Wednesday, July 29, 2009

Is Obama's Stim Package Working?

"We are going to do what is required to jolt this economy back into shape." Pres.-elect Barack Obama, 11/24/08.

That was then.

This is now.

"There is no silver bullet, no single thing, that can address the many and complex needs of America’s vast economy." VP Joe Biden, 7/26/09.

Is Obama's $787 billion stimulus working? In February, at about the time that the stim package was adopted, Bethlehem Mayor (and now Congressional candidate) John Callahan had high hopes.

“The federal stimulus package, now headed to a congressional conference committee, will bring a quick infusion of funds into Pennsylvania that will assist with the Commonwealth’s own budget crisis, as well as create jobs, encourage investment, lift consumer confidence, and begin the long road back to nationwide economic stability. Immediate action to pass the American Recovery and Reinvestment Act is vital not only to the future of our nation, but to the future of Pennsylvania and its local government units.”

Well, I doubt anyone can help Harrisburg legislators solve their yearly budget crisis. They're in gridlock as usual. Overall, Obama's vaunted stim package has been a bust. According to Bloomberg Press,
* household net worth has fallen almost 22 percent;
* house prices have fallen more than 32 percent;
* the Standard & Poor’s index of 500 stocks is 40 percent below its October 2007 level; and
* the jobless rate hovers around ten percent, with 29% of them have been out of work now for more than six months.

What's more troubling to me is that the stim package totally fails to consider the deleterious impact that two other major spending initiatives - health care reform and cap-and-trade - will have on our economy. The nonpartisan Congressional Budget Office has already warned about the trillion dollar cost of some of the health care proposals. CRA International, in its report for the National Black Chamber of Commerce, concludes that the green energy bill passed in the House will reduce national GDP roughly $350 billion, cut net employment by 2.5 million jobs per year (even after accounting for new “green” jobs), and reduce earnings for the average U.S. worker by $390 per year.

Then we'll need another stimulus package until the whole house of cards collapses. Congressman Charlie Dent voted against the stimulus package as well as the cap-and=trade legislation. He certainly supports health care reform and said so at the Nazareth Town Hall, but is taking a more careful approach than House Democrats.

16 comments:

Jacob said...

We are in a Great Depression caused by 30 years of bad economic policy. Time to abandon the notion of trickle down economics. Trickle down economics means trickle up poverty.

Anonymous said...

Bernie,

A hard rain is going to fall. I don't need to waste my time tediously proving the point, soon enough it will be apparent to all.

Scott Armstrong

Anonymous said...

Everything I've seen shows that less than 10% of the package has been spent. Ask me again when that number is up to 70%.

The better question is: what is wrong with America that as citizens we can spend money we don't have in our personal finances, leading up to this massive economic collapse - but our government can't get a desperately-needed cash infusion off their desks even after months of planning.

Anonymous said...

The stimulus package is back-loaded, so it's not surprising that its impact thus far is minimal. I was never a fan of Keynesian economic theory because by the time the gov't realizes a recessionary period is underway, passes the stimulus, and the stimulus takes effect, the business cycle is already cycling through toward recovery.

As other posters have noted, the clock is just about up on the worldwide (not just US) excess liquidity and public sector debt. When countries stop buying our Treasurys, interest rates will rise. This should occur just about the time the stimulus money kicks in, raising the possibility of hyper inflation.

Anonymous said...

I continue to be amazed that otherwise intelligent people, with overwhelming evidence to the contrary, spanning over 70 years, believe that the idiots in our government know better what to do with $787 billion dollars than the collective wisdom of the American People.
Holding this belief is 1. Beyond stupid and 2. confirmation that the believer is a socialist.
Worse yet, this government is printing the money they are spending-are you also stupid enough to believe that this will go unnoticed and haveno ill effect?

Pulleeeze

Bernie O'Hare said...

"Time to abandon the notion of trickle down economics."

I agree completely, and that's why this stim package is failing. It's trickle down.

Bernie O'Hare said...

" Ask me again when that number is up to 70%"

There was supposed to be immediate relief, a jolt. This is kinda' like taking two aspirins for a headache and being told they'll kick in three days from now.

Bernie O'Hare said...

I have to say also that I supported the stim package because I felt we had to do something. I now believe I was mistaken.

LVCI said...

I disagree with so many things in the ARRA (recovery act).

W/O going into endless detail let's just say at least 70% was folly. To just try and make temporary busy work is just plain ridiculous. By modifying all our trade agreements we could have created REAL jobs.

On a more positive note, only 25% of the ARRA monies have been committed (not necessarily spent) thus far. The remaining 75% is to be doled out by Sept. 2010. So the jury's still out as to whether this is a failure or not. I feel most people are arguing their philosophies while we're only a 1/4 way through this.

I must say I'm not confident in the plan either.

But I'm reluctant to commit either way till we're at least halfway through this plan. Since it was passed in Feb 2009 and culminates Sept 2010 that would make it about 1/2 way through around this November.

Bernie O'Hare said...

I consider it a failure now, and I say this as someone who supported the idea. Our problems exist NOW and need to be remedied now, not in over a year from now.

Anonymous said...

well as a socialist I'd much rather just see the government put an end to this silly capitalist farce than to keep prolonging the anguish that is false hope.

Miles Grant said...

The National Black Chamber of Commerce is a credible source of economic data? Check their funding sources. They get huge amounts of money from Big Oil. No surprise the NBCC wants to keep our economic & energy status quo.

ironpigpen said...
This comment has been removed by a blog administrator.
ironpigpen said...

Obama WILL also pay a MAJOR price for his WILLINGNESS to apologize to everybody under the sun for HIS PERCEPTION that America is, historically, a disgusting place to be.

Full of Wall Stree and Auto executive crooks, exploiters, racists, mean-spirited people, the USA...

BUT HURRY, HURRY, HURRY WITH THE HEALTH CARE THING!!!

Never let a crisis or catastrophe go to waste :)

Bernie O'Hare said...

Pig Pen, You've crossed the line too many times.

Anonymous said...

Oh the Presidents plan didn't solve the Bush nightmare in 10 minutes it must be terrible.

Yeah, keep selling that message Charlie, you are toast.