Rendell proposes $3.2B in new spending

I can't wait for Gov. Ed Rendell's annual budget speech Tuesday.

Pennsylvania, like the rest of the nation, is heading into a recession.

I'm no economist, but is $2.3 billion in new government spending the best way to deal with an economic downturn? Rendell thinks so.

"A stimulus package is urgently needed to protect and build on the progress we've made in the past five years," Rendell said in unveiling his "Protecting Our Progress" initiative.

Rendell is still painting a rosy picture of Pennsylvania's sick economy, but the governor admits trouble is on the way.

"There are storm clouds in the national economic forecast and we need to continue working together now to ensure residents and businesses can weather any storm," Rendell said.

Rendell's "Protecting Our Progress" plan has three elements:

1) Tax rebates for lower income Pennsylvanians.
2) Release of state funds for public construction development projects
3) More government grants and tax breaks to businesses to "stimulating business expansion and job creation and retention." (In other words, more corporate welfare spending.)

The fact that Rendell's first five years of "corporate welfare" handouts has failed to provide the promised job projections is not going to deter Rendell from continuing to dig a deeper hole for the state's economy.

Here's some advice for the governor. The first rule of digging holes is when you're in a hole, stop digging.

I'm waiting to see how the left-wing media (and the bloggers) will respond to Rendell's tax rebate scheme since many ridiculed President Bush's proposal. Do tax rebates make economic sense if a liberal governor is proposing them?

Rendell wants the Legislature to enact "Protecting Our Progress" tax rebates, a one-time rebate of up to $400 per household that would be paid to more than 475,000 of Pennsylvania's lower-income working families. This will cost $130 million.

Rendell also wants passage of an additional $750 million in Redevelopment Assistance Capital Program, or RACP, funding to jump start $1.5 billion in community and economic development projects, according to the governor's office. Nearly $200 million worth of projects are ready to go by the end of this year, and nearly a billion dollars more are in various stages of readying for development.

As for the rest of the package, it's a rehash of the initiatives Rendell proposed in 2007 but have not been approved the the Legislature:

1) The Jonas Salk Legacy Fund to provide $1 billion to build new facilities for health-related research.

2) Enactment of the Energy Independence Strategy to put $850 million to work expanding the alternative energy sector and helping consumers bring down their household energy costs.

3) Launching "Rebuilding Pennsylvania" to repair the state's aging infrastructure with more than $700 million to accelerate progress in the next three years to repair at least 1,000 bridges, all state-owned high-hazard dams, and help local governments repair their dams. In addition, capital funds will provide targeted infrastructure improvements to expand rail freight and aviation facilities and mitigate flooding.

The governor hasn't revealed yet where the money will come from to fund all these programs. Is there a printing press in the basement of the governor's mansion? A tax hike is out of the question. Can you say borrowing? Rendell has already borrowed $2 billion to fund various programs. What's another couple of billion among friends?

Rendell will present his 2008-09 budget proposal at 11:30 a.m., Tuesday, to a joint session of the General Assembly.