Almost 90% hasn't been spent. Let's keep it that way.
Published today at the New York Post
In February, the President signed a “fiscal stimulus law” to supposedly “create or save” millions of jobs. If executed according to plan, the bill will cost $789 billion, or about $2,600 for every American, and this does not even count the extra economic harm when our government levies the taxes to pay for it. Fortunately, almost 90% of the government spending planned by the law has not yet occurred — which means that it can, and should, be stopped.
The economy has been in bad shape. Employment has fallen for a year and a half now. Real GDP has dropped four straight quarters. Many statistics show the obvious — that this recession is worse than those in recent memory.
But the spending of our political leaders — including the $700 billion bank bailout and the $789 billion stimulus — is totally out of proportion, not to mention counterproductive.
Over the past four quarters, real GDP has been $655 less per person than it was in 2007. That’s a lot by comparison to previous recessions, but it makes no sense to spend thousands per person to attempt to partially fix a few hundred dollar decline.
Even if the Obama Administration were right that the stimulus law would “create or save” three to four million jobs, that means each job costs the Treasury $215,000! The best case scenario for the stimulus law gives us results that are miniscule compared with the costs. In the worst case scenario, we actually pay money to further harm an already struggling economy.
Advocates will tell you the economy would be even worse if it weren’t for the stimulus bill. They’ll lead you to believe that every man, woman, and child is on the brink of starvation, but will survive only because government is proactively saving their employer and their jobs.
Yet, since this recession began, tens of millions of Americans were hired into new, private sector jobs even before the stimulus law was signed. Over 4 million were hired in January 2009 alone. This hiring rate is less than healthy, but it contradicts stimulus advocates’ claim that only government can be our employer.
Just as bad, our federal government has managed to escape the accountability that Americans deserve from its leaders. The claim that “it’s bad, but would be even worse without us” permits the Obama administration and its allies to do any amount of harm without questioning.
Even so, while advocates are not about to admit that the overall performance has been dismal, some of them are beginning to acknowledge that the stimulus “could have been designed better.”
Indeed. It would have been designed better if money had stayed with the taxpayers instead of funneling through dozens of federal agencies — an option that is still available. Otherwise, we are looking at heavy taxes — and further economic damage — down the road to pay for all the borrowing.
Stimulus spending is doomed by the fact that most of our job losses are concentrated in a few sectors, and in regions of the country that had the larger housing boom and bust. Construction workers as a group lost more than 1 million jobs, especially in places like Florida, California and Nevada. The government could put close to a million people back to work by hiring them to build more houses, but then it would be rightly criticized for adding further to the excess supply of homes.
Government could hire teachers and nurses — education and health are not in such excess supply — but then it would create few jobs because, while some teachers and nurses are unemployed, their numbers are far fewer than those in construction and manufacturing who were put out of work. And even if you could quickly transform former construction workers into effective teachers and nurses, that would require moving people from where many of the jobs were lost (California, Florida, etc.) to where the health care and education are needed (all over America).
The stimulus won’t do this. But the free market will — people will move in pursuit of jobs, will train in new industries. Most economists think that real GDP will start growing again within a few months, if it hasn’t already. Houses are starting to sell again, and some new ones are being built.
Employment will continue to fall for a while, but we learned this Friday that the job losses this summer are less than they were in the depths of the recession.
Published today at the New York Post
In February, the President signed a “fiscal stimulus law” to supposedly “create or save” millions of jobs. If executed according to plan, the bill will cost $789 billion, or about $2,600 for every American, and this does not even count the extra economic harm when our government levies the taxes to pay for it. Fortunately, almost 90% of the government spending planned by the law has not yet occurred — which means that it can, and should, be stopped.
The economy has been in bad shape. Employment has fallen for a year and a half now. Real GDP has dropped four straight quarters. Many statistics show the obvious — that this recession is worse than those in recent memory.
But the spending of our political leaders — including the $700 billion bank bailout and the $789 billion stimulus — is totally out of proportion, not to mention counterproductive.
Over the past four quarters, real GDP has been $655 less per person than it was in 2007. That’s a lot by comparison to previous recessions, but it makes no sense to spend thousands per person to attempt to partially fix a few hundred dollar decline.
Even if the Obama Administration were right that the stimulus law would “create or save” three to four million jobs, that means each job costs the Treasury $215,000! The best case scenario for the stimulus law gives us results that are miniscule compared with the costs. In the worst case scenario, we actually pay money to further harm an already struggling economy.
Advocates will tell you the economy would be even worse if it weren’t for the stimulus bill. They’ll lead you to believe that every man, woman, and child is on the brink of starvation, but will survive only because government is proactively saving their employer and their jobs.
Yet, since this recession began, tens of millions of Americans were hired into new, private sector jobs even before the stimulus law was signed. Over 4 million were hired in January 2009 alone. This hiring rate is less than healthy, but it contradicts stimulus advocates’ claim that only government can be our employer.
Just as bad, our federal government has managed to escape the accountability that Americans deserve from its leaders. The claim that “it’s bad, but would be even worse without us” permits the Obama administration and its allies to do any amount of harm without questioning.
Even so, while advocates are not about to admit that the overall performance has been dismal, some of them are beginning to acknowledge that the stimulus “could have been designed better.”
Indeed. It would have been designed better if money had stayed with the taxpayers instead of funneling through dozens of federal agencies — an option that is still available. Otherwise, we are looking at heavy taxes — and further economic damage — down the road to pay for all the borrowing.
Stimulus spending is doomed by the fact that most of our job losses are concentrated in a few sectors, and in regions of the country that had the larger housing boom and bust. Construction workers as a group lost more than 1 million jobs, especially in places like Florida, California and Nevada. The government could put close to a million people back to work by hiring them to build more houses, but then it would be rightly criticized for adding further to the excess supply of homes.
Government could hire teachers and nurses — education and health are not in such excess supply — but then it would create few jobs because, while some teachers and nurses are unemployed, their numbers are far fewer than those in construction and manufacturing who were put out of work. And even if you could quickly transform former construction workers into effective teachers and nurses, that would require moving people from where many of the jobs were lost (California, Florida, etc.) to where the health care and education are needed (all over America).
The stimulus won’t do this. But the free market will — people will move in pursuit of jobs, will train in new industries. Most economists think that real GDP will start growing again within a few months, if it hasn’t already. Houses are starting to sell again, and some new ones are being built.
Employment will continue to fall for a while, but we learned this Friday that the job losses this summer are less than they were in the depths of the recession.
State governments have seen their tax revenues drop, and some economists are concerned that they’ve become “50 little Herbert Hoovers” who raise tax rates and cut spending in order to balance their budgets. But transforming Hoovers into FDRs is not the way the stimulus bill could achieve its employment goal, because few of the job losses have been in the government sector. Even as the stimulus law was being passed, state and local government employment had been higher than it was when the recession began.
Local governments, meanwhile, spend the money as impotently as the federal government does — while still considering tax increases.
Just as this recession was beginning, the county board in the Chicago area voted to hike its sales tax, making it the highest in the nation. As outrage by citizens and businesses grew louder, one-time advocates on the county board changed their minds and voted to repeal the hike. Let’s hope that American taxpayers turn up the volume of their own outrage, and demonstrate to President Obama’s one-time allies that their political survival depends on stopping the stimulus.
I'd expect as much from Keynesians, but why must you too use Herbert Hoover's name in vain? Hoover's only presidential term was arguably more Keynesian than FDR's first. He raised spending more than any president before and ran large deficits despite a huge tax increase.
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