Scott Spiegel

Liberals have generously treated us to a motley assortment of apologia for President Obama’s economy-wrecking fiscal policies over the past 19 months:

(1) The economy is doing fine (Ezra Klein)!  We should have expected the recovery to be agonizingly slow, and it is—hence, Obama’s policies worked.

(2) The economy isn’t doing well, but it would have been doing even worse without the stimulus bill (e.g., Mark Zandi, chief economist of Moody’s and bona fide boob).  Without a Keynesian spending orgy—or as Obama puts it, “moving the economy forward”—unemployment wouldn’t have stopped at 10% and might have risen to 12 or 13 or 15%.

(3) The economy is doing poorly, and it’s because the Democrats didn’t do enough (the ever-certifiable Paul Krugman).  The stimulus should have been much bigger, and financial regulations should have been much harsher.  To compensate we need “a second big stimulus, plus much more aggressive Fed policy.”

In contrast, conservatives have suggested the following interpretations of events:

(1) The economy is going to improve soon (Larry Kudlow).  We won’t experience a double-dip recession and growth is resuming, so we should be more optimistic.  Obama’s policies aren’t helping, but American ingenuity and entrepreneurial spirit are strong enough that we can recover anyway.

(2) The economy isn’t doing well, and Obama’s policies have made it worse (every other conservative on the planet).  Wasteful spending caused our debt to skyrocket and increased the chances of inflation; government takeover of private industries and burdensome financial regulations created an uncertain climate for investing and hiring that has prolonged the recession.

(3) The economy is doing poorly, and now is the time to discuss not only repealing Obama’s policies and ensuring that the likes of them never pass again, but undoing the policies liberals have inflicted on the nation since FDR under the pretense that once they were in place future generations would be too sheepish to touch them (Paul Ryan).  The impetus from the Tea Party movement should be used to revive talks about privatizing Social Security, Medicare, and Medicaid.

So liberals and conservatives are at a bit of a standoff over the fundamental economic principles behind their political strategies.  Who’s right?

Let’s see: economists have demonstrated, time and again, using common-sense reasoning, econometric modeling, and historical data, that increasing government spending yields less economic output than if government had left that money in the private sector to be spent, invested, or saved as those who generated it saw fit.

Economists have shown that increasing marginal tax rates counterintuitively decreases the gross domestic product, especially in the years immediately following tax increases.  Obama’s chief economic advisor, Christina Romer—who just retired over a conflict between her views and the administration’s—documented the effect of this negative tax “multiplier” using empirical data in a recently published economics article.

It doesn’t matter whether we accept Klein’s view that the economy is peachy, Zandi’s view that it’s doing badly but could be worse, or Krugman’s view that it’s doing badly and needs more Obamanomics.  All are based on the false premise that more government spending, taxation, and regulation are better for the economy than less.  (Hey—don’t Keynesians believe that spending lots of money on wars is a good way to revive the economy?  I guess Krugman will be admitting he was wrong about the Iraq and Afghanistan conflicts after all!)

People like Klein bemoan the fact that corporate profits are back up to 2006 levels while hiring remains slow.  Liberals present the question of our tepid recovery as an intractable metaphysical mystery incapable of being penetrated by mere humans; as Klein puts it: “That is the catch-22 of the recovery: Businesses will start hiring when the economy recovers. And the economy will start to recover when businesses start hiring.”  Answer: And both will improve when the government gets out of the way!

As for the varying conservative perspectives, which are the only ones remotely connected to reality and thus worth considering, Kudlow is right that the American economy is resilient.  Perhaps he’s slyly making the point that more optimism on the public’s part not only better reflects the state of our economy but may improve it via increased investment and hiring.  Kudlow’s perspective is largely predictive, rather than focusing on how lawmakers should bring about a faster and more permanent recovery (though he often discusses those issues as well).

Every other conservative in the world who believes that we shouldn’t stand for the “new normal” of high unemployment and unexceptional growth is correct that Democrats’ policies are making the recession worse.  Repealing ObamaCare, preventing cap-and-trade legislation, and stopping or reversing the scores of other nasty things Obama and Pelosi have planned for our economy are mandatory undertakings over the next six years.

