published Monday, May 16th, 2011

Debunked ‘stimulus’ claim

If anybody still thinks the $862 billion “stimulus” has created the jobs it was supposed to create, the latest unemployment report should finally put that notion to rest.

The stimulus was passed almost entirely by Democrats — with President Barack Obama’s support — more than two years ago. You may recall one of the Obama administration’s key claims about the bill. Just days after taking office, the administration said that if Congress passed the stimulus, unemployment would not exceed 8 percent.

But in fact, a month after the stimulus passed, joblessness hit 8.6 percent — before eventually skyrocketing to more than 10 percent. Not once in the 27 months since the stimulus became law has unemployment fallen below 8 percent — nor even gotten down close to that figure.

That remained sadly true last month. The U.S. Labor Department reported that joblessness rose from 8.8 percent to 9 percent in April, and that about 14 million Americans were unemployed. Although some businesses did add employees, natural growth of the workforce offset job creation.

And even the painfully high 9 percent unemployment rate does not tell the whole, unhappy story of joblessness in America. That “official” rate does not include millions of Americans who have given up the job search in frustration, nor the millions who need full-time work but can find only part-time jobs. When those groups are included, the so-called “underemployment” rate was nearly 16 percent in April.

That’s almost 16 percent of our people who don’t have the jobs they need to support themselves and their families!

So, what does our country have to show for the hundreds of billions of dollars in “stimulus” spending? We clearly don’t have the under-8-percent unemployment rate that we were told to expect.

But we do have far bigger national debt — about $14.3 trillion and rising fast — which we must repay with massive amounts of interest.

We also have a distorted market. The federal government used stimulus spending to pick winners and losers in the economy, rather than letting the free-market choices of hundreds of millions of Americans make those decisions based on which companies provided the goods and services the public wanted.

Additionally, in many cases, stimulus spending simply propped up government jobs at the expense of the private sector.

For obvious political reasons, there is little likelihood that Democrats will finally renounce the stimulus as the failure that it has undeniably been.

But its negative, and enduring, consequences should not be forgotten by the American people. It is past time we realize that reckless government spending is not the solution to our economic difficulties.

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nucanuck said...

Decades of debt accumulation, when reversed, will mean wholesale job destruction and depression.

That's why politicians can't find the courage to begin to repair the US economy. Cuts will lead to years of pain before economic stability could return.

To politicians, the needed medicine seems worse than the desease.

May 16, 2011 at 2:18 a.m.
SeaMonkey said...

the stimulus was a dud. a failure. it was a political move by a party in charge that has been the one primarily responsible for irresponible spending. both parties have contributed to it, but the democrats have led the way. the last two years have been a wrecking ball to the private sector. the federal government is flourishing.

May 16, 2011 at 6:28 a.m.
EaTn said...

Lots of folks are still debating whether FDR made the correct call on debt spending for ending the depression--some of these same folks or parents have or still work at places like TVA which was a FDR project that has created tens of thousands of jobs over the years. The debate of the Bush/Obama call is not likely to end soon either.

May 16, 2011 at 6:47 a.m.
nucanuck said...

SeaMonkey, while you try to place political blame for the stimulus, the true beneficiaries are doing rather well. The TBTF banks were, and are, who both parties "saved" at the taxpayers' expense. To try to distinguish which party is more guilty of over spending/under taxing is a fool's mission without an answer.

May 16, 2011 at 11:10 a.m.
GThreepwood said...

It was an absolute roaring success in terms of what what it was designed to achieve. A transfer of wealth from the private to the public sector = more dependency on gov't = political power and votes. Works every time. . As happened in Europe decades ago, once you pass the threshold of 50% of the electorate on some kind of government payroll, there is no turning back. It's not the end of the world, but certainly the end of productivity powered growth and the exceptional American propsperity we have come to take for granted. . Global investment of wealth and talent follows productivity, just as is it did when it left Europe for America, and is now doing from America to Asia. Our economy is entering an inevitable 'mature' state of political control. Best thing is to try to lock yourself into a gov't job while you can! .

May 16, 2011 at 11:51 a.m.
carlB said...

opinion » free press editorials » Debunked ‘stimulus’ claim published Monday, May 16th, 2011


Reply to FP Opinion: Why do you keep evading the causes of the conditions of the start of the high unemployment?
The Republicans keep wanting to weaken the US Governments strength while depending on the private sectors to come to the aid of this Republic, taking the Government out of the "fix" altogether. How can we expect the private sectors to "police" themselves when it was them that got us into this financial mess to start with? What would have been the results if Bush W. and Paulson had not gotten and used the $700 Billion dollars of borrowed money to bailout the fraudulent mismanaged "PRIVATE" financial systems? Did the doubling of the National Debt by the Bush W. administration cause the 2007 deep recession? What are your objectives for continuing your opinions of negative misleading information instead of discussing what would have occurred to the unemployment rate if not any money had been spent? Are you arguing for or against the possibility of having another "great depression"?

May 16, 2011 at 12:14 p.m.
Plato said...

The argument that this piece, and Republicans in general make, that the stimulus has had no effect on employment because the rate hasn't changed, is bogus because it doesn't consider the hypothetical alternative. That is how high would unemployment be WITHOUT the stimulus.

For those wondering about this, the Congressional Budget Office (CBO) actually did an in-depth analysis on the effect of the stimulus on both unemployment and GDP. As of last year the effect on unemployment is a positive 1 - 2% In other words we would have at least a 1 - 2% higher unemployment rate now without the stimulus and what is even more significant we would still be in recession without the stimulus as GDP would be a negative as much as a 2% instead of positive 2%.

Granted the graphs are a little dated but if you look at the trend lines you will see the the effect would probably be even more dramatic today then a year ago. This article reproduces the graphs and there is a link to a PDF of the CBOs full report for those that are interested in facts instead of political banter:

http://voices.washingtonpost.com/ezra-klein/2010/08/research_desk_where_would_unem.html

May 16, 2011 at 12:50 p.m.
carlB said...

EaTn said... Lots of folks are still debating whether FDR made the correct call on debt spending for ending the depression--some of these same folks or parents have or still work at places like TVA which was a FDR project that has created tens of thousands of jobs over the years. The debate of the Bush/Obama call is not likely to end soon either. May 16, 2011 at 6:47 a.m


Reply to EaTn: There appears to be a continuous battle between the US workers and the "Capitalist" of what the correct balance should be in "keeping our Republic"? Look at what the attitude toward the US workers has taken by the Republicans and the Capitalist as they have used the competition of the lower monetary value countries to depress the US workers. What other choice should FDR and President Obama have taken if this Republic was/is going to survive? All that everyone should do is read about what the Republicans allowed to happen to this Republic and the people after the 1929 great depression started and during the four years before FDR took over in 1933. Did the private enterprise sectors step up to put the people to work, when the Republican administration was afraid to help the people? What plans did they have then and now to prevent another great depression? The Republicans have the same "mind set" now as they had before and after FDR took over putting the people back to work on our infrastucture when the private sector did not help until FDR started the "lend lease" programs. During those times the CEO's were not making 400 times of the workers.

May 16, 2011 at 1:06 p.m.
hambone said...

The GOP is still waiting for "trickle down" to kick in!

May 16, 2011 at 2:13 p.m.
carlB said...

Plato said... The argument that this piece, and Republicans in general make, that the stimulus has had no effect on employment because the rate hasn't changed, is bogus because it doesn't consider the hypothetical alternative.


Reply to Plato: It would be hard to put a price on what the "bang for the buck" was if the stimulus kept us out of another great depression.

May 16, 2011 at 2:37 p.m.
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