What We Just Did

Resident Fellow
David Frum

Congress has just voted--and Barack Obama will soon sign--the most radical transformation of the US government since...well you pick. 1965? The 1930s? The Civil War?

In percentage terms, the stimulus package just passed is more than double the size of the cost of the New Deal, 5% of GDP vs. 2%.

Perhaps the worst thing included in the bill is the subsidy to green jobs.

Back in the Bush 41 era, we got worried when federal spending crept north of 20% of GDP. Now it's on the way to 26%--and that figure does not count the costs of Federal Reserve operations to rescue the banks.

Congress has taken at least three giant steps toward a national single-payer health care program. It has hugely expanded S-Chip, the federal program that offers Medicaid to under-18s at levels up to 4 times the poverty level.

Congress will subsidize unemployed people to maintain their existing insurance--before this was a cost that unemployed people usually had to pay themselves.

Above all: Congress has hugely expanded the federal role in Medicaid proper, relieving states of a big share of the costs of this rapidly growing program. This is billed as a temporary measure, but it’s hard to imagine that the day will ever come when say California is told to resume paying the Medicaid share it paid back in 2008 – not with Medicaid costs rising as fast as they do.

We’re going to see a huge burst of federal spending on public works, many of them of very dubious validity. Does America really need high-speed rail between Los Angeles and Las Vegas? Need it or not, we’re about to get it, thanks to Senate Majority Leader Harry Reid. (The administration could at least have extracted approval of the Yucca Mountain nuclear waste storage facility in return.)

Perhaps the worst thing included in the bill is the subsidy to green jobs. As the Washington Post reports:

"House Speaker Nancy Pelosi (D.-Calif.) said yesterday that money for developing such things as electric cars, clean-coal power plants and bullet trains will be "transformational," even though those funds will be some of the slowest to be spent…"

That money will be transformational. It will transform potentially useful dollars into waste. Instead of incentivizing private individuals to make environmentally positive decisions (as pollution taxes would), it puts government into the boondoggling business of directing investment dollars itself. That always ends badly.

But alas in this respect as in so many others: we are going to learn lessons the very hardest possible way.

David Frum is a resident fellow at AEI.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

David
Frum
  • David Frum is the author of six books, most recently, Comeback: Conservatism That Can Win Again (Doubleday, 2007). While at AEI, he studied recent political, generational, and demographic trends. In 2007, the British newspaper Daily Telegraph named him one of America's fifty most influential conservatives. Mr. Frum is a regular commentator on public radio's Marketplace and a columnist for The Week and Canada's National Post.

What's new on AEI

image The Census Bureau and Obamacare: Dumb decision? Yes. Conspiracy? No.
image A 'three-state solution' for Middle East peace
image Give the CBO long-range tools
image The coming collapse of India's communists
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Wednesday, April 23, 2014 | 12:00 p.m. – 1:30 p.m.
Graduation day: How dads’ involvement impacts higher education success

Join a diverse group of panelists — including sociologists, education experts, and students — for a discussion of how public policy and culture can help families lay a firmer foundation for their children’s educational success, and of how the effects of paternal involvement vary by socioeconomic background.

Thursday, April 24, 2014 | 12:00 p.m. – 1:30 p.m.
Getting it right: A better strategy to defeat al Qaeda

This event will coincide with the release of a new report by AEI’s Mary Habeck, which analyzes why current national security policy is failing to stop the advancement of al Qaeda and its affiliates and what the US can do to develop a successful strategy to defeat this enemy.

Friday, April 25, 2014 | 9:15 a.m. – 1:15 p.m.
Obamacare’s rocky start and uncertain future

During this event, experts with many different views on the ACA will offer their predictions for the future.   

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.