But Paul Ryan hits the bullseye when he notes that it is desirable, necessary, and possible to go further.  Train wreck legislation like ObamaCare is worth repealing, but if Medicare and Medicaid are quickly running out of money, and Social Security is already in the red, why shouldn’t we go after every entitlement shibboleth?

What principle, applied consistently, would nudge us to nullify ObamaCare but leave Social Security, Medicare, and Medicaid shiny and intact?  Did our country survive and prosper before these programs were enacted?  Would we survive and prosper if we phased them out?  Might we prosper even more in their absence?

Ryan’s proposal is far from perfect—his main argument for the Roadmap to recovery is that it will keep our entitlement system solvent, and he doesn’t discuss eradicating entitlements once and for all.  Perhaps Ryan believes that talking about eliminating entitlements is too politically risky now, when even his Roadmap is audacious by today’s standards.  But Ryan deserves credit for having gone further than anyone else in Congress in working out the details of a plan that will help the country avoid a fatal insolvency.



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Conservatives have been pounding their fists and screaming for decades that tax cuts stimulate the economy.  With lower taxes, investors and business owners can provide more capital for new ventures and engage in more hiring, because they know less of their profits will be confiscated to pay for things like solar panels at the White House.

Tax cuts don’t revive the economy the second they’re passed—no one, not even Rick Santelli, ever said they did.  They don’t do so a few weeks later; they don’t always do so in time for the next election.  But eventually they do.

Tax cuts trim government revenue temporarily, but soon increased growth from lower tax rates results in net revenue increases.

In contrast, tax increases—which is what the impending reversal of the 2001 and 2003 Bush tax cuts would amount to—shrink the economy by decreasing hiring and investment.  Regarding the Bush tax cuts, that’d be a combined tax increase to the tune of half a trillion dollars over the next decade.  (Pop quiz: If Rhode Island and Massachusetts’ tax structures were switched, would John Kerry still take the trouble to dock his yacht in another state, even though it would cost him half a million dollars a year in taxes?)

It’s really not that complicated.

Imagine that you run a lemonade stand and make $100 profit a day, and the Obama administration taxes you at 50%, for a government revenue total of $50.

Now imagine that the incoming Christie administration slashes that rate to 20%.  Instead of worrying about paying your bills and staying afloat, and resenting the government’s punishing your entrepreneurship, you hire more workers and eventually expand to five franchises.  At $20 in taxes per stand, you are now sending twice as much revenue to the government as before.

Leftists refuse to see the economy as dynamic and capable of expansion; they view it as a fixed pot that must be redistributed from oppressors to oppressed.

The 1990s were prosperous, not because Bill Clinton was a laissez-faire capitalist extraordinaire—though he was forced into the role of pseudo-free-marketer by Republican Congressional majorities after 1994—but because of the cumulative effect of Reagan’s policies throughout the 1980s.  Reagan campaigned on the idea of permanent tax cuts across the board and enacted them while in office; they remain largely in effect to this day.  The degree of certainty, stability, and flexibility that this consistent posture afforded investors and business owners over the next two decades should not be underestimated.

Reagan steadfastly resisted the call of Congressional Democrats and some Republicans to ramp up government spending during the early 80s recession.  Under his administration, deficit as a percentage of GDP never rose above 6.0%.  By 1987 it was down to 3.2%.

In contrast, the Office of Management and Budget expects the deficit-GDP ratio to be 10.0% in 2010 under Obama, and to barely decline in 2011.

During his presidential campaign, Obama was not shy about promising to let Bush’s tax cuts expire in 2011 if elected.  When Charles Gibson asked Obama why he would support an increase in capital gains taxes, even though raising them in the 1980s decreased revenue and lowering them in the 1990s and 2000s increased revenue, Obama insisted he would do it “for purposes of fairness.”  In other words, Obama feels obligated to make rich people suffer for the sin of being productive, even if that means poor people will suffer more in the long run.

