Tuesday, July 13, 2010

Has the Stimulus Worked?

One issue on which Congressional candidate John Callahan has actually taken a stand is the stimulus package, something I originally supported myself. On behalf of the Pa. League of Cities and Municipalities, he issued this statement: "It is imperative to the survival of our Pennsylvania communities that the Common-wealth receive the funding provided in the Federal Economic Stimulus Package. Pennsylvania’s cities and municipalities stand to beneļ¬t from investment in infrastructure, community/economic development incentives, and employment of displaced workers. Our country needs to immediately move forward in aggressively attacking the root causes of the current national recession."

Well, the Stim passed and things got better, right?

Wrong. Eighteen months have passed since the Administration claimed an economic Stimulus in the range of $775 billion would create 3.5 million jobs and cap unemployment at 8 percent. (1) Instead, 2.3 million American jobs have been LOST, unemployment spiked from 7 percent to nearly 10 percent and has remained there, and taxpayers are on the hook for a trillion dollars, including interest. There's been a total reduction of 2.3 million jobs from February 2009 until June 2010, including job losses in almost all business sectors. (2)

The only job sector “gains” were in government jobs – which means taxpayers will continue picking up the tab to keep these jobs in place after Stimulus funds expire. That is the working definition of “unsustainable” employment.

“The private sector is losing jobs and the government-created jobs from the Stimulus are unsustainable without future tax increases,” said Congressman Charlie Dent. “Taxpayers take note: John Callahan thinks that is success. John Callahan believes we’re getting our trillion dollars worth from the Stimulus and other failed job measures in the past year. How much more of your money will he be willing to spend on disastrous policies?”

1. Romer-Berstein report of Administration’s stimulus projections, Jan, 10, 2009http://www.politico.com/static/PPM116_obamadoc.html

2. U.S. Dept. of Labor, Bureau of Labor Statistics

39 comments:

Jon Geeting said...

As usual, you demonstrate a deep and studious ignorance of economic issues. Every time you speak up on national issues, I think your readers get a little dumber for having read what you had to say. Of course, the only time you see fit to cover national issues is when Charlie Dent has passed a press release through you.

Two especially outlandish errors among many here badly need correction:

First, the Obama administration's estimate of the appropriate size for a stimulus package was wrong on two counts.

1. The reason they said it would keep unemployment under 8%, was because they as well as the Federal Reserve and most professional economic policymakers in Washington were operating under the assumption that the recession was significantly less severe than it was. This a point that even honest conservatives openly acknowledge. Only a hack would still be using the "they said it would stay under 8%" talking point in 2010.

2. More importantly, even with the Fed and the adminstration planning under unduly rosy assumptions, administration economist Christina Romer ran the numbers and figured out that we really needed a $1.2 trillion stimulus. That number was shot down immediately for no better reason than political sticker shock. But that's still how much we needed! Does anyone actually believe Charlie Dent or any other Republican for that matter would have voted for a $1.2 trillion stimulus?

Second, the jobs created by the stimulus have been overwhelmingly in the private sector. It is true that the last few months have seen public sector employment temporarily high because of Census jobs. But those are still jobs. On a side note, why is a government job not any good?

Ultimately, the most charitable explanation for why Charlie Dent has zero credibility on jobs is that he understands even less about economics than Bernie does. At a time when the 10-year TIPS rate is at a record low, and there are no inflation expectations, Charlie is girding himself for inflation. http://www.lehighvalleyindependent.com/2010/07/if-charlie-dent-wants-jobs-he-should-be.html He doesn't get that you need to use a different recipe for fighting deflation, than the recipe we used to fight inflation in the 80's - exactly the opposite problem.

Anonymous said...

Yes!

Anonymous said...

Not too full of ourselves, are we, Geeting? Seems like you agree with O'Hare's basic conclusion. The Stimulus package has failed. Your brilliant solutuion is to dump even more money into it, after acknowledging two errors by Obama.

Anonymous said...

If you want another yes vote in the House for Barack Obama then vote for Callahan. Otherwise the choice is clear. Hold every Democrat accountable.

Scott Armstrong

Anonymous said...

"...why is a government job not any good?"
because unlike a private sector job, where the employee is creating something for an exchange of real value, an increase in federal employment must necessarily mean a decrease in private employment. Government jobs are an illusion that will evaporate when other prople's money runs out.

Anonymous said...

Stimulus under Bill Clinton put millions into homes they could not afford. It also encouraged a feeding frenzy on tax dollars by bankers and their government friends who made sweet deals with each other. Clinton's friends at Fannie and Freddie got filthy rich. Chris Dodd got his special mortgage. Everything about the stimulus was firing on all cylinders.

Now, we're told by the same types who stimulated the mess, that we must stimulate our way out of the crisis they created. Remember, stimulus caused this. Any more stimulus, and we'll all be Greeks.

