Today at the Christmas Gallery -- a locally-owned small business -- as the federal government considers one of the largest spending sprees in the nation's history, Congressman Lamar Smith outlined the true cost of the economic stimulus package passed by the U.S. House of Representatives.
"As the federal government prepares to deliver billions of dollars in gifts to state and local governments across the country," said Smith, "some would have you believe that the $825 billion economic stimulus is the equivalent of a Christmas present."
"Unfortunately, the federal government is not Santa Claus. Elves are not making this money," said Smith, "This money isn't free and the American people will pay the bill."
"This unprecedented deficit spending will inevitably hike inflation and lead to increased taxes," said Smith. "I did not support this bill, nor did any House Republican. In fact, it had bipartisan opposition. Eleven Democrats voted against it because it is a bad bill."
Smith is also concerned that only $90 billion, or 12%, of the massive $825 billion plan is anything that could be considered stimulus spending that would create jobs soon.
According to the Congressional Budget Office, only 20% of the funds will be spent in the first year when Americans and the economy need it most. More than $250 billion of the plan is actually in the form of income-transfer payments to the states.
"States that were fiscally more conservative like Texas are bailing out the multi-billion dollar deficits of states like California and New York that spent lavishly when times were good," said Smith.
Smith pointed out that Texas is only getting 3% of the stimulus money while it has about 8% of the country's population. "The federal government is rewarding irresponsible behavior by bailing out states that overspent their budget," said Smith. "Meanwhile states like Texas that lived within its means are penalized for responsible behavior."
House Democrats say the proposed stimulus is intended to create or save 3 million jobs. That means that the legislation will spend about $275,000 per job. The average household income in the U.S. is $50,000 a year.
"We've already had the Economic Stimulus Act of 2008, which cost $150 billion. We've had the Troubled Asset Relief Program (TARP), which burned through $350 billion with nothing to show for it," said Smith. "I think we should gauge the impact of the TARP funds already approved before throwing good money after bad."
Smith instead supports a Republican alternative. The GOP proposal would cut small business taxes by 20%. Small businesses employ half of all working Americans. This will lead to the immediate creation of new jobs.
Using the methodology of the President's nominee to head the council of economic advisers, Dr. Christina Romer, House Republicans calculate that their plan will create twice as many jobs - 6.2 million - at half the cost of the so-called stimulus package.
The GOP proposal also would reduce taxes across the board and increase the Child Tax Credit from $1,000 to $5,000, which would provide a substantial, immediate tax cut for middle-class families.
"It would be far more effective to provide tax incentives and investment credits to the small businesses that create 70% of the new jobs in America than to send the American people a bill for $825 billion," said Smith.