Welcome

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Monday, February 23, 2009

WHY YOU SHOULD READ THIS ARTICLE

I will warn you that this is a longer piece than I usually write and is not suitable in length for newspaper columns. It may take you fifteen or twenty minutes to read it, rather than the usual three. But I offer this for your investment of time: you will learn many things about our economy and the plans for its recovery that you might not know and may be surprised to learn, if not in some instances be outright shocked. I may not get you to change your viewpoint, but you will be challenged to think about some of the most important problems facing America today with facts you probably will be learning for the very first time. Much, if not most, of what I will be telling you cannot be found in mainstream newspapers.

This essay is about the just shy of a quarter billion dollars of expenditure for the Violence Against Women's Act that was recently enacted as part of a "stimulus package" known as "The American Recovery and Reinvestment Act." But it is so much more than an essay about VAWA. It is an article about misguided economic thinking, challenging both Democrats and Republicans alike. As stated, if you are like most people, many of the facts (and even theories) that will be presented to you will not be known to you.

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OUR ECONOMY AND THE ECONOMIC STIMULUS PACKAGE

The stimulus package passed into law this Tuesday by President Obama (The American Recovery and Reinvestment Act) amounts to $787-billion dollars. How much is $787 billion dollars? To give you a rough idea, there is currently about $2,000 billion of US currency in circulation-so called "M0" money which is monitored by the Federal Reserve. By the way, this $2,000 billion is only recent-the graph of the amount of money currently in circulation looks like a hockey stick, with a dramatic increase around the 2008 November elections. (To see an interesting segment on this little known but extremely important subject of pumping currency into the economy that was virtually ignored by the main stream media, click HERE). [For the record, I agree with Al Gore and not Glenn Beck on environmental issues.]

For one of the more humerous videos on the size of the spending bill, watch "All the Money In The World," by Stuard Sheppard at Citizenlink.org.

But this isn't a piece about devaluing money so much as it is about the nature and size of this stimulus package, and whether it is likely to work. In early 2008, this M0 was at about $750 billion dollars. To get an idea of the size of the stimulus package, if you took every physical dollar in every bank, in every wallet, and under every mattress in early 2008, as well as every dollar the banks themselves have in the Fed, which would be literally every dollar in circulation, you could not pay off the principal, let alone the interest of the stimulus package. This is not just about "another news story." It is an epic event in American history.

The stimulus package has been sold by Democrats as a necessary measure to get the economy rolling again. The theory is that by massive governmental spending the economy will be "jump started" by infusing massive amounts of dollars into the economy, so that people will start buying and selling again. Once the economic engine is hot and running, so the theory goes, we can stop the government spending spigot and let the private sector drive an engine that will then be in full-throttle. Republicans rail against the stimulus package saying that governmental spending results in a tax bill that needs to be paid, draining the taxpayer eventually of his wages so he has less to spend and hurting the economy.

The centrist in me suggests that both theories are incorrect, and that government spending is more of a neutral thing, neither inherently helping nor hurting the economy. (I say that it is "neutral" unless government spending gets so out of hand that the taxation rate gets so confiscatory that people see no purpose in working or businesses that by their nature can relocate would rather produce overseas.) When the government spends, people become employed and they have greater spending money, but there is an equal and concomitant loss of income from the private sector. When the government does not spend, there is an infusion of cash in the private sector making the sale of goods and services increase (as well as increasing savings which is also good for the economy), but there is an equal and concomitant loss of the wealth generated by the government spending.

To get my point how people misunderstand that government spending is inherently neutral, click here for a Cato Institute video on government spending. There is a little bit of Three-card Monte going one. On the one hand it is claimed that government spending merely redistributes how the pie is cut, much as how I argue. We are shown a card. We are told by the Cato Institute, that with government spending "the pie is sliced differently, but it is not any bigger," echoing my sentiment that "when the government spends, people become employed and they have greater spending money, but there is an equal and concomitant loss of income from the private sector." Fair enough-but watch those cards!

