was easy for conservative Republicans. But consider McCain's situation. By endorsing the Obama bill, he'd assure himself a prominent spot at the White House signing ceremony. The media would lovebomb him and declare the old straight-talking maverick alive and well. That's a lot to give up. But it can't match the joy of doing the right thing.
Fred Barnes is executive editor of THE WEEKLY STANDARD.