And Charlie Dent bailed out the sleazy banks and said not a word about the Clinton administration-filled Freddie and Fannie crooked operations. He has no standing on this issue vs. Callahan.

LVCI said...

What were the alternatives.. Suppose McCain were President.. better off? I think not!

Jan. 25, 2009: McCain says he wouldn't vote for the stimulus unless the Bush administration tax cuts to the wealthy are made permnant

NO PROBLEM.. HE DIDN'T!

Feb 7, 2008: McCain the only U.S. senator Wednesday to miss a vote on an economic stimulus package

Here are McCain's ideas:
Focusing on payroll tax cuts and business cuts and spending on military construction and replacing equipment for the military.

So this comes down to nearly the same amount of government debt (created by permanently reduced tax revenue). The difference being McCain would have cut taxes decidly favoring the wealthy and businesses. Then use the stimulus monies to fund the military complex.

He did however support "Mortgage Relief".. the very thing he now critisizes.

So the bottom line is taxpayers would have been on the hook either way. I doubt the results from either Obama's or McCain's would put us in a much differnt position then we're in. It's all a matter of who's basket you favor to put the taxpayer's eggs in.

Either way neither Demos or Repubs will ever stop dueling over the matter to the expense of what's best for the nation itself.

Anonymous said...

Geeting -

You miss a third possibility - that the growth of the size of government, hostile attitude of the Obama Administration toward private sector businesses, and the out-of-control spending of this administration (such as the stimulus) have made things worse.

Roosevelt extended the Great Depression using similar tactics. Those who fail to learn from history are doomed to repeat it.

Wayne said...

Yes, we just under estimated the severity of the recession... more money please!

But Jon, the page you link to shows that America is already on the path to recovery! Just look at the graph. It's hard to defend the "success" of the savior's program while simultaneously blaming the tightwad R's (who do not control Congress) for it's failure, isn't it?

Anon 6:31 is right on. Some jobs generate wealth by adding value to a product while others do not. A carny worker is generating wealth because the pay for what he does and the overhead for the carnival is exceeded by the income from the ride tickets. On the other hand a National Park Guide's services and park overhead is not sufficiently covered by entrance fees. So where does he get his pay from? By taxing wealth creators like the carnival.

Not saying that Park Rangers and all government sector jobs are unworthy. Am saying that imagining that creating more of them will stimulate the economy is lunacy. It has it's place in the absolute necessity of government functions and that is where the real difference lies between our philosophies.

It's not so much an opportunity to fix the economy as it is a way to expand everyone's opportunity to suckle at the "government teat". And to do that at a time economic crisis is just plain wrong...

Anonymous said...

LVCI -

You're right.

Under McCain we might have slightly smaller versions of the programs Obama put in place, but I have no doubt McCain would have rolled over for much if not all of what the congressional Democrats wanted (probably in the name of bipartisanship).

At the end of the day, McCain is a big-government Republican. Obama is (among other things) a big-government Democrat.

It's time to stop focusing on party affiliation and start opening our eyes to what big-government supporters (in both parties) are doing to us.

I can't go back in time and get you better candidates (on both sides) in the 2008 election. How about we focus on the future and reject big-government candidates, regardless of what letter they have in front of their name?

Wayne said...

To Anon 8:01AM

Amen and amen...

Anonymous said...

I much prefer NO stimulus and 15% unemployment! See, I'm bipartisan!

Anonymous said...

If you want another yes vote in the House for Barack Obama then vote for Callahan. Otherwise the choice is clear. Hold every Democrat accountable.

Yes, because we clearly need to go back to the failed economic policies - you know the ones that devastated the economy to begin with - of the Bush presidency.

The audacity of these Repubs to even suggest times were better under George W. Bush is delusional.

Anonymous said...

Not saying that Park Rangers and all government sector jobs are unworthy. Am saying that imagining that creating more of them will stimulate the economy is lunacy.

Yes, you are.

Last time I checked, money in the pocket of a government employee purchases goods and services that otherwise would not have been purchased. But don't let common sense get in the way of good demagoguery!

Bernie O'Hare said...

"As usual, you demonstrate a deep and studious ignorance of economic issues. Every time you speak up on national issues, I think your readers get a little dumber for having read what you had to say. Of course, the only time you see fit to cover national issues is when Charlie Dent has passed a press release through you."

Thank goodness we have people like you to tell everyone what they must think.

As far as this blog goes, I stick mostly to local stuff bc that is where I am most comfortable and
can best complement the MSM with some original stories. Some of the local stories I've written, , like the upside down flag, have actually become national stories. A story about the Hillary campaign was also picked up nationally.

Incidentally, I consider Vharlie Dent a local story.

Now I can understand disagreement. That's fine. Let me have it. But I don't really understand what the hell you're saying. You admit that Obama was wrong about the stimulus, and think the answer is to spend even more money. That's actually insanit, which is defined as doing the same thing over and over and getting the same bad result.