But then the narrator starts flipping the cards around, claiming that Herbert Hoover was actually a diehard Keynesian economist who increased taxes and spending, and the theory does not make inherent sense and does not work in practice. Somehow towards the end of the video they do an about face and argue that "Keynesian economics does not work." But by "does not work" they do not mean "no change for the better," but a change for the worse. In other words, they later argue that the pie does not merely stay the same but is only cut differently with government spending, but that government spending somehow shrinks the pie to be cut.

The Cato institute fails to see my other point, that "when the government does not spend, there is an infusion of cash in the private sector making the sale of goods and services increase (as well as increasing savings which is also good for the economy), but there is an equal and concomitant loss of the wealth generated by the government spending."

All things being equal, it may be true that with government spending, as stated by the Cato Institute, "the pie is sliced differently, but it is not any bigger." But it is also true that all things being equal, with government spending, the pie is sliced differently, but it is not any smaller." All things being equal, the pie remains the same size, it is just cut differently. All things being equal, the pie does not increase or decrease in size.

If it is true that "borrowing money from one group and giving it to another group does nothing to increase economic output," as stated in the Cato video, it works both ways, regardless if whether one group is the government sector employees or one group is the private sector employees! If you give the money to private sector employees an economy might have more coats and shoes, but it will have less school buildings. If you give the money to public sector employees an economy might have more school buildings, but it will have less coats and shoes. This might seem so simplistic that it could not possibly be true, but all things being equal, it is true.

In this Cato game of Three-Card Monte you start grabbing a card that you think will read "government spending neither increases nor decreases the pie," but you end up with a card that say "government spending decreases the pie." Many do not pick up on the sleight of hand and are fooled. On a minor point, during the Reagan administration when there was undoubted economic prosperity and there was "morning again in America" (albeit with leaving a tab for future generations), there was record levels of government spending; this is conveniently left out of the Cato video.

Most importantly, and this is a critical point entirely missed by those that oppose government spending, the New Deal, or Keynesian economics, we can make it so all things are not equal, but that the government expenditure constitutes a bona fide investment (sans the politician's cry of calling something an "investment" [such as expenditures on VAWA] that is obviously not an investment) so that the economy is later more efficient. We build the Hoover dam and get cheap electricity. We build a good train system and we lower the cost of transporting goods. In other words, if the government invests well there is also a return on investment, just like the private sector. We spend money on the GI Bill, we get an educated workforce better able to compete in the global economy.

This concept never makes the Cato video who believes that the government cannot even run the Post Office. Conversely, if money is spent on something foolish, (such as a bridge to nowhere) or if the project is not foolish but is prosecuted poorly (such as Boston's "Big Dig"), we can also make it so that all things are not equal-we can make the situation worse and make the pie shrink. But this is a rule that also binds the private sector-how many times have we seen "blue chip stocks" fall because of poor business decisions-this also hurts the American economy. Foolish enterprises or poorly run enterprises result in a loss of national wealth, no matter whether the actor is the government or the private sector.

To the centrist, it is wrong to consider government spending as inherently improving economies or hurting economies. There is only wise government spending which down the road will help the economy (improving our workforce, infrastructure, transportation, and reducing the costs of energy and pollution) and unwise government spending which will not.

This centrist view does not get much airtime in our media culture which focuses on point-counterpoint between liberals and conservatives. By this standard, the current stimulus package has both good spending and what New York Senator Chuck Schumer recently insensitively called "little, tiny, yes porky amendments."

There is also one other important fact regarding spending that is different today than it was during the Great Depression. I vividly recollect Ronald Reagan brushing off questions about the mounting national debt and social security obligations with the response that "we only owe the money to ourselves." This just is not true anymore-we do not merely owe the money to ourselves. Before Ronald Reagan, most borrowing by the United States Government was financed by Americans. But this is no longer the case. After Reagan, our National Debt became so enormous to Americans that the United States government had to borrow from foreign countries and still does to this day. In other words, when Americans finally have to pay for the bill, foreign governments will be reaping the interest on the loan. Interest payments to foreign investors in turn means a smaller pie for Americans.

