Among other intelligent questions Alan Reynolds asks below why over half of the almost $900 billion “stimulus” package is going to be spent on the parts of the economy where unemployment is lowest, where jobs are fewest, and, worst of all, years down the road where there will be no immediate impact to the economy (i.e., the very point of stimulus). Less than 12 cents of every dollar spent could be considered stimulating the economy.

The answer is obvious: Democrats aren’t attempting to stimulate the economy, they’re attempting social engineering. Here’s more from the Wall Street Journal:

There’s $1 billion for Amtrak, the federal railroad that hasn’t turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There’s even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

In selling the plan, President Obama has said this bill will make “dramatic investments to revive our flagging economy.” Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There’s another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren’t likely to help the economy immediately. As Peter Orszag, the President’s new budget director, told Congress a year ago, “even those [public works] that are ‘on the shelf’ generally cannot be undertaken quickly enough to provide timely stimulus to the economy.”

Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?

Here’s another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?

Here’s Alan Reynolds:

House Democrats propose to spend $550 billion of their two-year, $825 billion “stimulus bill” (the rest of it being tax cuts). Most of the spending is unlikely to be timely or temporary. Strangely, most of it is targeted toward sectors of the economy where unemployment is the lowest.

The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in the bill would go to state and local governments. Another 17.3% would go to health and education — sectors where relatively secure government jobs are also prevalent.

If the intent of the plan is to alleviate unemployment, why spend over half of the money on sectors where unemployment is lowest? … Spending $214.5 billion to create or save 330,400 government jobs implies that taxpayers are being asked to spend $646,214 per job.

Does that make sense?

It’s not redistributed wealth strategies that will save our economy. It’s having a smarter economy would save our economy.l

Under the current system, U.S. corporations are charged 35 cents for each foreign-earned dollar they bring back home to the U.S. If they keep that income overseas, it is taxed at lower rates. As a result, those dollars tend to stay overseas permanently, since companies know they will automatically lose more money by bringing that income home than they can reasonably expect to make by reinvesting it once it is here.

– Allen Sinai, chief global economist, strategist and president of Decision Economics.

From Mark Steyn’s “12 Zeros” (National Review). I just love the “garage business” observation. How true!

Barry Ritholtz, author of the forthcoming book Bailout Nation, calculated — gosh, was it only six weeks ago? — that the tab for the bailout by November 24 was already $4.6165 trillion, which looks much more convincing because it’s big but not round…The media coo over Obama’s “new New Deal,” but, as Mr. Ritholtz pointed out, if you adjust for inflation, the combined costs of the old New Deal plus the Louisiana Purchase, the Marshall Plan, the Korean, Vietnam, and Iraq wars, and every NASA project in history — oh, and the S&L crisis — add up to a mere $3.92 trillion. Even as he was totting up his numbers, the Bloomberg news service estimated that, factoring in Citibank and a couple of other Johnny-come-latelies, the bailout bill was in fact up to $7.76 trillion — which is the combined cost of all that other stuff (Louisiana Purchase, etc.) plus the $3.6 trillion of the Second World War.

… “The administration’s number-one goal,” said the new president, “is to create 3 million new jobs, more than 80 percent of them in the private sector.” And that sounds kind of impressive — unless, that is, you’re one of those capitalism-red-in-tooth-and-claw types who wonder what kind of functioning polity is so structurally decayed that it’s supposed to be good news that a mere 20 percent of new jobs will be government work. Are 600,000 new government workers really necessary to stimulate the U.S. economy? And, come to that, will a $3,000 tax credit really persuade a private company to take on a new employee it wouldn’t otherwise have hired, or will the bulk of the dough just go to companies that would have hired the extra workers anyway?

… If they were trying to build the transcontinental railroad now, they’d be spending the first three decades on the environmental-impact study and hammering in the golden spike to celebrate the point at which the feasibility commission’s expansion up from the fifth floor met the zoning board’s expansion down from the twelfth floor. If 9/11 was (as they used to say) “the day everything changed,” that seven-year hole in the ground in the heart of Lower Manhattan is a monument to how hard it is to get anything changed in today’s America. So good luck “stimulating” the economy with infrastructure. One reason Google and Apple and other American success stories started in somebody’s garage is that that’s the one place where innovation isn’t immediately buried by bureaucracy. As to Representative Woolsey’s rampaging forest fires, these days they’re caused mostly by federal eco-regulation preventing traditional prudent stewardship such as basic brush-cutting.

