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The True Cost of the so-called Economic Stimulus Package

This week, the U.S. Senate is expected to consider and pass its version of the so-called economic stimulus package.  If you're a regular follower of this blog, you know that this action follows House passage of a similar package that the nonpartisan Congressional Budget Office (CBO) and other experts say will not immediately stimulate the economy since the bulk of the spending in the bill will not occur until next year and beyond – with some of it not being spent until 2018.  Moreover, the bill devotes hundreds of billions of dollars to government spending programs rather than the job creation and economic stimulus our country truly needs.

Regarding the roughly $145 billion in education funding proposed under the bill, what has been lost is the fact this money is supposed to be temporary: it vanishes in 2 two years.  College freshmen who are slated to receive $500 more in Pell Grants to combat rising tuition rates will have to work longer in their junior and senior years to cover the shortfall.   Schools that have instituted new afterschool programs with the millions in new Title I funding will have to send those students home after two short years.  States that have enhanced their special education services for infants and toddlers with the new special education funding will have to pay for those services themselves. 

With such dramatic consequences occurring all over the country, we know what will happen.  We've been through this before.  Over the last three decades, Washington has created hundreds of “temporary” education programs, with the promise that it would be for one or two years, to provide seed money for "demonstration programs" until some fashion or fad can finally can get off the ground or to help states and school districts brave bad economic times.  Those federal programs, and the spending to go with them, are still with us today.

So regardless of the promises that have been made by the Congressional leadership, we know that this new "temporary" funding will be around long after the economic stimulus package has passed, long after our economy has rebounded.  This case is already being made by some in the education establishment who are arguing that we need to add the new temporary funding into the federal budget's "baseline" – a mechanism in federal budget law that assumes that all of the new funding will be provided by Congress each and every year.  While the “baseline” is arcane and not easily understood, it’s incredibly important in detailing what Congress has provided for all of its programs for the last fiscal year and what it is projected to provide for each program going forward.

Recently, the Committee’s Republican staff put together three charts demonstrating the impact that a new budget baseline, including the spending in the economic stimulus package, will have on the federal budget for the Pell Grant, Title I, and IDEA programs.  The funding increases for three programs alone would result in a doubling, tripling, or even quadrupling of the U.S. Department of Education’s budget in a few short years.

While no one is disputing that states and school districts rely on federal dollars, it’s important to remember that the federal government has a responsibility to balance its budget and to start paying down the more than $10 trillion debt (already more than $30,000 for each person in the country). The funding included in the so-called economic stimulus package isn't "free" money; our children and grandchildren are going to be the ones who are going to have pay for these massive increases in new federal spending.  It’s time for those in charge to restore fiscal discipline to Washington.

Posted by Education Policy Staff (02-02-2009, 12:38 PM) filed under Education

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