According to Wikipedia's article on the United States public debt as read on Saturday, February 21, 2009, "The US debt in the hands of foreign governments was 25% of the total in 2007, virtually double the 1988 figure of 13%." In fact, as this essay is being written, paying interest on the national debt is already one of the largest federal expenditures, at over four hundred billion dollars per year. What will this number be when we add the interest of the recently enacted stimulus package and how much will be paid to foreign investors?

There is little doubt that the present stimulus package that can make the universe look small is motivated by the spending programs of Franklin Delano Roosevelt and the New Deal during the Great Depression. In a recent CNN written interview, New Deal or Raw Deal, Adam Cohen, author of "Nothing to Fear: FDR's Inner Circle and the Hundred Days That Created Modern America" stated "What [the New Deal] argues for today is really bold action -- a large stimulus program of the kind we're getting, maybe even more."

For this reason, we should look hard at what really happened during the Great Depression. History is bound to repeats itself when no one was listening the first time and lessons were not learned that should have been learned.

The story we are taught of the Great Depression in school, or the story octogenarians or septuagenarians (such as my father) remember of their childhood, goes something like this: Because Republican presidents did not believe in regulation of financial markets, there was excessive speculation in the stock market. This included allowing people to buy on margin with little or no cash creating a bubble of a grotesquely overvalued stock market with price to earnings ratios through the stratosphere that was bound to burst because real money was not backing the price of the stock. When the stock market crashed in '29, President Herbert Hoover, instead of learning his lesson about the evils of laissez-faire economics from the stock market crash, stood idly by while Hoovervilles and soup kitchens popped up across America.  While banks closed, Hoover kept preaching that "prosperity was just around the corner."

The bad conservatives, so the story continues, followed the witticism of Bourbon Democrat President Grover Cleveland (back in the 19th Century Days when the Democrats were not so liberal). Cleveland, a noted laissez-faire advocate, stated, "though the people support the Government, the Government should not support the people," in his veto message when he rejected the Texas Seed Bill. The Texas Seed Bill provided a measly $10,000 in aid to farmers after a catastrophic draught so they would have seed to grow the next crop. In the 1930's, projects in the vein of the Texas Seed Bill were looking mighty popular, but conservative politicians and presidents refused to intervene, believing that the business cycle was by its very nature cyclic, and government was not only powerless to change this cycle, but actually might make things worse if it attempted.

The story further goes that people had enough, elected F.D.R. in '33, who repudiated Hoover's (and much of the 19th century's) laissez-faire economics. (Historian Robert S. McElvaine states that "Hoover had no use for the strict laissez-faire attitude of the nineteenth century," but most people regard Hoover as having a callously "hands off" approach.) The country "rolled up its sleeves and went to work" and engaged in massive governmental spending projects through the New Deal which took us out of the Great Depression. In another popular variant of the story, the Great Depression was "still lingering," and "almost over," just before the outbreak of World War II. In both versions, the Great Depression was either over or nearly over by the time the United States entered the 40's.

(Above: Gross national product just before and during the Great Depresion) 

Such sentiments run in my own family. My own father, who was born in 1930 and a son of Italian immigrants, fondly recollects Roosevelt's programs helping (if not outright saving from hunger and homelessness) other Italians in the Lakewood area of Pittsfield, Massachusetts, where he grew up. It is literally impossible to describe his reverence for Roosevelt and how much he doggedly defends the New Deal as providing opportunities when there was otherwise hopelessness.

There is one serious problem with this story and lessons we may learn from it to be applied today. Most historians (even liberal historians) agree that F.D.R. did not end the Great Depression, World War II ended it. Wrote Professor Robert McElvaine in his 1984 book, The Great Depression, "In 1939, a full decade after the Crash (of '29), 9.4 million Americans remained unemployed. This figure constituted 17.2 percent of the work force. Few would have predicted in the heady days of 1933, or even in 1935 or 1936 (and many people fail to realize it today), but the Great Depression outlived the New Deal."

Granted, unemployment reached 25% during the depression's height in '33, but 17.2 percent in ‘39 is still a staggering number from hell. In 1940 it was still at 15%. By way of comparison, the unemployment rate in this moribund economy is 7.6%. For this reason, people like libertarian, small-government minded Clara Howell write, "The New Deal not only failed to turn around the Great Depression, it made things worse." Writes one conservative, President Roosevelt's "tax increases in 1937 snuffed out a nascent recovery."