In the spring of 2009, Obama and Congressional Democrats passed their poorly designed, massively irresponsible stimulus spending bill.  Before passage, Obama warned that without the $787 (now $862) billion bill, the unemployment rate might rise to 8.0%.

When unemployment hit 10.0% in 2010, Obama’s new tagline became, “Yes, but it’s not 12 or 13, or 15.”

Democrats’ halting efforts to offer targeted tax cuts to special interest groups as part of the stimulus bill were not convincing.  Giving a tax break to a “green” company that wouldn’t survive on its own does not create the wealth that a tax break for an independent, self-sufficient, productive company would.

Now that it’s become obvious to everyone except Paul Krugman that runaway government spending does not mysteriously create wealth, Federal Reserve Chairman Ben Bernanke has been caught admitting to the House Financial Services Committee last Thursday, 18 months after the stimulus bill has had a chance to work but failed, that extending the Bush tax cuts will strengthen the economy.

Bernanke was quick to walk back his statement and claim that extending the tax cuts is just one way to stimulate the economy.  (One way that works, he did not say in so many words, but give him credit for letting the genie out of the bottle.)

Since the end of last Thursday, the Dow Jones has rallied some 200 points to 10,500, after have troughed earlier in the week at just above 10,000.

Last month Obama economic advisor Christina Romer and her husband published a paper in The American Economic Review demonstrating that tax hikes hurt economic growth.  Their article included the following takeaway: “Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly 3 percent.  The effect is highly significant.”

Over the weekend, Republican senators revived the idea of extending the Bush tax cuts.  Now even some Democratic senators are talking up the idea, including Evan Bayh, Kent Conrad, and Ben Nelson.

So I guess tax cuts stimulate the economy after all, according to our liberal president’s Federal Reserve chairman, his economic advisor, and multiple Democratic senators.  It used to be newsworthy when we discovered that Obama’s associates and cabinet nominees were terrorists, communists, and Maoists.  Lately the scoop seems to be that a few of his cronies, if allowed to speak freely, occasionally have some sane ideas about how to run the country.



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If deficit spending is the way out of an economic downturn, as leftist economists like Paul Krugman keep telling us, then one way to characterize President Obama’s approach to reviving the ailing economy is “killing it with kindness.”

Another is “tough love”—not the kind where you force hard choices and self-discipline, but the kind where you shoot the poor beast to put it out of its misery.

James Clyburn, House Majority Whip, recently crystallized the Democrats’ position on fiscal responsibility when he announced, “We’re not going to save our way out of this recession.  We’ve got to spend our way out of this recession, and I think most economists know that.”

Here are some fun facts about Obama’s proposed federal budgets over the next decade:

•    The projected deficit for Obama’s 2010 budget is $1.6 trillion, which is 10% larger than the 2009 deficit, which in turn was three times as big as the record 2008 deficit under President Bush.

•    The projected 2010 deficit is 10 times as large as the deficit for Bush’s 2007 budget, the latter of which included funding for the troop surge that won the war in Iraq.  Hoping to match our accomplishment in Iraq, the White House Travel Office has approved a trip for Obama to go to Cambridge, Massachusetts in November to get a Democratic dogcatcher elected in Harvard Square.

•    The projected 2010 deficit will render our national debt 13% bigger on the last day of this year than it is today.  Projected 2010-11 deficits will cause the debt to swell 23% bigger than it is now.  By 2020, the debt will be twice as big as it is today.

•    By 2013 the deficit will recede to $700 billion, a “mere” half of the 2009 deficit, then ratchet up again to $1 trillion by 2020.  Even this will happen only if Congress agrees to drastic spending cuts before 2013, which it has already expressed strong resistance to doing.

•    All of these numbers are conditional on what many private sector economists call overly optimistic expectations held by the current administration regarding growth of the economy.

These sobering statistics raise a number of tough questions about the measures Obama has proposed to bring down the deficit—which, naturally, he will never satisfactorily answer.

