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Budget-Busting Expenditures for Roads Means More Federal Waste Saddling Economic Growth

by kristina rasmussen / /

When you're in a hole, quit digging. Tell that to Barack Obama, Nancy Pelosi, Harry Reid & Co., who want to add an additional $300 billion to America's $10 trillion national debt for a new "stimulus" package to repair, among other things, roads and bridges.

Considering that each American's share of the debt is now more than $34,850, any new spending liabilities should be considered with great care.

Thus far, most of the federal "rescue" -- ahem, bailout -- money has been targeted toward financial entities. Yet more special interests -- from automakers to road builders -- are sinking into "me too" mode.

Take the case of state governments, some of whom are experiencing deficits of their own making. On the whole, state outlays have grown 124 percent over where they were 10 years ago, and debt has increased by 95 percent. Clearly, some states and localities allowed themselves to be caught up in the borrow-and-spend mania. Now that the economy has soured, they want Uncle Sugar to finance their habits.

"Over the past few years, many states have spent money like drunken sailors. It's not right to expect the American taxpayer to pick up the tab," notes Jonathan Williams of the American Legislative Exchange Council, a nonpartisan membership organization of state legislators. "If families and businesses are required to live within their means, state governments should be required to as well."

Amen!

If the first bailout proved anything, it's that rushing to "do something" is irresponsible. The House's attempt to pass a stimulus bill in September gave priority to projects that "can award contracts based on bids within 120 days of enactment." In other cases, it favored "those activities that are labor intensive." Speed and make-work shouldn't be the primary drivers of how taxpayer dollars are spent.

Haste makes waste, and there's enough of that in government as it is.

Stimulus-boosters counter that they're directing long-overdue money into supposedly "neglected" areas, but this premise is false. According to the National Taxpayers Union Foundation's VoteTally system, Congress adopted legislation to increase spending above the baseline in the areas of infrastructure, housing, disaster recovery, and energy assistance by $99 billion between 2001 and 2006. Washington has been indulgent, not neglectful, in doling out cash.

Besides, bloated government budgets don't make economies soar. They didn't work here in the 1970s, the last time Washington tried spending its way out of a slump.

For more than a decade Japan has poured huge sums into public works projects, helping to boost its national debt level to 150 percent of Gross Domestic Product -- the highest in the industrialized world. Japanese citizens are still waiting for the boom.

The reason for these failures is simple -- pumping money into the inefficient public sector means taking it out of the private sector through taxes or borrowing, which can reduce or stall growth overall.

The better way to jump-start the economy and keep it going is through tax relief. How about locking into place the 2001 and 2003 tax cuts that are set to expire after 2010? If families can count on current tax rates, many will be more comfortable investing today instead of fearing the tax man's bigger bite in 2011. Or what about allowing full and immediate expensing for small businesses? This would encourage firms to invest in the assets such as equipment and real estate that could help expand and invigorate operations.

Pro-growth tax policy can best lay the groundwork for a sustainable economic expansion -- one that will provide the solid base for tomorrow's tax revenues. More government spending is likely to result in a temporary market blip, one that isn't worth its price tag.

Congressional Democrats, and yes, some Republicans, are polishing their spades as they get ready to heap more tax dollars on government projects. It's up to ordinary Americans to stay "quit digging."

Rasmussen is Director of Government Affairs for NTU. This article originally appeared in the McClatchy-Tribune News Service.