Here are the some unemployment figures from the Great Depression years of the 30's:

1930 8.7%
1931 15.9%
1932 23.6%
1933 24.9% (F.D.R. takes office in March ‘33)
1934 21.7%
1935 20.1%
1936 16.9%
1937 14.3%
1938 19.0%
1939 17.2%

(Source: "Presto, You've Got A Liberal Polemic" James Antle, III)

 (ABOVE is a graph from the conservative Heritage Foundation.  Note how high the unemployment numbers are compared to the usual statistics. The claims is made that the New Deal never drove unemployment down under 20%.)

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(As you can see from the graph ABOVE, others give numbers well below numbers giving by the Heritage Foundation. Here the high in '33 is just below 25%, not 35%. This was found on doctorhousingbubble.com.)

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But these unemployment numbers are disputed. In a February 18, 2009 Boston Globe column entitled, "The New Deal and right-wing revisionism," Scott Lehigh claims the numbers are misleading because they do not include New Deal work-relief employees as being "employed." Lehigh states,

"Include work-relief employees, and unemployment declined more steeply, falling to 9.2 percent in 1937. It then rose to 12.5 percent in 1938 before dropping back to 6 percent in 1941."

It is stunning to see the difference between Lehigh's numbers and those provided by the Heritage Foundation.

Here the Heritage Foundation gives much more favorable numbers when you include government relief workers.

Op-ed columnist Paul Krugman wrote, "There's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse." (Franklin Delano Obama?, New York Times, November 20, 2008). Krugman may be right: Amity Shlae's "Forgotten Man," has sold well. States the Washington Independent, "There are 200,000 copies of the The Forgotten Man in print, a dramatic success for a work of economic history."

On-line magazine Slate columnist Eric Rauchway makes the same criticism that the Boston Globe's Scott Lehigh makes. Rauchway writes in "FDR's Latest Critics" (July 5, 2007):

"Let's look at a figure Shlaes gives twice in her book and again in her Wall Street Journal editorial: She has unemployment at 20 percent in the 1937-38 recession. That's appalling-almost as bad as 23 percent in 1932. Based on such a statistic, you could think the New Deal wasn't alleviating the Great Depression. But that number hides something: A third of the people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs.

One of the most ardent advocates of this theory that FDR actually made the Great Depression worse through the New Deal spending is Jim Powell, a senior fellow at the Cato Institute, and author of FDR's Folly, How Roosevelt and His New Deal Prolonged the Great Depression (2003), and who wrote an article on the subject, "How FDR's New Deal Harmed Millions of Poor People," that can be read on the Cato website (by clicking here). He states, "New Deal programs were financed by tripling federal taxes from $1.6 billion in 1933 to $5.3 billion in 1940." (Powell was also interviewed in the article New Deal or Raw Deal recently mentioned.)

Making matters worse, argues Powell, F.D.R. implemented excises taxes on goods, making the taxes very regressive and thereby hurting the people's ability to purchase goods and stimulate the economy with what little money they had. He writes,

"The most important source of New Deal revenue were excise taxes levied on alcoholic beverages, cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, radios -- these and many other everyday things were subject to New Deal excise taxes, which meant that the New Deal was substantially financed by the middle class and poor people."

Powell adds,

"Until 1937, New Deal revenue from excise taxes exceeded the combined revenue from both personal income taxes and corporate income taxes. It wasn't until 1942, in the midst of World War II, that income taxes exceeded excise taxes for the first time under FDR. Consumers had less money to spend, and employers had less money for growth and jobs."

Of course Powell, like most conservatives, conveniently forgets the jobs created by New Deal government spending and enhanced infrastructure (which would help future Americans) as he only looks at the economic harm of taxes.  Powell also does not view government spending as neither inherently increasing nor decreasing the size of the national economic pie when all things are equal; he also believes the pie gets smaller.

(Soup line in Great Depression: As the sign shows, there was a fear that Americans were doubting capitalism and democracy, and the government went on a campaign to support the American political and economic system.)

