Obama and the Democrats told us that his porky "recovery plan" would reduce the climb in unemployment. To be sure we understood they produced a graphic showing how unemployment would be lower if we accepted his $787 billion in pork spending.
How have we fared? Obama promised that his spending would keep unemployment below 8 per cent. It went above 8 in February, above 9 in May and is now above 9.5.
Here is Obama's projection in blue overlayed with the actual unemployment numbers in red from Innocent Bystanders.
Unemployment got worse instead of better, according to the Bureau of Labor Statistics. The stimulus didn't help.
Obama's blue lines are from Christina Romer, Chair (then designate) of the President's Council of Economic Advisers and Jared Bernstein of the Office of the Vice President Elect on January 9 - here (pdf).
Why didn't it help? If their demand-side assumptions are correct - that spending increases buying and selling which increases employment - why haven't they spent it yet? Very little has been spent yet. Most of the spending comes after one year or later. They bypassed "shovel ready" projects to fund their political friends instead.
But there is a long record of failure for demand-side incentives. Success has been from incentives to invest. Cutting income taxes encourages working more, because you get the reward for your effort. Cutting capital gains taxes encourages investment. President Reagan turned Jimmy Carter's stagnation into increased investment, job growth and economic growth and the longest recorded period of peacetime prosperity without recession.
Posted by Ron Hebron at September 07, 2009 08:26 AM | Email Thismaybe Obama will bring us the next Reagan. Posted by: USA Ronin on September 7, 2009 08:47 AM
http://www.google.com/publicdata?ds=usunemployment&met=unemployment_rate&tdim=true&q=Unemployment+percentage
Posted by: Tim on September 7, 2009 09:01 AMPosted by: Daniel on September 7, 2009 09:07 AM
http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html
Daniel - you are quite correct!!
Posted by: Tim on September 7, 2009 09:11 AM
Now that Democrats won the White House what do we hear? Oh yes, things are looking up, we are coming out of this economic downturn.
What a surprise.
Posted by: Bill Cruchon on September 7, 2009 09:48 AM
But I'm curious, Ron. Do you think the unemployment picture was made better or worse by the stimulus package? In other words, without the stimulus, do you think unemployment would be higher or lower today?
You complain about not spending enough money on shovel ready projects or not soon enough. That implies that you think stimulus helps, but we just haven't had enough of it. Somehow, I don't think that's what you meant to say, so maybe you could clarify for us.
"Now that Democrats won the White House what do we hear? Oh yes, things are looking up, we are coming out of this economic downturn."
Yes, but that was after they tried to scare the hell out of everyone in order to pass the stimulus!
Posted by: Bill H on September 7, 2009 11:20 AMWhich is it?
Stimulus=failure
Or
Stimulus not enacted?
Exactly right, Bill H.
It strikes me funny that Democrats are always accusing Republicans of "fear mongering". Obama and his commie cronies are the champions of "fear mongering". Watch as Obama continues to use that tactic this week pushing health care.
If Obama was honest he'd have allowed plenty of time for his agenda to be digested by the public,(as he promised during the campaign). Instead he used fear and urgency in an attempt to slam dunk his policies into law without any discussion.
What Obama is demonstrating is that he and his gang are among the worst political strategists in modern history.
Posted by: Bill Cruchon on September 7, 2009 11:59 AMhttp://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll
I believe this is the biggest tailspin of any President since Gerald Ford pardoned Nixon.
What did Obama do today? Mr."our planet is in peril" flew his carbon spewing entourage to Ohio. How many other places will he fly to this week, and every week?
These people are all phonies. From our deposed Mayor on up. Not one of them reduces their own "carbon footprint" and sets an example.
Americans are sick and tired of them. It's about time.
Posted by: Bill Cruchon on September 7, 2009 12:55 PMPosted by: Jim Miller on September 7, 2009 01:36 PM
If I understand what we were told by those in favor of the stimulas- In order for the Stimulas to "stimulate" the economy it must be spent... If it isn't spent it won't do anything... except raise the amount of debt we will eventually have to pay off.
Hopefully, that clears it up for you...
Posted by: David on September 7, 2009 01:58 PMDid he get the Nobel Prize? Duh. When was the last time a conservative was awarded a Nobel Prize? Probably around the time a UN Security Council Resolution had actual effect.
Posted by: Bill Cruchon on September 7, 2009 02:48 PMBonus points: a commenter here describing someone else as "sour". You think eight years of economic mismanagement and outright theft should make an economist happy?
Posted by: tensor on September 7, 2009 04:10 PMBy being spent after the economy is working again... Didn't realize it was that tough to follow. Did you think the government would give back the money authorized if they don't use it?