For example: in his budget address on Monday, Obama stated, “Because small businesses are critical creators of new jobs and economic growth, the budget eliminates capital gains taxes for investments in small firms and includes measures to increase these firms’ access to the loans they need to meet payroll, expand their operations, and hire new workers.”

Why only small businesses?  Why not medium and large businesses?  Who adds more jobs to the economy—Sal’s Pizzeria, a local franchise of Linens ‘n Things, or Microsoft Corporation?

Obama proposes letting the Bush tax cuts expire for families making over $250,000 a year.  He wants to impose a new tax—sorry, “financial crisis responsibility fee”—on banks and corporations who received TARP money, some of whom were forced by the administration to take it.  Obama wants to strip away tax breaks from oil and gas corporations.

Why would Obama want to choke the engines of growth and job creation by saddling them with tax increases?  If the absence of a $5,000 tax credit would hinder a small business from new hiring, what does he think the addition of hundreds of thousands of dollars in taxes to a corporation would do to their hiring?  Do big corporations hire workers out of the goodness of their hearts, with no concern for the bottom line?

Also, given that many of those families who make over $250,000 are headed by small business owners, how does Obama justify giving them tax credits while simultaneously increasing their taxes?  Is his administration even feigning consistency here?

History shows that cutting individual and corporate tax rates increases long-term tax revenue.  Obama was specifically asked about this proven fact by George Stephanopoulos during a primary debate with Hillary Clinton.  Obama stated outright that even if this pattern were true, he would still favor higher taxes on the wealthy to promote “fair” taxation.

Obama is free to endorse Marxist policies if he desires, but how can he turn around and claim that his proposal to increase taxes for the wealthy is an effective way to reduce long-term deficits?

When you’re handed a hot potato such as the sickly economy—a fate Obama has reminded us of precisely eight million times since he was elected office—the responsible solution is to let it cool down.

Instead, Obama proposes to cremate it.

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Critics of Federal Reserve Chairman Ben Bernanke’s performance in his first term blame him for failing to recognize the threat of the looming subprime lending crisis; his supporters laud the aggressive policies he enacted in response to the crisis.

I fault him for both.

Before the crisis, Bernanke helped Fannie Mae and Freddie Mac executives cover up their scheme to hide trillions of dollars in junk mortgages and give themselves enormous bonuses.  In the process, he failed to address the growing housing bubble that precipitated the financial crisis.

His solution was worse.  Having learned the wrong lesson from the Great Depression—that the government prolonged it by not intervening more, rather than intervening too much—Bernanke radically expanded government’s power and “reinvented the Fed,” as Time magazine put it mildly in their recent cover story on Bernanke.

Time glowingly continued: “[H]e conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies… lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash… revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed’s balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation.”

“Conjured up,” “blasted,” “engineered,” “revolutionized,” “breathtaking,” “shopping spree,” “blew up,” “desperate improvisation”—somehow these don’t sound like particularly reassuring terms for investors in the world’s largest financial system.

Bernanke isn’t finished.  The Federal Reserve has been buying up Fannie and Freddie securities to try to keep mortgage rates artificially low and stimulate the housing market.  The program is set to end in March, but Bernanke is toying with the idea of propping up the housing industry indefinitely.  Sound familiar?

The question is whether the Senate will reconfirm Bernanke for another four-year term before his first term expires on January 31.

Dumb arguments for keeping Bernanke abound:

•    The Financial Times of London reports, “Economists warned that a rejection of Mr Bernanke could be seen as a threat to the central bank’s independence.  US Treasury yields were little changed but stocks fell more than 2 per cent” due to uncertainty regarding reconfirmation.

Come on—it’s at least as plausible that stocks plummeted last week because of Obama’s announcement that he was going to impose a new tax on banks to subsidize the Troubled Assets Relief Program (TARP).  (Especially given that the Dow Jones Industrial Average slipped 219 points while Obama was still giving his speech.)