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There is also one other point that smacks you in the face for its obviousness that Powell overlooks. While World War II may have ultimately taken America out of the Great Depression, that was because of the absolute massive spending behind the war effort. American's sudden emergence from the Great Depression after the massive war expenditures does not refute Keynesian economics, it supports it.  Scot Lehigh makes the same point about Keynesian economics being proven by the war effort in his Globe article arguing:

There's virtually no disagreement that World War II gave the country the strong final tug out of the Depression. Yet that reality also argues for the efficacy of Keynesian remedies; economically, the war constituted a huge government stimulus, financed by massive deficit spending.

For what it is worthy, Krugman has won a Nobel Prize in economics. There is also one other factor noted by Krugman, Lehigh, and E. Cary Brown (an MIT economist). Lehigh writes, quoting Brown:

"‘[I]f we take the seven years from 1933 on, in only two was the federal share significantly more than enough to offset state and local shrinkages,' MIT economist E. Cary Brown wrote in his well-regarded study of the era."

Krugman calls Brown's study the "definitive study of fiscal policy in the '30s." Krugman also asserts, in his column "Franklin Delano Obama?," "expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level" during the New Deal period." This observation is puzzling-logic suggests that if net government spending actually decreased during the New Deal due to cuts in state and local spending surpassing the increases of federal spending under Roosevelt's programs, and if the economy actually improved during the New Deal as these pro-New Dealers claim it did, reducing government spending improves economies.

For a short film by reasontv.com claiming that F.D.R.'s policies did not work, click HERE.

People with diametrically opposed political philosophies can see the very same set of facts and come to diametrically polar-opposite conclusions. McElvaine observes "the two worst depressions in American history prior to the 1930s occurred in the long conservative period of the late nineteenth century." The people did not elect a Rooseveltesque interventionist to come to the rescue in the 19th Century. While populism (or "progressivism") was strong when the Panic of 1893 hit, in the 1890's populism was still largely an agrarian movement and failed to become the dominant political force that it would become a generation later.

The liberal sees the depth and longevity of the Great Depression of the 1930's as justification for the massive government intervention of the New Deal. The conservative sees the massive government intervention of the New Deal as the cause of the depth and longevity of the Great Depression. Depending on whether you wish to see the glass as half empty or half full, a liberal can see a drop from an unemployment rate of 25% in 1933 to 15% in 1940 as an "emergence," and a conservative can see a failed economic policy embodied in the New Deal that did not end the Great Depression.

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WHY IS VAWA FUNDING IN THE STIMULUS PACAKGE?

There are a number of reasons why father's rights activists and others oppose VAWA, a subject worthy of only briefly mentioning. RADAR (Respecting Accuracy in Domestic Abuse Reporting) cites 12 reasons on its website. VAWA is criticized by RADAR because it:

1. Has been ineffective in stopping abuse

2. Provides incentives to file false allegations and break-up families

3. Betrays women

4. Spreads one-sided and biased information

5. Allows states to expand the definition of "domestic violence" to encompass virtually all types of family disagreement, even raising your voice

6. Promotes immigration fraud

7. Encourages the issuance of restraining orders, even in the absence of physical violence

8. Funds harmful mandatory arrest policies

9. Biases the judiciary

10. Condones the mismanagement of federal funds

11. Costs taxpayers $20 billion a year to help at-risk children who are harmed by family break-up

12. Illegally discriminates against male victims of abuse

Also, many groups funded by VAWA are virulently anti-father's rights. When Dr. Helen interviewed Glenn Sacks, a well-known father's rights activist columnist, he stated, "Another problem with VAWA is the way that it helps fund domestic violence advocacy groups' political agenda. Whenever we try to push forward legislation to help resolve some of the gross inequities of the family system and to protect the loving bonds children share with their fathers, these groups are out in force in the legislatures to stop us." They start off being against domestic violence, and before you know it they are solely focusing on domestic violence against women, enacting draconian child support measures and railing against shared parenting laws.

Melissa Wilt, Director of Public Policy at the Men's Health Network, wrote in 2005 op-ed that appeared in the Washington Times entitled VAWA Funds Family Breakups, "[VAWA] is not gender-inclusive, allocates funds under a flawed grant system, and ultimately promotes family breakup, not reconciliation."

