Fiscal Stimulus and Jobs

February 19th, 2010 at 6:48 am by David Farrar

The Herald reports:

Facing a sceptical public and an implacable opposition, President Barack Obama insisted the US$787 billion ($1.1 trillion) financial stimulus plan signed into US law a year ago had been worth the money.

Marking the anniversary with a renewed effort to show the everyday benefits of the American Recovery and Reinvestment Act, the President predicted it would save or create 1.5 million US jobs this year on top of 2 million last year.

But what happened?

A nascent economic recovery is threatened by continuing high unemployment, which stands above 10 per cent, and the unpopularity of the first stimulus package is complicating efforts to pass a second “jobs bill” that is currently under negotiation in Congress.

Unemployment is around 2% higher than what Obama said it would be if the stimulus package was not passed. And they are surprised that a second borrow and spend package is not popular.

A recent poll found that only 6 per cent of Americans believe it has created jobs.

And they are insisting on a second package!

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11 Responses to “Fiscal Stimulus and Jobs”

  1. Swiftman the infidel (329 comments) says:

    I wish the Keynesians would disappear back into the woodwork.

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  2. kiwi in america (2,428 comments) says:

    Excellent summary David

    Of course then there’s the farce at http://www.recovery.gov where the Obama Administration list all the so-called saved or created jobs while the private sector shed over 4 million jobs since his inauguration.

    Various mainstream media outlets (eg Boston Globe) have unearthed the double ups and rorts associated with the stimulus. Govt temporary jobs that we already going to be added, funding for a new job that miraculously became 4 jobs, some states only show government jobs and they were ‘saved/created’ at the cost of $200k per job – the list is long and scandalous.

    When you study all post Great Depression recessions in the US and look at the three tools Administrations use to aid recovery (deficit slashing through tax increases, Keynesian pump priming and tax cuts), tax cuts show the best results over the quickest time. Obama is concentrating on the two techniques proven to cost the most money and take the longest time to have any effect which is typical of all socialists and their programmes.

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  3. queenstfarmer (764 comments) says:

    Tax and spend is all the far-left knows (not that Obama himself necessarily falls into that camp).

    If one lot of spending doesn’t work, their only answer is… more spending.

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  4. Luc Hansen (4,573 comments) says:

    He gave the money to the banks for bonuses instead of building infrastructure, like hospitals, schools, state housing, bridges (except the bridge to nowhere, of course). You get the idea.

    Sorry Swifty, I’m claustrophobic and woodwork is too dark!

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  5. Luc Hansen (4,573 comments) says:

    KIA

    Again, just wrong, wrong, wrong.

    Go and look up Paul Krugman’s columns for the NYT.

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  6. kaya (1,360 comments) says:

    It’s going to be interesting to see what happens to this leaky balloon they call the US economy when the air supply that is keeping it afloat is taken away. The collapse is inevitable, just the speed that is unknown.
    $1.1 trillion just to stand still, impressive. Did he have Cullen as an adviser by any chance?

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  7. Redbaiter (13,197 comments) says:

    “Go and look up Paul Krugman’s columns for the NYT.”

    Moron. How could anyone be so out of touch as to recommend Krugman and the NYT as a source??

    Does anyone apart from knuckle dragging gape jawed leftist troglodytes still read such tainted and discredited sources?

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  8. kaya (1,360 comments) says:

    Well put – Niall Ferguson in the FT.

    “The idiosyncrasies of the Eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most Western economies. Call it the fractal geometry of debt: The problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes. – What we in the Western world are about to learn is that there is no such thing as a Keynesian free lunch.”

    And on a lighter note from The Onion:

    U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion

    http://www.theonion.com/content/news/u_s_economy_grinds_to_halt_as

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  9. kiwi in america (2,428 comments) says:

    Luc
    Rather than quote a fellow lefty like Krugman put up the evidence.

    Its pretty simple. Look at the the GDP growth and reduction in unemployment for each of the recessions. That excercise will show that the 1980/81 recession had the quickest and most sustained GDP growth and the quickest reduction in unemployment and it was as deep a contraction as the current recession. The reason for the rapid recovery – Reagan’s tax cuts. The next quickest recovery was the 9/11 induced short sharp recession of 2002. Reason: the Bush 43 tax cuts.

    FDR’s massive boost in Federal spending from ’33 onwards led to only a modest reduction in unemployment. By 1939 it was still a massive 17% (down from the high of 24%). I guess that’s why FDR’a own Treasure Secretary Henry Morgenthau said this to the Senate Finance Committee in 1938 about the New Deal “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot”. It took WW2 to bring the US finally out of the Depression.

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  10. kiki (425 comments) says:

    http://www.counterpunch.org/roberts02162010.html

    This from a hard left extremist

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  11. kaya (1,360 comments) says:

    kiki – I read nothing in that article that indicated the writer’s political leaning, it all just sounded like common sense.

    The talk of recession being over in the US is bullshit. The financial markets have been artificially propped up by taxpayers money (future debt). The real indicators are all negative. As with all Governments, statistics are nothing but tools to tell whatever story they want the public to hear. The true unemployment figure in America is closer to 20% than 10%. Incomes are down, tax revenue is down, real growth is down.
    The biggest mistake made during this period has been describing organisations like AIG as “too big to fail”. What utter and absolute garbage. In actual fact, the majority of those large organisations NEED to fail.

    As described by the Wall Street Journal:

    “Our budget deficit is a problem, but it’s not the core issue.

    “Our shadow government, the financial industrial complex, is our potential Greece. High unemployment lingers, higher interest rates are on the horizon and U.S. aid to the mortgage markets is coming to an end. Government guarantees in the markets will be withdrawn leaving them exposed to the whims of confidence.

    “Amid that uncertain state, Wall Street is chugging along as if the last few years were merely a blip. At Citigroup Inc., the financial innovators are readying a new, complex derivative that would act as kind of financial crisis insurance. Citigroup believes the derivative, dubbed CLX, won’t put Citi or taxpayers at risk, but they concede the contracts aren’t foolproof, a story we’ve heard before.”

    The financial markets are living in Disneyland at the moment. The crash this year or next (depends when the stimulus stops or the hyper-inflation starts) will make 2008 look tame.

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