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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[After eight years of this administration we have just as much unemployment as when we started . . . and an enormous debt to boot!”]
That’s a lie. In 1932, unemployment was over 23%. In 1940, it was down to just over 14%. The WPA gave people new skills, created many of our national parks, taught farmers how to farm without depleting the nutrients, built many schools, libraries, and other government buildings, and provided employment to 100s of thousands of people who would have otherwise been unemployed. It was a tremendous success.
[New Deal lawmakers doubled federal spending–yet unemployment remained above 20 percent until World War II.]
Another lie. See above.
[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.]
Government spending on infrastructure, such as road construction, does indeed create jobs. People have to be hired to do the work.
Tax cuts do not create jobs. It relies on the hope that companies with extra money will use that money to hire people. The problem with that theory is, business hire people they need to do work. If they don’t need more people, they’re not going to do any hiring.
[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.]
No, that’s evidence that the stimulus was essential in preventing us from descending into another full scale depression. Without the jobs created from the stimulus, we’d be in a lot worse shape.
It’s just right-wing spin that the stimulus hasn’t created jobs. All one needs to do is take a drive around Colorado to see all the road construction jobs created with stimulus dollars. There are a good number of jobs that aren’t so obvious, but were created just the same. Those are for companies developing renewable energy technologies, teacher’s jobs that would have been lost had they not received funding, new development of mass transportation systems…
Tax cuts do little to stimulate growth. While Reagan tripled the federal debt, job growth was moderate and was due more to the mini-tech boom than tax cuts. Clinton raised taxes and what we got was huge job growth and a balanced budget. Bush cut taxes, doubled the federal debt, and we had anemic job creation. The rich got richer and everyone else lost ground.
There is never been any real evidence that Reaganomics works at all. Keynesian economics does work and it has been shown to work every time. It is working now to some extent, but it is just not big enough. 1/3 of the stimulus bill was tax cuts, which has done little to nothing to stimulate growth.
oww this was great , i wonder why this can happen? 18:41
Here’s a solution to some of our wows.
On construction projects creating jobs-they go to the same bidders-democratic contributors-only union contractors-big companies, etc.
I keep thinking about the obama plan to spread the wealth. What is his plan to spread the work to those on public aid? Free TV’s and new Cell Phones? Health Care Reform is one of his plans to spread the wealth. Will he place a limit on government costs of producing crack babies and fetal alcohol syndrome babies. will he continue to increase payments to support illegitimate babies for public aid mommies. What comment do right to life advocates have on these issues? What is the incentive to stop public aid mommies from having more public aid babies?
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