President Obama’s Three-card Monte trick

On Tuesday August 10, 2010 President Obama signed a 26 billion dollar stimulus bill that is claimed by Democrat leaders to save the jobs of 300,000 teachers, police and fire personnel that have either been laid off or are in danger of being laid off. Mr. Obama, at the ceremonial signing of this bill into law claimed “We can’t stand by and do nothing while pink slips are given to the men and women who educate our children or keep our communities safe.”

This Bill, now law, has reportedly been scored by the congressional Budget Office as “deficit neutral,” meaning it will not add to the Nation’s exploding deficit of more than 13 trillion dollars. To get to the Holy Grail designation of “deficit neutral,” the bill is funded using a combination of tax increases and innovative spending cuts in other areas.

Part of the funding involves cutting 12 billion dollars from the food stamp program administered by the Department of Agriculture. Americans receiving food stamps are at an all-time high of near forty million people. In one year alone, the number of people on food stamps has increased by almost nine million. These spending cuts to food stamps arrive in 2014, so Congress is cutting a program in the future that has not been paid for yet and applying that future money to the present. A legitimate “bookkeeping trick” yes, but a trick nonetheless.

The Feds say this spending law could save 160,000 teacher jobs by spending 10 billion dollars. But the calculation involved in getting that money to the States is based upon state population and the number of children in school. States that have run their budgets responsibly will be getting money regardless of whether they need it. Arkansas, for example will be getting an extra $91,000,000 of taxpayer money, even though their teaching staff is fully funded.

“There is a fairly broad spectrum of personnel that money can be used to support,” said Carmel Martin, assistant secretary for policy at the U.S. Department of Education in a media conference reported by the Daily Caller. “Often in school districts where the teachers were not laid off, many times districts were able to do that by cutting other critical services. So this money could be used to support some of the service in the form of salaries and compensation of benefits.”

According to the Boston Globe, the bill also provides $16 billion to extend increased Medicaid payments to states. This funding boost will free up money that can be redirected to other areas of state budgets. The result is supposed to save an estimated 150,000 police officers, firefighters, and other public employee jobs. Medicaid payments to the states had been increased as part of the Stimulus Bill of 2009. Those payments are now winding down, causing a major hole in state budgets. Combined with Obamacare’s provision to expand Medicaid up to 50% by 2014, state Governors are in a panic to find money to pay for it.  

The claim made by President Obama that he is stopping “pink slips” from being doled out to police, fire, and teachers is not accurate. A more truthful description of this law would be another bailout for teacher unions to exempt them from the pain of renegotiating state labor contracts coupled with a short-term cover-up of Obamacare flaws while shielding Democrats politically in the mid-term elections. Tax increases, vague guidelines, funding based on future spending looks like a trick. That’s because it’s what it is.