Obama’s Stimulus Package Has Failed To Deliver
Obama’s $787 billion “stimulus” a flop. In a January report, White House economists predicted the bill would create (not merely save) 3.3 million jobs. Since then, 2.8 million jobs have been lost, pushing unemployment toward 10 percent. The February 2009 report “The Job Impact of the American Recovery and Reinvestment Plan,” which the White House used as an ammunition belt in the fight to gain passage of its $862 billion economic stimulus bill (the actual cost of which exceeds $1 trillion when interest is included).
History proves otherwise. In 1939, after a doubling of federal spending failed to relieve the Great Depression, Treasury Secretary Henry Morgenthau said that “we have tried spending money. We are spending more than we have ever spent before and it does not work. . . . After eight years of this administration we have just as much unemployment as when we started . . . and an enormous debt to boot!” Japan made the same mistake in the 1990s (building the largest government debt in the industrial world), and the United States is making it today. During the 1930s, New Deal lawmakers doubled federal spending–yet unemployment remained above 20 percent until World War II.
• Japan responded to a 1990 recession by passing 10 stimulus spending bills over 8 years (building the largest national debt in the industrialized world)–yet its economy remained stagnant.
• In 2001, President Bush responded to a recession by “injecting” tax rebates into the economy. The economy did not respond until two years later, when tax rate reductions were implemented.
• In 2008, President Bush tried to head off the current recession with another round of tax rebates. The recession continued to worsen.
• Now, the most recent $787 billion stimulus bill was intended to keep the unemployment rate from exceeding 8 percent. In November, it topped 10 percent.
The stimulus bill has proven to be a waste of borrowed money that has failed to create jobs, generate economic growth or do much of anything other than line the pockets of White House political allies. $308 million was given in subsidies to BP before the Gulf oil spill disaster, and subsidize a study on what happens when monkeys snort coke.
Department of Labor jobs report, which showed private sector job creation fell by 190,000 between April and May of this year, jolted markets worldwide including the Dow Jones Industrial Average, which fell 3.2% to its lowest level since early February. In total the U.S. economy has now lost a net of 2.2 million jobs since Obama signed his stimulus bill, and his administration is now 7.2 million jobs short of what he promised his $862 billion stimulus would help create by 2010.
This repeated failure has nothing to do with the pace or type of spending. Rather, the problem is found in the oft-repeated Keynesian myth that deficit spending “injects new dollars into the economy,” thereby increasing demand and spurring economic growth. According to this theory, government spending adds money to the economy, taxes remove money, and the budget deficit represents net new dollars injected. Therefore, it scarcely matters how the dollars are spent.
The White House issued a report saying that the stimulus bill had “saved or created” 2.5 to 3.6 million jobs.” This report, based on a highly inflated projection of how much economic growth is created for every government dollar that’s spent, is further evidence that Washington is lying to the Nation. The national unemployment rate was 7.7 percent when the stimulus was passed. Today it is 9.5 percent. Since the passage of the stimulus, more than three million jobs have been lost across the country, resulting in a net job loss of 2.4 million.
One year later, one thing is clear: the stimulus bill has failed. One year later, not one net job has been created as unemployment rose from 7.6 percent to nearly 10 percent nationwide. Mr. President, millions of Americans are asking, ‘where are the jobs?’ Obama’s stimulus bill failed by its own standards. The idea that increased deficit spending can cure recessions has been tested, and it has failed. If growing the economy were as simple as expanding government spending and deficits, then Italy, France, and Germany would be the global economic kings. Every dollar Congress “injects” into the economy must first be taxed or borrowed out of the economy. No new income, and therefore no new demand, is created. They are merely redistributed from one group of people to another. Congress cannot create new purchasing power out of thin air.
Once again, the American public has been sold a bill of goods by the politicians who are trying to buy the public’s votes with the public’s money.
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