After Bernanke’s prospects improved over the weekend, Obama’s boosters at the Associated Press helpfully divined the trend in the stock market for us: “Amid the news, the Dow Jones industrial average rose 24 points.”  Well, the Dow was down 3 points on Tuesday—I think this means Bernanke’s chances are dimming.  What say ye, Associated Oracle?

•    Mohamed El-Erian, CEO of bond investor Pimco, declared, “A No vote on Bernanke would be viewed by markets as adding yet another uncertainty in an already fluid economic and policy environment.”

Give me a break: Ben Bernanke-Tim Geithner-Larry Summers form the very Axis of Uncertainty.  The Obama administration has demonstrated that it is capable of deciding, in any given week and depending on its poll numbers, to announce any manner of blanket economic policy to try to shore up its popularity.  This is exactly what causes uncertainty in the market: whimsical manipulations from disconnected puppet-masters on high.  Sowing a little uncertainty about whether King Caprice’s minions will remain in office is the surest prescription I know of for assuaging the market.

•    Obama’s team “saved” the economy, so it’s best to keep the same leadership in place.

Obama’s team didn’t save anything—it wasted a trillion dollars and slowed down the real recovery.  Obama claimed that unemployment would reach 8.0% if we didn’t pass his stimulus bill last spring.  We did, and unemployment is at 10.0% and projected to increase.  The last people who should still be in charge of our monetary policy are the people who helped Obama implement his disastrous recovery strategy.

•    Chris Dodd, the Senate banking committee’s chairman, announced that booting Bernanke would hurl our financial system into a “tailspin.”

Chris Dodd certainly knows something about sending the economy into a tailspin.  Given his role in the subprime lending crisis, I say his vote on any financial matter from now until his retirement next January ought to automatically count as a vote for the opposite of whatever side he’s on.

•    Dick Durbin, Senate Majority Whip, pointed out that conditions that led to the financial crisis were in place before Bernanke took office.

Yes, and if Noah had deliberately drilled a hole in the bottom of his ark, I think he could credibly claim that conditions that led to the Great Flood were in place before his time at sea.  But that doesn’t mean he would bear no responsibility for having made things worse.

Paul Krugman, whom I never thought I’d quote (except mockingly), recently wrote, “Before the crisis struck, Mr. Bernanke was very much a conventional, mainstream Fed official, sharing fully in the institution’s complacency.  Worse, after the acute phase of the crisis ended he slipped right back into that mainstream.”  Granted, Krugman is only partly talking about Bernanke’s failure to head off the imminent lending crisis.  He’s also talking about Bernanke’s failure to push for cumbersome bank regulations and inflate the currency, goals Krugman seems to think worthwhile (we are talking about a New York Times columnist, here); but the general characterization still applies.

Krugman continues, “During the run-up to the crisis, as financial abuses proliferated, the Fed did nothing.  In particular, it ignored warnings about subprime lending…  Mr. Bernanke didn’t acknowledge that failure, didn’t explain why it happened, and gave no reason to believe that the Fed would behave differently in the future.”

I’m mystified as to why so many in Congress are reluctant to sack Bernanke for poor performance.  Perhaps it’s because they fear it will remind their constituents that they may apply the same standard to their elected officials.

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Thanks to the Obama administration’s new Car Allowance Rebate System (CARS), also known as Cash for Clunkers, American taxpayers are now subsidizing car owners to do what they would have done eventually—scrap their old cars and buy new ones.

CARS is perversely profligate in numerous ways, among them the fact that it forces car dealers to waste time filling out onerous paperwork to get reimbursed by the government and adding legal riders to contracts with car buyers regarding liability for rebates.  Mechanics must squander effort draining each car’s oil, then donning protective suits and carrying out a dangerous procedure involving pouring sodium silicate on the engines to make them “seize up” and cease to function.

This government-mandated engine-cide is a huge problem for auto parts sellers, who earn the bulk of their income reselling engines, motors, and transmissions—all of which must be intentionally damaged and made unsalable to comply with program rules.  Government inspectors will go around making sure engines have been properly decommissioned, a precondition for dealers and car buyers to claim refunds.

