Obama’s Stimulus: A Complete Waste of $800 Billion

by geo on Aug.23, 2010, under The Economy

Back on August 3rd, I commented on an article that analyzed the Blinder and Zandi research paper and concluded that, contrary to the conclusions reached in that paper, the $800 billion stimulus “didn’t do squat” for the economy.

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Further, looking at the numbers in the study seems to suggest that while the original TARP program was effective in stabilizing the world banking system, the later “stimulus” bill had zero impact on spurring economic growth or recovery.

On August 14, I answered the question “Why are we still losing jobs after spending trillions in stimulus, bailouts and reforms?” by stating

Because most of those trillions of dollars have been wasted, spent on pie-in-the-sky agenda-driven nonsense like “green energy”, handed over to big unions that will roll billions back into supporting Democrats, and squandered on “reforms” that will mainly create a few jobs for lawyers trying to figure out how the thousands of new regulations will play out.

Now western union ukraine uzhhorod comes Lawrence Lindsey, writing in the Weekly Standard and looking primarily at the jobs aspect of the stimulus and concluding that unemployment is now, and has been since the stimulus was enacted, almost exactly what Obama’s budget team predicted would happen if we did nothing at all. The $800 billion stimulus had zero effect on creating jobs, even when the Obama administration’s projections are adjusted to account for the fact that “it was worse than they thought”.

Ever since it became apparent that the administration’s projections were way off, “it was worse than they thought” and “they didn’t have accurate information to work with” have been advanced as excuses by the Obama administration and its apologists.

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Now comes Lindsey to demonstrate that the excuse doesn’t hold water. Using the calculations of the now-departed Christina Roemer, and using the actual jobs numbers which became known after the projections were made, Linsey shows that the administration’s own calculations demonstrate that the jobs picture would be almost exactly where it is today had the $800 billion not been spent.

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The striking observation is that after correcting for the higher starting point, the actual performance of the economy is almost exactly what Romer and Bernstein said would happen if we had done nothing, rather than passing the $800 billion package.

Why was the stimulus so ineffective? Lindsey notes the general principle that an effective economic stimulus measure must be “timely, targeted and temporary”.

The Obama stimulus was none of these. The program was not timely because money was doled out in small amounts over a long period of time through cumbersome government processes. The spending spree was certainly not targeted, since it amounted to a blank check for congress to spend wads of cash on wish-lists and pet projects, rather than being focused on creating jobs or spurring economic growth. And because unemployment remains so high, Congress will now be tempted to make these spending measures permanent, or at least, ongoing and recurring, which just happened with the second round of bailouts for state governments and their unionized governmental employees. This very concern was addressed in this July 14 post.

And now, having effectively wasted $800 billion in stimulus spending, the administration is poised to compound the problem by pulling productive dollars which actually contribute to economic growth out of the economy by raising taxes in response to the huge deficits created by the government’s own foolish economic policies.

I continue to believe that it would be a mistake to withdraw stimulus from the economy—such as by raising taxes or by letting existing tax provisions expire. This despite the very high deficits we are now experiencing. Our policy problem today is that the bill that was actually passed into law was both so expensive and so badly flawed that it gives the whole concept of macroeconomic stimulus a bad name.

With somewhere around eight million Americans losing jobs since the recession began in December, 2007, the government has spent well over a trillion dollars on “stimulus” spending that has had zero impact on unemployment, job creation and economic growth.

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Lindsey, who served in the administrations of both Presidents Bush and in the Federal Reserve under Clinton, provides a startling perspective on just how ineffective and inefficient the stimulus spending of the Obama admistration has been.

How you spend money is as important as how much you spend. Since the beginning of the recession, the number of unemployed has increased by more than 8 million people. For $800 billion, we could have handed every one of these people a check for $100,000—which gives a sense of what was possible with that much money and just how inefficient the actual program was.

For what we wasted on the Demo western union sri lanka pannala crats’ pet projects and union payoffs, we could have hired every single unemployed person in America to spend $100,000 over the course of one year. Money that would have gone back into the economy in mortgage payments, rent, car payments, appliance purchases, groceries, clothing, travel, entertainment and more.

How stimulating would that have been?

I highly recommend that you read the full article here:

“Did the Stimulus Stimulate?
The Obama team gives macroeconomics a bad name.”

NOTE: This post has been edited from its original form in order to shorten it and reduce the amount of reproduced material.

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:economic policy, economic recovery, obamanomics, stimulus

5 Comments for this entry

goatboy
August 23rd, 2010 on 8:36 pm
“For what we wasted on the Democrats’ pet projects and union payoffs, we could have hired every single unemployed person in America to spend $100,000 over the course of one year. Money that would have gone back into the economy in mortgage payments, rent, car payments, appliance purchases, groceries, clothing, travel, entertainment and more.How stimulating would that have been?”

Good God. That is mind-boggling.
JP Jones
August 24th, 2010 on 7:35 am
I volunteer to quit my job and sign up to be a direct recipient of my $100,000 share of the stimulus money.

It really is just absolutely unbelievable when you see it broken down that way.
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August 25th, 2010 on 12:51 pm
Terrific work! This is the type of information that should be shared around the web. Shame on the search engines for not positioning this post higher!
Annie
August 26th, 2010 on 11:26 am
Hi, sorry for inquiring this inquiry here, but I couldn’t find a contact form or something so I thought I leave my query here. I run a blogengine blog but I am receiving increased amounts of spam. I see u use wordpress, is it trouble-free to control spam with wordpress or doesn’t it make any difference? I hope you will respond to my comment or maybe send me an email with your answer if you don’t want to approve the comment. Best regards, Annie
- topkick
  August 27th, 2010 on 7:48 am
  None of us are familiar with Blogengine, so we don’t know what, if any, spam protection might be integrated with that platform. WordPress does have an integrated spam filtering system that is pretty effective, as well as several settings management can customize to help limit the spam that makes it into comments. On this blog we also use an additional third-party filter, Bad Behavior. Our setup keeps over 99% of the spam comments from appearing on the site, and blocks many spammers from even being able to leave a comment pending approval. We still get dozens of comments on a daily basis filtered into our spam file, which we actually review individually. We find and approve few legit comments that got filtered, but most are junk we just delete. And with serial spammers who dump a dozen or more garbage comments a day, we just block their ip. Hope that helps.