In addition to making a particuliarly poor argument, you just have to insult me and my readers for readig me, too. Does that make you feel good?

Bernie O'Hare said...

"Last time I checked, money in the pocket of a government employee purchases goods and services that otherwise would not have been purchased. But don't let common sense get in the way of good demagoguery!"

Yes, but the money that is put in the pocket of that government employee is coming from the taxpayers, and this catches u with us in the form of higher taxes. That's common sense.

The best way to create jobs is to help the people who create the jobs. That's a Republican idea, I know, but they are right on this one. Government does a lousy job of creating jobs.

Wayne said...

Anon 9:09AM

Nice try...

That money being spent was not created wealth, it was redistributed wealth. The carny worker could have spent it just as well, or a ride could have been maintained or bought with that money thus retaining or creating jobs.

Taking money from your left pocket and placing it in the right and then imagining you've accomplished something...

Yeah, sure.

Anonymous said...

Anon 9:06 said:

"Yes, because we clearly need to go back to the failed economic policies - you know the ones that devastated the economy to begin with - of the Bush presidency.

The audacity of these Repubs to even suggest times were better under George W. Bush is delusional."

***********************************

I guess it's just a coincidence that the country's financial problems mushroomed after the Democrats took control of Congress in the 2006 elections.

It wasn't all that long ago that the economy was at statistical full employment. And yes, that was under the Republicans.

Unemployment is double what it was back then, so I guess you don't like people having jobs. That being the case, it's clear why you support Obama.

Anonymous said...

Where's the story about the unemployment benefits that Charlie and the other Republicans just cut off for millions of Americans?

Anonymous said...

DEMOCRATS - CLEANING UP REPUBLICAN MESSES SINCE 1933.

Bernie O'Hare said...

"Where's the story about the unemployment benefits that Charlie and the other Republicans just cut off for millions of Americans?"

Dent and House Republicans voted to extend benefits. The Senate went into recess without voting on it. I wrote about ir.

Bernie O'Hare said...

LVCI,

I don't think McCain had a very compelling argument, to be honest. The reality is that you create jobs by creating an environment in which businesses want to hire people.

Pa. is #45 in job creation, having fallen from #44 just 4 years ago. Why is that? One reason might be a 9.9% corporate net income tax, the highest in the nation along w/ Iowa.

Why not reduce that tax rate and see what happens?

Government does a lousy job of creating jobs. You can have all the DCED programs in the world, but it is up to business.

Lighthouse said...

As already alluded to above, the "stimulus" spending of the New Deal provided some "relief", but not "recovery." When FDR was concerned about costs and cut back, shock-- unemployment crept up. We couldn't spend our way out then...don't think we can spend our way out now.

Fast forward to today, in the age of 24/7 media coverage and we expect instant results. Like every other commercial for this, that, and the other medical drug to give us instant gratification from our ailments, the public has been conditioned since the New Deal to believe that there is some quick fix economic "pill" if the our wise leaders in the government could simply put partisanship aside and work together to get the formula right. . . something that never has, and never will happen.

As long as the masses want the government to "do something", they'll keep electing big-government Democrats and Republicans. But how deep into debt can we go? I've been hearing D's and R's alternately talking about how "shocking" our national debt is since I first took and interest in government in the late 70s ...but the hole just gets deeper and deeper to the "new" shock of the next round of politicians.

Clem said...

"Pa. is #45 in job creation, having fallen from #44 just 4 years ago. Why is that?"

Because our economic development policy is little more than handing out cardboard checks (funded with borrowed money) to bars and restaurants owned by Rendell supporters?

Just askin'.

Anonymous said...

11:34,

LMAO

Socialism works great until you run out of other people's money.

I can understand it's all Greek to you.

Anonymous said...

Jon:

You don't sound like an "independent" to me. As a matter of fact, you sound like the "hack" you are calling Bernie!

Tell me Jon, How in your short 26 years on this earth, have you become such and expert in economics? I am sure you have a PhD in economics, right?

Try again in 10 years, after you have learned something about anything.

LVCI said...

Bernie O'Hare said..."Why not reduce that tax rate and see what happens?"

Key is targeted reductions.. not just general reductions for everyone. A business's future growth demands are the key.

EXAMPLE: If there is a demand for 1,000 boxes of macaroni per day, why give a company that makes it a tax reduction? They would just use the extra savings to buy their competitor's macaroni plant.

These kind of things always result in consolidation and workforce reductions. In the end we still only have the same amount of macaroni being sold (because there is only the same demand for 1,000 boxes a day) minus perhaps the former 1,000 workers.

Let's say instead we have a demand for steel, iPhones or widgets. The potential growth and demand for more steel, iPhones or widgets will see an increase on jobs or industrial growth.