More disturbingly, for those who can barely afford to buy a used car, the reduced supply of used engines will lead to increased, often prohibitive costs for used cars, because so many used car engines—having been decommissioned by mechanics—cannot be resold to potential buyers.  That’s looking out for the little guy!

For those concerned about the “environmental impact” of the program, the plan unfortunately won’t help on that front, either.  According to the director of Columbia University’s Center for Climate Change Law, the energy required to produce a new car years earlier more than offsets any fuel savings from driving a used car for a few more years.  Without the program, car buyers would have ended up buying more fuel efficient vehicles anyway, because most vehicles are made to be more efficient nowadays.

The one thing we can’t foresee is what those in high enough tax brackets who will be funding most of this program would have done with their money if they could have kept it—say, devoted it to more profitable, wealth-creating investments of their own choosing?

If all of this isn’t enough to convince you the program is a slam dunk, there’s also the matter of how it’s being administered.  Congress allotted $1 billion and expected the funds to last 100 days—from July 24 to November 1.  They didn’t enact any sensible precautions on the limits of the program—say, no more than 20 clunkers bought by each of the nation’s nearly 20,000 car dealers—until the program’s impact could be measured.  This is, of course, because Congress is not managing its own money, but rather maintaining an infinite balance sheet.

Shockingly, Congress underestimated the cost of its new program and the rate at which people would lap up free money.  Rae Tyson, a Transportation Department spokesman, insisted on July 28, “When we get close, we will start alerting dealers so they don’t get caught with a deal in the pipeline.  We’re not going to leave them hanging. We’re not going to run out of money in a couple days.”

Two days later—surprise!—the Transportation Department announced that the program had run out of money and would be suspended at midnight.  Tyson should have concluded his statement, “When we get close, we will start alerting dealers…  OK, now!”

So the program’s funding lasted six days.  Assuming a steady rate of access by dealers over the intended life of the program, the actual rate of use so far has been 17 times as high as lawmakers anticipated.  Were the program to be funded at its current rate until November 1, it would blow through $17 billion.

Representative David Obey, chairman of the Appropriations Committee, speaking on behalf of lawmakers who want to dump more money into CARS, declared, “Consumers have spoken with their wallets, and are saying they like this program.”

Note to Obey: “speaking with your wallet” usually means that the wallet owner chooses to purchase a product or service with his own money, not that he gobbles up a heavily subsidized goody that he would have bought in a few years on his own.

Saying Cash for Clunkers has been “wildly successful,” as many reporters have decreed, is like saying that a program designed to give out $4,000 checks to anyone who’s willing to cash them has been “wildly successful.”  Cash for Clunkers would have been a colossal failure if it hadn’t run out of money in less than a week.

The sudden revelation that people like free money led to uncertainty over continuance of the program: word got out from the Transportation Department that the program was bankrupt, but Press Secretary Robert Gibbs insisted to reporters on Friday that it would continue through the weekend and beyond.  In other words, the Obama administration, caught in a jam, with no idea whether additional funding would ever be approved or not, simply lied by sowing confusion over how much money was actually left in the program.

John McEleney, chair of the National Automobile Dealers Association, and numerous car dealers across the country have reported on the risk they face that the government will not reimburse dealers for buying clunkers, given the precarious state of program funding.  They have also complained about the confusion regarding rules and continuance of the program, contradictory statements from government, inability to make future business plans, and the havoc all of this has wreaked on their dealerships.  All of which augurs well for the long-term beneficial effects of CARS on the economy—because if there’s anything the market loves, it’s confusion, conflicting information, delay, and chaos!

House Minority Leader John Boehner noted, “There are a lot of questions about how the administration administered this program.  If they can’t handle something as simple as this, how would [they] handle health care?”

The Cash for Clunkers debacle should be viewed as a test run for Congress’ overhaul of the nation’s health care system.

Break out the sodium silicate.

Five months after the stimulus bill was passed, we can now say that we’ve witnessed the following under-stimulating results.

