DISMAL RECORD April 2011
Bill Parcells, the long-time and venerated football coach once stated and I happen to agree with, “You are what your record says you are.” With that being said let us take a look at the record of the Obama Stimulus Package and the Keynesian Playbook that we have followed since 2008, and that includes George W. Bush…
The Wall Street Journal has called the past three years, an experiment in economic policy with record levels of spending, new regulations and monetary stimulus. “The results have been rolling in, and they represent what increasingly looks like a historic mistake that deserves to be called the Keynesian growth discount.”
First up was the $168 billion tax rebates handed out by George W. Bush in February 2008.
Second up, Obama’s stimulus package and other stuff put on our kids credit card including: cash for clunkers, home-buying tax credits, The HAMP (keeping people in their homes even though there is no possible way they can afford it) program, the GM/Chrysler (breaking all known business rules and laws to aid unions) bailout, Green jobs, 99 weeks of unemployment, to name a few. Third, the Fed keeping interest rates artificially low with quantitative easing.
The Congressional Budget Office has once again raised the cost estimate of the stimulus program. The CBO is calculating that the end cost to the taxpayer of $821 billion, which is $34 billion more than the original projections.
The “jobs created and saved” by the Obama economic stimulus law cost at a minimum an average of $228,055 each according to the CBO. The CBO states that in the fourth quarter 2010 there were in the neighborhood of 1.3 to 3.5 million people who were then employed, who would not have been had the stimulus not been enacted.
We just received first quarter GDP numbers and they are nothing short of anemic. Growth at this stage of a recovery should be in excess of 4%. However, in this so-called recovery the animal spirits have yet to return. Consumers are being extremely conservative and businesses very reluctant to expand. This, I believe, is the result of the tax code, (which grows ever more ridiculous and complex), Obama Care, and uncertainty when it comes to regulation.
A report done by Stanford University economists John Cogan and John Taylor was blunt in its assessment of the stimulus package. They wrote, “There was little if any net stimulus.”
They break down in their piece three different Keynesian models. In the first, the government gives money to consumers and hopes they spend it. Second, the government goes out and buys goods and services, which can be anything from Chevy Volts to “shovel ready projects such as bridges to nowhere or airports nobody uses or needs. Third, the government hands out money to states which in turn is spent keeping their bureaucracies running.
The Obama stimulus package tried to do all of the above and this was the results…Money to consumers was used to pay down debt or was saved. Infrastructure spending was minute and often wasteful. In fact, economists Cogan and Taylor were stunned on how little was spent on this area considering it was sold to the public as the centerpiece. Out of the entire package only $4 billion was spent on infrastructure projects. The grants to states and municipalities, a total of $173 billion, did not revive locales. It was used mostly to pay down debt. So we issued federal debt, to pay down local debt; which is like using one credit card to pay off another.
“No Taxation Without Representation!” That phrase was a rallying cry during the 1750’s and 1760’s which encapsulated several of the major grievances of the inhabitants of our original thirteen colonies. Our forefathers rightfully felt that that their lack of representation in the British Parliament made taxes on them unlawful. We the people of the United States of America have empowered through our constitution our elected representatives to legislate. Not a bunch of bureaucrats.
Our federal government employs a massive army of regulators in various departments that for all intents and purposes create law out of thin air. The Federal Register which records all the red tape hoisted upon us by government bureaucrats exceeded 157,000 pages in 2010, followed by the 2010 tax code which reached 71,684. Regulatory agencies enact more than 3,500 regulations in an average year. Contrast that with Congress, which passes fewer than 200 pieces of legislation per year. The total cost of federal regulations in 2010 was over $1.75 trillion according to Nicole and Mark Crain in a report for the Small Business Administration, which exceeds our budget deficit.
We are currently at a budget deficit of over $1.6 trillion. We are told by the grumpy old troll liberal economists that the stimulus did not work as advertised because it was not big enough. My question…How much would be enough? Should we run deficits of $3 trillion…$4 trillion? It must be nice being one of these unaccountable fools, you make projections, put forth ideas, and when they prove to wrong, it is never your fault. We tried your Keynesian fantasy world and you failed. Not only has it failed here, but every place it is tried. You are all like whiney failed coaches or athletes who like to blame everyone else for their lousy record.
Also…stop telling us you are making investments. “We are investing in green technology!” It is not the job of Uncle Sam to be investing our money. What qualifications does this army of beltway lawyers have in deciding what is, and what is not a good investment? Most of them have never spent a second of their lives in the private sector and would not know a business plan if it bit them in the ass. The market will decide what works and what does not work; when the government intervenes it creates an inefficient misallocation of capital. Here is an idea…Get the hell out of the way! Simplify the tax-code; free ourselves from burdensome regulation, no more corporate subsidies, and no more picking winners and losers. Do us all a collective favor and stop trying to micromanage our economy.
Source Material:
Cover Matt Jobs Created and Saved By Stimulus Cost An Average of $228,055 Each CNS News 2/24/11
Dinan Stephen CBO Raises Its Stimulus Cost Estimate Again Washington Times 2/23/11
Editorial The McJobs Economy Investor’s Business Daily 4/19/11
Editorial The Keynesian Growth Discount Wall Street Journal 4/29/11
Young Ryan Federal Register Hits 50,000 The Daily Caller 8/17/10
Editorial The Economic Stimulus That Wasn’t Investor’s Business Daily 1/25/11
Crews Wayne & Young Ryan Regulation Without Representation Investor’s Business Daily 2/8/11