Having scratched the surface of the problems with VAWA (without even having touched federalism issues wherein there is no constitutional authority to enact VAWA under the powers granted to the federal government), one can see that VAWA is a controversial federal program. But even its strongest adherents would have to admit that VAWA is not a program aimed at, or even having the unintended result, of getting the economy up and running again. So why is VAWA in the stimulus package instead of a general governmental expenditure?

By now, you probably see where this is going. I thought that the stimulus package was about rejuvenating our economy, which President Obama has repeatedly declared is in its worse state since the Great Depression. The stimulus package was passed in great haste in order to avoid "the perils of inaction" or the "paralysis of analysis."

In order to promote transparency, President Obama has launched "Recovery.gov." The stated purpose of recovery.gov on its home page is to see to it that the "American Recovery and Reinvestment Act will be carried out with full transparency and accountability."

So I recently used Recovery.gov in order to get information on why VAWA spending was in The American Recovery and Reinvestment Act. On Saturday, February 21, 2009, I went into the websites internal search engine and put in "Violence Against Women" and did not get any results. Then I put in the word "violence" and did not get any results. So then I used a Google search, "violence site:recovery.gov," which should have turned up every instance of the word "violence" at the "recovery.gov" website. I still did not get any search hits. Searches for "woman" or "women" were also fruitless.

The omission of VAWA spending is both unfortunate and defeating of the transparency that recovery.gov claims to promote. Recovery.gov states, "This is your money. You have a right to know where it's going and how it's being spent." This is of course true, which makes the failure of recovery.gov to give an accounting of why money was spent on VAWA, or even in any way to mention VAWA, disappointing. When I criticize the lack of transparency, please be aware that I voted for Obama and I am an Obama supporter.

So I called Congressman John Olver's office (he is my Congressman) and told him I might be writing a column on the stimulus package and wanted to see if funding VAWA was part of the stimulus package. I might have alarmed them a little when I told them there had been Republican criticisms that the bill was enacted into law so fast, that nobody in Congress actually read, let alone understood, the bill. I was promptly and courteously e-mailed the following response for which I am grateful to have received:

"Hi, my name is Sara Merriam and I am Congressman Olver's press secretary. My coworker, Ben, told me that he spoke with you on the phone this morning and that you wanted to know if there was any VAWA funding in the stimulus. We were able to track down that provision for you - The conference agreement provides $225,000,000 for Violence Against Women Prevention and Prosecution Programs, to be available until September 30, 2010, of which $175,000,000 is for the STOP Violence Against Women Formula Assistance Program, and $50,000,000 is for transitional housing assistance grants. No administrative overhead costs shall be deducted from the programs funded under this account."

At least there was one Congressman who seemed to be able to provide some answers to rudimentary questions. But as for the spending of a quarter billion on VAWA, there is an old Washington joke-"A quarter of a billion dollars here, a quarter of a billion dollars there, in a while you are talking real money." (OK, $225 million is not $250 million, but you get the drift.)

In all likelihood, you would not have heard of this story-i.e., the expenditures of VAWA in the recently passed stimulus package-had you not read this article or been on the RADAR mailing list. On Saturday, February 21, 2009, I did a Google News search and found only one hit for "stimulus package" and "VAWA." Not only does VAWA not improve the economy (such as school or infrastructure improvements), it does not have that soup-kitchen type of relief needed for those who have been hurt by the economy and need food or shelter. Assuming, for the sake of argument, that VAWA is a worthy program, what is it doing in a "stimulus package"? The F.B.I. is also a worthy program-it should be funded through general government funds, not "stimulus packages."

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WHAT WAS GREAT ABOUT THE NEW DEAL AND WHAT VAWA IS NOT

Republicans such as Mike Huckabee on Fox News have criticized The American Recovery and Reinvestment Act, by "meeting in the middle of the night," "locking Republicans out of the room," and "hurriedly voting on a 11,000 page bill that not one member of the House or Senate had time to read much less understand." GOP Representative John Boehner, the Republican House leader, paraded the actual bill on the floor of the House, which was about the size of several New York City House books; he culminated by dropping the bill on the floor where it made a thunderous plump.

