Did Obama's stimulus make things worse? A compelling argument is made, via James Pethokoukis:
Stanford economist John Taylor, perhaps the next chairman of the Federal Reserve, has analyzed the actual results of the ARRA. Not what the White House’s garbage-in, garbage-out models say happened, but what actually happened as gleaned from government statistics. Taylor, simply put, looked at whether consumers actually consumed and whether government actually spent in a way that produced real growth and jobs. His devastating conclusion:Read the whole thing. Not that Obama has, or has ever had, a shred of interest in firing up the engines of free enterprise. His socialist policies will ensure a steady expansion of government and the economic decline that must accompany it. Hope 'n' Change, people!
Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers. Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.
Indeed, the results are horrifying. The two-year-old recovery’s terrible tale of the tape: A 9.1 percent unemployment rate that’s probably closer to 16 percent counting the discouraged and underemployed, the worst income growth and weakest GDP growth of any upturn since World War II, a still-weakening housing market. Oh, and a trillion bucks down the tube. Oh, and two-and-a-half years … and counting … wasted during which time the skills of unemployed workers continue to erode and the careers of younger Americans suffer long-term income damage. Losing the future.
Next, add in healthcare reform that Medicare’s chief actuary says will not slow the overall growth of healthcare spending. (Even its Obama administration godfather, Peter Orszag, warns that “more drastic measures may ultimately be needed.”) And toss in a financial reform plan that the outspoken and independent president of the Kansas City Fed says he “can’t imagine” working. “I don’t have faith in it all.” Indeed, markets continue to treat the biggest banks as if they are still too big to fail.
But wait there’s more.
Hat tip: Instapundit
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Jill,
ReplyDeleteHere is the ugly and hidden truth. Our governments, our way of life, our entitlement programs were being paid for by paper money. Not real currency or real investments or savings. The "cash" was created out of whole cloth by a bunch of greedy thirty something MBA's across the world. We are talking TRILLIONS upon TRILLIONS of dollars.
What they bought and used with the money did exist and did continue to demand more inflow of cash. Budgets with fixed entitlement programs, bloated agencies, pension plans, car companies and union contracts. All of this was perched upon a foundation of sand and the sand got washed away in a month.
I have an econ buddy who is brilliant. He predicted this for years, and also predicts a second recession/depression. Why? Because everybody is frozen in fear and there is no stimulus left.
Without going into a long deal, the Keynesian theory never works. Applied like it was by the Left in Congress, it was guaranteed a suicidal entrance. Done before it got started. They used the money simply to prop up bad policies from the fed, state and local level, instead of creating infrastructure.
I was told that in their view there were three ways to land the plane. 1. on the airstrip, which wasn't going to happen. 2. Into the side of a mountain killing everybody. 3. Into the trees, hoping that some survived. They picked three.
When the inertia from the stimulus finally grinds down to a halt, you'll see even worse numbers. Obama's drive to regulate and manipulate the nation WHILE it was trying to restart also lent to the disaster. He should have gotten out of the way and let the economy jumpstart. He didn't, it didn't, here we are.