Here’s the Wall Street Journal:

One of the more curious items in the $825 billion House “stimulus” is $87 billion to help states with Medicaid, specifically including an expansion of family-planning services. The implication is that more people mean less economic growth.

Following a White House meeting with President Obama on Friday, Republican John Boehner, the House Minority Leader, asked how spending millions of dollars on birth control will help stimulate the economy. On Sunday, George Stephanopoulos of ABC’s “This Week” repeated the question to House Speaker Nancy Pelosi, who responded that “family planning services reduce costs.”

She added: “The states are in terrible fiscal budget crises now, and part of what we do for children’s health, education and some of those elements are to help states meet their financial needs. One of those — one of the initiatives you mentioned, the contraception — will reduce costs to the states and to the federal government.”

The notion that a larger population will produce a lower standard of living can be traced to the 18th-century economist Thomas Malthus. But during Malthus’s own lifetime, his prediction was proved false, as he later acknowledged. Population and living standards rose simultaneously, and have continued to do so.

Ms. Pelosi’s remarks ignore the importance of human capital, which is the ultimate resource. Fewer babies would move the U.S. in the demographic direction of Europe and Asia. On the Continent, birth rates already are effectively zero, and economists are predicting labor shortages in the years ahead. In Japan, where the population is aging very fast, workers are now encouraged to go home early to procreate. Japan is projected to lose 21% of its population by 2050.

The age and growth rate of a nation help determine its economic prosperity. A smaller workforce can result in less overall economic output. Without enough younger workers to replace retirees, health and pension costs can become debilitating. And when domestic markets shrink, so does capital investment. Whatever one’s views on taxpayer subsidies for contraception, as economic stimulus the idea is loopy.

WaPost: Obama to force car manufacturers to make cars consumers don’t actually buy.

George Will writes about how often small government programs become behemoths. Case in point: SCHIP.

By a vote of 289 to 139, with 40 Republicans joining the majority, the House, in the process of reauthorizing the State Children’s Health Insurance Program, doubled the funding, thereby transforming it through “mission creep.” SCHIP’s purpose, when it was enacted by a Republican-controlled Congress in 1997, was to subsidize state governments as they subsidize health care for families too affluent to be eligible for Medicaid but not affluent enough to afford health insurance. Because any measure acquires momentum when it is identified as for “the children,” SCHIP was said to be for “poor children” or children of “the working poor.”

In 2007, after President Bush proposed a $5 billion increase in SCHIP, the House voted for a $50 billion increase but receded to the Senate’s proposed $35 billion, which became the definition of moderation. That compromise, which Bush successfully vetoed, at first would have extended SCHIP eligibility to some households with incomes up to 400 percent of the poverty line (up to $83,000 for a family of four), and more than $30,000 above the median household income ($50,233). So people with incomes higher than most people’s became eligible for a program supposedly for low-income people. Call that compassionate arithmetic.

The new expansion, which is vengeance for Bush’s veto, is mission gallop: It will make it much easier for some states to extend SCHIP eligibility to children from families earning up to $84,800. Furthermore, to make “poor” an extremely elastic concept, generous “income disregards” are allowed. Families can, depending on their state’s policies, subtract from their income calculation what they spend on rent or mortgage or heating or food or transportation or some combination of these. So children in some families with incomes well over $100,000 will be eligible.

Grace-Marie Turner, a student of health-care policies, says this SCHIP expansion is sensible — if your goal is quickly to get as many people on public coverage as possible and to have children grow up thinking that it is normal for them to get their health insurance from the government. That is the goal.

George Melloan expands on the folly of the latest craze of “stimulus” spending.

Even before Barack Obama’s inauguration, the Democrat-controlled House crafted a record-breaking $825 billion program to “stimulate” the U.S. economy. One measure — withholding less income tax from paychecks over the next two years — is a Keynesian effort to restore consumer demand for goods and services by sweetening take-home pay. Its authors assume that this $140 billion tax break will work better than last spring’s $152 billion tax rebate, which seems not to have worked at all, judging by the economic debacle in late 2008.