While the New Deal was passed in earnest and dispatch, it was not done with so much haste that Congress did not actually fail to understand what they were passing. I suspect that if there an unexpected pop-quiz shortly after the passing of the stimulus bill, most members of Congress would not even know that VAWA was funded through the stimulus package, let alone be able to provide an economic justification other than violence against women is bad.

(Works Project Administration) 

The New Deal featured such things as the Tennessee Valley Authority, which brought affordable energy to the country. It also had an obvious long term beneficial impact on the economy and the cost of manufacturing. In fact, the Tennessee Valley Authority was so effective, private power companies complained that they could not compete with it. The Tennessee Valley Authority still operates today and has an impressive website, a monument to Roosevelt and the Democrats' Tennessee Valley Act.

The New Deal had other projects bound to have long term effects, all of which were deliberately and intelligently crafted. Many of these programs have benefits that we enjoy this day. The Rural Electrification Administration (REA) brought electricity to rural America. According to the National Park Service, "The Public Works Administration funded the construction of more than 34,000 projects, including airports, electricity-generating dams, and aircraft carriers; and seventy percent of the new schools and one third of the hospitals built during that time." Almost every community in America has a park, bridge or school constructed by the Works Progress Administration. My father remembers the WPA putting in sewers around Pittsfield, Massachusetts, employing otherwise unemployed Italian men who were desperate.

And then there was one of the most popular programs of the New Deal, the Civilian Conservation Corps, which was aimed at youth. Under the CCC, nearly 3 billion trees were planted, roads and buildings were constructed, as well as soil conservation programs introduced. Lodges, cabins, picnic pavilions, and many other recreational structures still stand in our nation's parks as a testament to the craftsmanship and design of the CCC program.

In Berkshire County of Massachusetts, a rustic stone and wood structure known as "Bascom Lodge (pictured to the left) was built at the summit of Mt. Greylock in the Berkshires of Massachusetts by the Civilian Conservation Corps between 1933 and 1937 to provide accommodations for hikers, vacationers and nature enthusiasts. It still stands in all its glory today.

And that is the problem with VAWA being in the stimulus package. It has none of the long term benefits of these New Deal programs when the spending is all done and Americans are finally footed the bill.

Government spending, taken alone, in reasonable amounts, neither helps nor hurts economies. But when there is a long term benefit to expenditure, such as many of these New Deal programs, there may be a net benefit to the economy. For instance, what would happen if today there was an incredible, massive expenditure spent on wind power of an epic proportion? It just might be that posterity might be enjoying bundles of clean, free energy (once the bill is paid off) for decades to come. What if we provided a free high speed subway service in Los Angles that was energy efficient? Imagine the long term effects on oil dependency and the environment.

John Maynard Keynes, father of "Keynesian economics" of which the New Deal was based, (so notes the Wikipedia article on Keynesian economics) argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches: a reduction in interest rates, and government investment in infrastructure.

In other words, "government spending on such things as basic research, public health, education, and infrastructure could help the long-term growth of potential output." I have stated, as a centrist, that government spending neither inherently hurts nor helps the economy. But Keynesian economics stands an infinitely better chance of working in the long run if we use government spending to build something that will directly and concretely improve the economy of the future by enhancing efficiency in production or otherwise lowering cost.

Incidentally, if you want an excellent discussion of Keynesian economics, or at least from a positive perspective, click HERE and start the movie at around the 25th minute. (Unlike most Google movies, you can maximize this one and it comes out with relatively high quality.) You may also watch it here, on the PBS website.

 But VAWA does not have any of these benefits. For that reason, the quarter billion spent on VAWA is infinitely better spent on windmills or technical education. While many expenditures of The American Recovery and Reinvestment Act might have some of the long term benefits of these New Deal Programs, how many of them are VAWA-like expenditures that have no long term economic benefit? We just do not know. Already, articles are appearing all over the net in US News and World Report, such as "Finding the Pork in the Obama Stimulus Bill" by Matthew Bandyk published February 19th. One expenditure includes $98 million for a polar cap ice breaker for the Coast Guard. (A Sunday, February 22, 2009 search on recovery.gov for "polar" or "coast guard" or "ice" also yielded no results.