The stimulas was supposed to go to "shovel ready" projects to give the economy a "jolt". Instead it is going to projects scheduled to start sometime next year, or to projects that have nothing to do with stimulating the economy.
Posted by: David on September 7, 2009 04:21 PMSecond thing here is to remember that the northwest is perennially six months behind any move that the national economy makes. This means that our unemployment number now will get worse for at least six months before it starts to flatten out like the national economy is doing now (at least for now, it may start down again). That, I am not looking forward to.
In spite of what Tensor may say, the things that the "stimulus" was spent on is doing virtually nothing for jobs. A couple hundred "shovel ready" jobs on some road projects (hell, make it thousands) doesn't make a recovery when millions of jobs are rolling down the tube every month. "Stimulus" job numbers like that don't even pass the common sense test. The only thing the stimulus has done is funnel massive amounts of pork to Obama/Democrat supporters and very little of that has gone to job creation.
Hey Tensor, didn't Arafat get a Noble for peace? Ha, ha, ha, ha, ha!! The only thing more ridiculous is Krugman's for economics. Ha, ha, ha!! Yeah, that Nobel committee sure can pick 'em!
Posted by: G Jiggy on September 7, 2009 04:52 PMIt went into recession in March 2001. If you think it's gone anywhere near the Clinton years since, you should check your investments.
Democrats have a bad habit of being unable to forsee the consequences of their acts.
We caught bin Laden? Iraq has returned to pre-2003 levels of daily violence? How's the Palestinian issue?
Noble for peace?
Yes, "peace" and "economics" are so totally comparable as fields of study. But thanks for playing. (Maybe next time you'll meet the minimum requirement: spelling it properly.)
Posted by: tensor on September 7, 2009 05:35 PMThe Stimulus is clearly not working. Some people don't get it - unfortunately that would be the Obomba Administration. They tried to use the Keynesian economic approach, once used by FDR.
That has been clearly demonstrated not to work - spend your way out of a deep recession ? Talk about clueless and ideologically corrupted-the chart speaks volumes.
I would be willing to bet that it will not improve measurably - if at all over the next 6 months or even 9 months from now. After that, natural recovery processes will act to improve the economy, just as we have recovered from other deep recessions in the past. This stimulus bill (which was lobbied hard by NOW - so that it is more difficult on working men than working women). will extend the time it would have taken recovery to occur, if there would have been. Pray that there is not another terrorist attack between now and then so that this recession does not evolve into a depression.
Posted by: KDS on September 7, 2009 06:01 PMI'd like to know how citing the words of Paul Krugman -- an internationally recognized expert in this field -- shows "moral relativism." (You do have some time to compose your proof: like any good 'defender of marriage,' I'll be gone for awhile, "hiking the Appalachian Trail.")
The Stimulus is clearly not working.
And the aforementioned winner of the Nobel Prize in Economics predicted why it would not. Thank you for supporting more spending.
That has been clearly demonstrated not to work - spend your way out of a deep recession ?
I believe most of us call it "World War II", but that's what happened, yes. (If memory serves me correctly, in 1943 the U.S. Gov't. spent an amount equal to the GDP -- and we all recall what a disaster that was. Or, at least, you do.)
After that, natural recovery processes will act to improve the economy, just as we have recovered from other deep recessions in the past.
We ended The Great Depression by spending more federal dollars than we ever had on anything. Your point?
...which was lobbied hard by NOW - so that it is more difficult on working men than working women...
You forgot the, "whiskey banana monkey telephone, so shut up, that's why," part of the construction. Please show your work next time.
Pray that there is not another terrorist attack...
Better yet, I voted for President Obama. I'm pretty sure he wouldn't react to "Bin Laden Determined to Strike Within the U.S.," with "well, you've covered your ass, then."
Posted by: tensor on September 7, 2009 06:20 PMWikipedia shows the "Timeline of the late 2000s recession" starting in July of 2008 with Denmark confirming it was in recession. The United States declared recession in December of 2008 so that means our economy started shrinking in March of 2008.
http://en.wikipedia.org/wiki/Timeline_of_the_late_2000s_recession
Bill C was correct with his statement that "The economy tanked when the dreadful Democrat policy of "we will force banks to make home loans to people who we know can't affort to pay them". Republicans tried several times over the last eight years to try and fix that problem but Democrats like Barney Frank refused to do anything.
It would be interesting to see exactly what has been accomplished to fix the banking problems to ensure that we don't do that again! Would you happen to a link for that?
Posted by: Tim on September 7, 2009 06:21 PMRemember what happened when those dot.coms collapsed and people realized those companies that were trading for over $100 dollars a share and had never made a profit? Maria Cantwell can tell you. She lost a bundle working at RealNetworks.