So I feel there is a need for reduced tax rates only that target certain companies that have potential for growth and hiring.. not just an across board willy nilly tax break.

Bernie O'Hare said...

LVCI,

You could very well be right. But I'm not seeing it and disagree.

A "targeted" tax cut, aimed at some companies while excluding others, is very likely unconstitutional. We have the highest corporate tax rate in the nation and are #45 in job growth. I do not think a tax cut at all business is willy nilly, as you put it. I think it's necessary.

I do not think the solution is more of our money down the drain.

Anonymous said...

LVCI -

The sooner we realize that too many of our elected officials either don't understand the free market or are actively working against it, the better off we will be.

"Targeted" tax cuts are nothing more than paybacks for political contributors.

The only thing that is both fair and proven to work time and time again is across the board cuts in tax rates.

Using your example, maybe the macaroni factory uses their "savings" and hires an advertising company to boost demand for their product. Maybe they plow the "savings" back into R&D and come up with variations of their product (remember when there was just one version of Coca-Cola).

The macaroni company might then have to hire additional workers or buy some new equipment (which helps equipment manufacturers) in order to keep up with that new demand. Maybe they have to hire a construction company to expand their facility.

We could both think of thousands of other variations. In any case, I'll trust that those running the macaroni factory probably know more about the macaroni business than you or I. They certainly know more about the macaroni business than some bureaucrat in Washington.

So I'll leave it up to them as to what they do with their "extra savings" on taxes.

By the way, those "extra savings" might also lower the cost of macaroni to all of us, since BUSINESSES PASS ALONG THEIR TAXES TO THEIR CUSTOMERS IN THE FORM OF HIGHER PRICES.

Anonymous said...

To the liberal defenders of the status quo, the writing is on the wall and nothing you write or say will alter the course of a well deserved Democrat drubbing at the polls this fall.

Scott Armstrong

Wayne said...

Scott,

There will be a follow up "drubbing" of the Republicans if they don't change their ways. It's one thing to swoon about November's prospects, it's another thing to actually follow through afterward. Will "Main Street Republicans" have the stomach for it?

Please read.

Anonymous said...

Wayne,

One step at a time SVP. No one knows what the GOP will do with the victory that will fall into their laps this fall. One can only hope real leadership and direction comes to the fore.

Scott Armstrong

Wayne said...

Scott,

If we can only hope, then maybe we have already lost. They say a leopard cannot change its spots, I say we scrub like hell till it cries uncle.

Seriously, there are not enough Chris Christies in the GOP to get the job done. Disaster looms ahead unless an incredible amount of political pressure is applied.

People are done with the "politics as sport" (oh there'll be a drubbing!) and are looking for a government that can live within a budget and follow the Constitution.

We haven't seen that in a while...

Anonymous said...

An intelligent President is something the republicans are having a great deal of difficulty adjusting to.

I feel your pain and observe your confusion.

Ivan Denisovich said...

Anon 3:10

Yes, well, many Americans are having difficult time adjusting to an incompetent president.

Intelligent? You call a guy who reads phonetically off a teleprompter and says "corpse-man" twice in 50 seconds intelligent? How about a Veep who tells a man confined to a wheelchair to stand up? The Two Stooges in charge put Larry, Moe, and Curly to shame.

Have some more Kool-Aid.

Anonymous said...

Anon 9:09AM

Nice try...

That money being spent was not created wealth, it was redistributed wealth. The carny worker could have spent it just as well, or a ride could have been maintained or bought with that money thus retaining or creating jobs.

Taking money from your left pocket and placing it in the right and then imagining you've accomplished something...

Yeah, sure.


That's all well and good. But if private business refuses to hire based on some future fear and not bad business, then jobs need to be created.

If it means hiring more firemen, police, road crews, or forest rangers, so be it.

Wayne said...

Anon 10:33

The money is not stuck under a mattress when it's not in the government's hands.

If it's not used directly it's placed where it can invested into some other venture. No government intervention needed except for the brainiacs that feel they have a divine right to direct other people's money.

The fear to hire and expand is a direct result of this administrations actions. Part of what made this country a great financial powerhouse was the stability and fairness of the laws. Now a business cannot be sure what the future holds. Even the bankruptcy laws can be interfered with by the administration (GM, Chrysler) and who decides who is "too big too fail" --- how does a small business compete against one that's "too big too fail"?

And we haven't even touched the moral dimension of your covetousness of other people's goods...

Wayne said...

This is what convinced me that our Dear Leader is not too swift

And I don't really need brainy enlightened leaders to follow if they don't respect the individual and the Constitution 1st.

Anonymous said...

Anonymous said...

"An intelligent President is something the republicans are having a great deal of difficulty adjusting to."

***********************************

You are correct!

In addition to the Navy Corpse-men, people in all 57 states agree with you.