According to Bandyk's US News article:

"Where you might find the pork is in the so-called discretionary spending portion of the bill, which amounts to $308 billion, according to the Congressional Budget Office. Of that money, $48 billion goes to the Department of Transportation for various rail and road projects to repair and expand infrastructure. That leaves about $260 billion of discretionary spending that goes to various federal agencies, as well as to state and local governments. How much of that amount helps special interests instead of the economy as a whole? That depends, of course, on what you consider a special interest."

I would agree that in the aggregate, most of F.D.R.'s New Deal programs based on deficit spending were a necessary evil, albeit we would have to pay for them later. I am not sublime, as no rational person could be, about deficit spending during depressions because eventually when you dance to the music you have to pay the fiddler. Even Roosevelt would agree to that, and as stated, he did try to rein in spending.

This said, when unemployment nearly hit 25% in '33, was F.D.R. just going to watch it hit 30%, 35%, or more by failing to act? Robbing from the prosperity of tomorrow to allay the misery of today is necessary in extreme situations-there is no choice but to rob Peter to pay Paul. Hopefully, Peter will be in a better position to suffer the loss when we take from him tomorrow. My father, by the way, believes it is important to deficit spend during the nadirs of the vicissitudes of the business cycle so that people are not subject to the extreme economic conditions.

This is flattening of both the highs and lows of the business cycle also an integral part of Keynesian economics.  There is an understanding that deficit spending will hurt the swings upward (both Keynes and Roosevelt knew that eventually a deficit needs to be paid off), but it is generally thought that it is preferable to try to flatten an otherwise roller coaster economic business cycle.

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But having recognized that sometimes you have to deficit spend, we now live in an era where we have been deficit spending for decades, especially when we have had Republican presidents. Roosevelt did not face this situation of a huge national debt that had already been amassing for decades. This makes the case for deficit spending harder, because without rampant inflation or an eventual explosion of growth, deficit spending cannot be indefinitely sustained. When Bill Clinton first ran for office, discussions of energy efficient high speed rail were a constant in his campaign speeches.

While Clinton was at the helm of a great economic recovery, the high speed rail never materialized. 

Now news accounts say that Obama wants to reduce the federal deficit in half by winding down the war in Iraq and raising taxes on people that make more than $250,000. This news comes days after the $787-billion dollar stimulus package was passed into law. Much of the money goes to extending unemployment benefits, increasing monies for food stamps, social security bonus checks, deducting car sales taxes on Federal income tax, and a tax credit of $8,000 for people buying homes. (See, Robert Gavin and Erin Ailworth, "What the $787b stimulus would do for consumers," Boston Globe, Feb. 13, 2009).

And then there is the money spent on VAWA, polar cap ice breakers, and heaven knows what else. There are some good things in the stimulus package, but much if not most of it will have no long term effect in a way that New Deal programs such as the Works Progress Administration or Tennessee Valley Authority had.

Haste does indeed make waste; this stimulus bill, literally surpassing in amount all the money that was in circulation in early 2008, was put together with far too little reflection and with too much disregard for longer term economic planning. If we are going to stick future generations with bills to escape today's economic malaise, let us leave them with windmills, an educated workforce, an energy efficient transportation system, and an infrastructure not suffering from years of delayed maintenance. VAWA does none of this, and that is why it should not be in the stimulus package.

According to Recovery.gov, of the $787 billion stimulus package, only $111 billion (14%) goes to infrastructure and science, and only $53 billion (6.7%) goes to education. "Tax relief," "protecting the vulnerable," and "state and local aid" are nice things, but they are not investments. Moreover, the $43 billion for energy remains cryptic-does this mean windmills and nuclear power plants or does it mean free fuel for seniors?  (BELOW TO RIGHT): Distribution of spending stimulus according to recovery.gov).

Rinaldo Del Gallo, III

The author is a family law attorney in Pittsfield, Massachusetts, spokesperson of the Berkshire Fatherhood Coalition, and a columnist whose articles have appeared throughout the country. He may be reached at 413-445-6789.