Payrolls are falling more than forecast, with employers having cut 467,000 jobs in June, following a 322,000-job decline in May.  Factory jobs fell by 136,000 after dropping 156,000 in May.

Unemployment is at 9.5%, the highest level in 15 years, and is projected to exceed 10% by the end of 2009.  Some economists expect it to remain at historically high levels for years.

The average workweek is at 33 hours, the lowest in 45 years.

Average weekly earnings are down to $611.

The national debt is $11.5 trillion.  The Congressional Budget Office projects the deficit for 2009 to be almost $2 trillion and for 2010 to be more than $1.4 trillion.

The Treasury is increasing its sale of debt to pay for spending.  Treasury offered $1 trillion in notes and bonds in the first half of 2009 and plans to offer another $1 trillion by the end of 2009.

Colin Powell, of all people, is alarmed that Obama’s spending orgy may be swelling government and the national debt: “I’m concerned at the number of programs that are being presented, the bills associated with these programs and the additional government that will be needed to execute them…  [We have] a huge, huge national debt that, if we don’t pay for [it] in our lifetime, our kids and grandkids and great-grandchildren will have to pay for…”  Now he tells us!

Jared Bernstein, chief economic advisor to Joe Biden, whose office is managing the stimulus, says, “It’s working, it’s demonstrably working.”  According to Bernstein, $200 billion in stimulus money has already been obligated or spent.  Case closed!

Note to Bernstein: In order to demonstrate causality, you have to show that: (1) there was a cause, (2) there was an effect, and (3) the cause influenced the effect.  Defenders of the stimulus bill are still stuck on #1: as of June, only 10% of all stimulus funds had been distributed.  Bernstein’s $200 billion “obligated or spent” figure—eerily reminiscent of the administration’s “jobs saved or created” trope—is untrustworthy, because the administration has already been caught lying about money committed to spending projects.

Given the miserable failure of the stimulus bill, naturally Congressional Democrats want… another stimulus bill!  According to House Majority Leader Steny Hoyer, “We need to be open to… further action.”  Democratic Senator Sheldon Whitehouse said that another stimulus would “probably take place towards the end of the year.”  Second-ranking Senate Democrat Dick Durbin said he would leave any decisions on passing another stimulus bill to “the president’s evaluation”—and we all know how cautious Barack “Fiscal Restraint” Obama will be.  Stan Collender, former Congressional budget analyst, said that another stimulus bill may be possible if the economy gets worse: “Right now it doesn’t seem to be justified…  Come September, it might be.”

The first stimulus package was “a bit too small,” according to Laura Tyson, member of Obama’s Economic Recovery Advisory Board.  Paul Krugman writes in the New York Times, “O.K., Thursday’s jobs report settles it.  We’re going to need a bigger stimulus.”  Biden advisor Bernstein says, “There is no conceivable stimulus package on the face of this earth that would fully offset the deepest recession since the Great Depression.”

Let’s see: the stimulus bill committed a record $787 billion in spending.  Tyson says it should have been “a bit” bigger.  Congressional Democrats and Krugman wanted it much bigger.  Bernstein admits it would have to be infinitely big to work.  Can we give Bernstein the award for inadvertent honesty on this one?

The clincher that the stimulus bill was an abject failure—and that another stimulus bill would be a repeat failure—is the fact that Wall Street has just hit a 10-week low after talk of a second stimulus package recently began.  Amateur analysts suggest that chatter about another stimulus bill is making investors nervous, because—get this—it shows that the economy might not be recovering.  According to Hugh Johnson of Johnson Illington Advisors, “When there’s talk about another stimulus plan, that adds fuel to that fire, it intensifies the concerns about the timing and strength of the recovery.”

Is it possible, just possible, that investors are nervous, not because Congress’ hinting at a second stimulus package implies the economy is not recovering—which I think they can figure out on their own—but because Congress is hinting at a second stimulus package?

If Democrats aren’t persuaded by Republicans’ argument, backed up by ample historical data, that spending vast quantities of wealth not yet created does not stimulate the economy in the long term, could they at least admit their little experiment failed and try the Republican option for a change?