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?