Jan 27 2009

Shelby: “We Cannot Spend Our Way to Prosperity”

Opening Statement of Senator Shelby to Senate Appropriations Committee

U.S. Senator Richard Shelby (R-Ala.), a senior member of the Senate Appropriations Committee, today made the following statement at the full committee mark-up of the regarding the economic stimulus plan.

Senator Shelby’s opening statement, as prepared:

“Thank you, Mr. Chairman.

“Our nation is facing tough economic times.  Our unemployment rate is rising and many states have budget shortfalls. 

“Yet how do we propose to alleviate the economic downturn?  Through massive government spending that will be carried on the backs of our children for generations to come. 

“Combined with the tax provisions and mandatory programs announced by the Senate Finance Committee, the proposed Senate legislation totals $825 billion.  That is $825 billion of pure debt. 

“In itself, that is an amazing figure. 

“Yet, when the House introduced a similar plan last week, it was described as a “down payment” by President Obama. 

“If $825 billion is a down payment, what is the total purchase price?  At what point will we have spent enough? 

“We should not be willing to spend our children and grandchildren’s money on a “stimulus plan” without knowing the full price.

“There are no quick and easy fixes to our economic troubles and intelligent minds will differ on how best to do so.  However, it seems plain to me that this bill is not the answer.

“Much of this legislation is not even short term spending.  Instead, it is loaded up with funding for politically motivated programs masked as economic policy. 

“Mr. Chairman, we cannot borrow and spend our way to prosperity.  If it was possible to do so, would we not be at our most prosperous time right now, given the state of our current debt? 

“At no point in America’s history has our debt been this high.  Yet, here we sit, telling each other that, while we are in tough times right now, if we just borrow nearly $1 trillion more, this will finally have us headed in the right direction.

“Albert Einstein once said that insanity is defined as doing the same thing over and over again and expecting different results. 

“I remain gravely concerned that we are trying to solve an economic problem with an already disproven political fix.

“Mr. Chairman, stimulus packages have a checkered history when it comes to preventing an economic downturn.

“Last year, Congress passed a tax rebate program because it perceived a growing risk of recession.  I opposed this so-called stimulus because it was akin to trying to raise the level of the ocean by pouring in a glass of water.

“The government’s recent Gross Domestic Product figures show that as a result of the tax rebate last year, the level of consumer spending only rose by an extra $12 billion, or 15 percent of the lost revenue.  This is out of an economy that measures more than $13 trillion annually.

“The tax rebates added $78 billion to the permanent national debt, but less than $20 billion to consumer spending. 

“It was not “timely, targeted, and temporary,” as many believed.  Instead, it was none of those things and appears to have done little to help the economy while piling on more national debt.

“Now, less than one year later, we are looking at spending $825 billion to create or sustain three to four million jobs.  That comes to approximately $217,000 to $275,000 per job.  With the average national salary at approximately $40,000 a year, does that sound like good economic value?

“Most importantly, Mr. Chairman, we must remember that Congress does not have access to a secret vault of money.  The $825 billion has to come from somewhere, and that somewhere will have to be taxed or borrowed out of the economy in order to be repaid, burdening each of our children and grandchildren with thousands of dollars in new debt.

“As Harvard economist Robert Barro pointed out in the Wall Street Journal last week, the government cannot create wealth out of thin air.

“This bill is not stimulating the economy – it is simply more spending.  Spending that is forcing our nation much further into debt.

“As we continue the debate on how to best stimulate the economy, we must focus on long term economic growth. 

“We simply cannot spend our way to prosperity. 

“While many have proposed massive new federal spending to solve our economic problems, history shows us that this type of quick fix provides few, if any, short term benefits with tremendous long term costs. 

“There must be a better way.

“Thank you, Mr. Chairman.”