Summer of Bailouts

Heritage Foundation

White House press secretary Robert Gibbs did not give the White House daily press briefing yesterday. The stated excuse was a bad cough. But there was no mention of any flu-like symptoms when The Hill reported yesterday that Gibbs believes the "professional left" should be "drug tested" since they will only be satisfied "when we have Canadian health care and we’ve eliminated the Pentagon." After an outpouring of leftist protests over the article, including a call from Rep. Keith Ellison (D-MN) that he resign, Gibbs walked back his criticism, releasing a statement explaining: "Day after day it gets frustrating. Yesterday I watched as someone called legislation to prevent teacher layoffs a bailout - but I know that's not a view held by many."

Oh how wrong Gibbs is. "Bailout" is the only word that can accurately describe the $26.1 billion legislation that the House approved on a largely party line vote yesterday. Let's break down the bill's main provisions:

The $16.1 Billion Medicaid Bailout - Congress has already bailed-out state Medicaid programs three times this decade, the most recent $87 billion installment coming as part of President Obama's $862 billion failed economic stimulus bill. But the states with the most wasteful Medicaid programs have already blown through that money, and now they need another hit. Every state should have known that the stimulus funding would expire on December 31, 2010. But 30 states went ahead and built their budgets on the assumption that President Obama would hook them up for 2011 as well. This $16 billion Medicaid bailout is designed to aid to those states with the worst Medicaid spending problems. For instance, New York has nearly 30 percent of its citizens enrolled and spends in excess of $18,000 per person in poverty. Texas, in comparison, with 5 million more people and 1 million more individuals in poverty than New York, has a much smaller Medicaid program. In essence those 20 states that acted prudently and budgeted for the stimulus to expire are paying for the bailouts of the 30 states that can't control their Medicaid spending problem.

The $10 Billion Government Union Bailout - The President will tell you that without this $10 billion, your child's teacher will be fired this fall. Don't believe him. As Mike Antonucci of the Education Intelligence Agency has detailed, those schools that "fired" teachers this spring have already begun hiring them back. If teachers unions were really concerned about saving teachers' jobs, they could easily agree to pay-freezes or to start paying for their own health care. But government unions are not in the business of giving up revenue sources. They exist to suck the private sector dry as much as politically possible. The unions claim that the $10 billion public-education bailout would save 100,000 teaching jobs. That means taxpayers will be paying $100,000 per job — nearly double the national average for teacher salary, $54,000. Moreover, the U.S. Census Bureau estimates that about 57 percent of teachers are unionized. Using a conservative estimate of $300 in annual dues paid, the NEA and AFT have a minimum of $24 million in dues at stake. It is that $24 million in union dues revenue, not your children's education, that this bailout is really about.

Fantasy Food Stamp Cuts - President Obama originally just asked for all these new bailouts to be tacked onto the deficit. But the Senate balked. So instead, Majority Leader Harry Reid (D-NV) got creative and identified $11.9 billion in unspent food stamp stimulus funds that could be re-appropriated. But don't believe for a second that that money will not be spent anyway. Democrats immediately told The Huffington Post that they will work to prevent those food stamp cuts from ever taking effect.

Real Job-Killing Tax Hikes - In addition to the food stamp and other smaller spending cuts, the bailouts are also paid for by a $10 billion tax hike on American companies that compete overseas. This tax is pure protectionism. The Obama administration seems to believe punishing firms that try to expand their businesses in foreign countries will increase employment here at home. They are dead wrong. For every worker employed by a U.S. subsidiary in a foreign country, 2.3 Americans are employed in the United States. This tax hike is the Smoot-Hawley of this recession.

When the House recessed last week, taxpayers had the chance to believe that their long national bailout nightmare was over. No such luck. Just when you thought your tax dollars were safe, the Obama administration sucks them back in.