On Saturday, President-elect Obama announced a public-works spending plan he claims will help the economy. But his nominee for Director of the Office of Management and Budget, Peter Orszag, apparently disagrees with Obama’s plan.
In January, when Orszag was the head of the Congressional Budget office, he presided over a report titled Options for Responding to Short-Term Economic Weakness. One of the options the CBO addresses in the report is using large public works projects to stimulate the economy. Orszag’s CBO calls these “totally impractical.” The report states:
Some of the candidates for public works, such as grant-funded initiatives to develop alternative energy sources, are totally impractical for countercyclical policy, regardless of whatever other merits they may have. In general, many if not most of these projects could end up making the economic situation worse because they would stimulate the economy at the time that expansion was already well under way. [emphasis added]
According to Orszag’s CBO, even if you accept the proposition that government spending stimulates the economy, there is a long lag time between conceiving an idea and real action. The CBO report merely acknowledges that the Federal government is not nimble and takes a lot of time to move forward, frequently making the situation worse.
President Obama’s spending plan will do more harm than good. Instead of spending the public’s dollars just for the sake of spending, the Federal government should spend money on projects that make economic sense. The Federal government should budget like any family or successful business and make investments in energy efficiency when they make sense, not merely to spend money.
The Federal government has a ready-made stimulus package that will create real jobs and not cost the taxpayers a dime—increased access to America’s domestic energy resources. The Federal government can bring in billions of dollars of revenue and American companies will create real jobs—not just make-work jobs envisioned by the President-elect.