The central question, however, is not whether “stimulus” programs are ineffective. It is whether they are counterproductive. A case can be made that the bucket not only leaks but that the leaks tend to drown out chances for economic recovery.

Circumstantial evidence that “stimulus” packages actually delay recovery can be derived from the Keynes-guided New Deal of the 1930s, which put large faith in federal deficits as a Depression cure. Federal debt climbed to 43.86% of GDP in 1939 from 16.34% in 1929 with very little relief from hard times. Huge Keynesian deficits in the 1970s did not arrest stagflation. The misery index, combining inflation and unemployment, soared above 20%.

In a word, pathetic. Related, the Wall Street Journal noted today that, “According to Congressional Budget Office estimates, a mere $26 billion of the House stimulus bill’s $355 billion in new spending would actually be spent in the current fiscal year, and just $110 billion would be spent by the end of 2010. This is highly embarrassing given that Congress’s justification for passing this bill so urgently is to help the economy right now, if not sooner.”

The Wall Street Journal opines on the ridiculous hypocrisy of Northeastern Democrats who attempt to block the passage of the Cape Wind project, located in Cape Cod, Martha’s Vineyard and Nantucket. The project boasts a planned “130 towers [which] could meet 75% of the region’s electricity needs and reduce carbon emissions by some 734,000 tons every year.” Of course, there’s a flip side to that cost -effectiveness coin. Keep reading.

Then there is the political saga, with the Kennedy family as the Hyannis Port Sopranos, supplying the muscle. While Ted Kennedy was castigating President Bush for destroying the environment, the Senator was working furiously behind the Congressional scenes to kill Cape Wind. He even had the inspiration of getting former GOP colleague Ted Stevens of Alaska to slip wording into a spending bill that would have handed a veto to then-Governor Mitt Romney, another aesthetically minded opponent. Robert Kennedy Jr., a Time magazine “hero of the planet,” tried to get the Sound designated as a national marine sanctuary to bar development.

Incredibly enough, this political sabotage has so far failed. And last week the Interior Department issued its long-awaited regulatory study, mostly finding “negligible” environmental impact — apart from a “moderate” impact on the scenery. If the Obama Administration signs off, construction could begin next year.

Mr. Kennedy blustered that the report was rushed out: amusing, considering it runs to 2,800 pages. Bill Delahunt, the windy Cape Democrat, also denounced the action as “a $2 billion project that depends on significant taxpayer subsidies while potentially doubling power costs for the region.”

Good to see the Congressman now recognizes the limitations of green tech, such as its tendency to boost consumer electricity prices — but his makeover as taxpayer champion is a bit belated. Green energy has been on the subsidy take for years, including in 2005 when Mr. Delahunt was calling for “an Apollo project for alternative energy sources, for hybrid engines, for biodiesel, for wind and solar and everything else.” The reality is that all such projects are only commercially viable because of political patronage.

Tufts economist Gilbert Metcalf ran the numbers and found that the effective tax rate for wind is minus-163.8%. In other words, every dollar a wind firm spends is subsidized to the tune of 64 cents from the government. The Energy Information Administration estimates that wind receives $23.37 in government benefits per megawatt hour — compared to, say, 44 cents for coal. Despite these taxpayer crutches, wind only provides a little under 1% of U.S. net electric generation.

al-Shihri becomes the next of at least 60 former detainees who have returned to their terrorism roots. And people want to close Guantanamo…

Ex-Guantanamo detainee becomes No. 2 for al-Qaeda in Yemen
CBC News

A Saudi man who was detained at the U.S. detention centre at Guantanamo Bay, Cuba, for six years has now become the second-in-command for al-Qaeda’s branch in Yemen, according to an online statement allegedly by the group.

The statement, which appeared on a website commonly used by militants purportedly from al-Qaeda, says Said al-Shihri has joined the branch known as “al-Qaeda in the Arabian Peninsula” and is now the group’s No. 2.

Al-Shihri, 35, ended up in U.S. custody after he was hospitalized for more than a month for injuries suffered during an air strike in December 2001. He was one of the first detainees sent to the controversial detention centre set up by the George W. Bush administration in response to the Sept. 11 attacks.

The detainee was released from the detention centre in November 2007 and transferred to Saudi Arabia, according to U.S. Department of Defence documents. After that, he apparently travelled to Yemen.