The Dow reached it's highest level in history during Bush's Presidency. Despite the disaster of September 11th 2001, and the dot.com recession he never complained about. Bush cut taxes and the economy rebounded. The current President never stops whining like a spoiled crybaby about how he "inherited this economy".
The contrast between the two men is stunning. In actuality it is a stunning contrast between ideologies.
Posted by: Bill Cruchon on September 7, 2009 06:37 PMMarch 2001 is "late 2000s"? Please elaborate.
Maria Cantwell can tell you. She lost a bundle working at RealNetworks.
She's still not exactly poor. Your point?
The Dow reached it's highest level in history during Bush's Presidency.
Very early on, yes. What has it done since? (Hint: The Economist published a graph on this topic, with a pithily British title: "Ever Downward". Bolsheviks, I tell you!)
The contrast between the two men is stunning. In actuality it is a stunning contrast between ideologies.
For once, I agree with you.
Posted by: tensor on September 7, 2009 06:45 PMYou haven't a leg to stand on here. You just spew the typical stuff leftists always say. Kerry's campaign in 2004 routinely said we were in "the worst economy since the depression". The country had a robust economy in 2004. It was a pure lie, but that never stops leftists. They are going to hammer their socialist agenda home and they don't care a bit about being honest. That's why I don't like them.
That's also why I am so happy they are finally being exposed to the entire country.
Posted by: Bill Cruchon on September 7, 2009 07:03 PMhttp://en.wikipedia.org/wiki/Timeline_of_the_late_2000s_recession
The Wikipedia article shows the declaration dates for different countries declaring a recession. So back to my question: What is a link showing an official recession starting in 2001 as you stated?
Posted by: Tim on September 7, 2009 07:09 PMKrugman is a Keynesian economist. He is wrong here - look just because he received a Nobel Peace Prize does not mean he is right. Example - Al Gore received one also and he is dead wrong about anthropogenic global warming and that CO2 is any kind of an indicator. Besides, Krugman is progressive ideologue who by definition is a moral relativist and to say anything different would be going against his religion, but you wouldn't want to admit this truth.
Google "moral relativism" to answer your challenge, then be honest and look at yourself in the mirror. It's not a gimmick, it just requires honesty from YOU. Are you ashamed of being classified as one ? Why should you be unless you are ashamed of being a Progressive, which doesn't fly.
"Better yet, I voted for President Obama. I'm pretty sure he wouldn't react to "Bin Laden Determined to Strike Within the U.S.," with "well, you've covered your ass, then."
All I will say here is that you are quite gullible if you believe all of what he says and is clever but shallow rhetoric. Pay attention to his actions - he and his AG have made an attempt to deball and vilify the CIA. Nice going - now we are more vulnerable than before 9/11. You'd better say an extra prayer and cover your a$$.
Posted by: KDS on September 7, 2009 07:50 PMJust look at any longtime leftist. They are bitter, angry people. They aren't the happy people that went to Woodstock.
Here's the little secret. Those people who went to Woodstock weren't happy people. They were young people that hated capitalism and ended up becoming lawyers, school teachers, politicians and university professors. Lots of them are in the Obama Administration. We will see them exposed in the coming weeks.
Pick up your kids' grade school history books. It will talk about the white oppressors who came to America. It won't mention the native population that savaged each other and never invented the wheel. Amazing, isn't it?
Posted by: Bill Cruchon on September 7, 2009 08:46 PMPosted by: attila on September 7, 2009 08:50 PM
Posted by: attila on September 7, 2009 08:50 PM
The man who should have been awarded a Nobel Prize was Ronald Reagan, who destroyed the Soviet Union and freed thousands of people.
Posted by: Bill Cruchon on September 7, 2009 09:01 PMMany who voted for Obama who are Independents and Republicans, believing he was going to govern as a centrist now are sorry they did, because he is governing like a Progressive Neo-Communist. The only faction that can hold his feet to the fire is silent no longer majority - the sleeping giant has awoken.
Posted by: KDS on September 7, 2009 09:15 PMAll of the wonderful benefits of free market capitalism that they enjoy--the choices of food at the store, the cell phones, the flat screen TV's, the digital cameras, seem to not register in their minds. They just want to be hacked off constantly instead of counting their wonderful blessings. Are they spoiled ungrateful indoctrinated children?
Posted by: Bill Cruchon on September 7, 2009 09:27 PM
He never made a promise anything like that. A council of his advisers did projections that used rapidly-changing data during a very serious economic downturn. Obama never, ever made a promise anything similar to what you've said, though. Those are substantially different things.
Is it possible for you to make a post without including a serious, major factual error deserving a correction?
Posted by: John Jensen on September 8, 2009 01:38 AMYou mean like the tax credit that is the largest single component of the stimulus bill?
Or the AMT extension which is the second single largest component of the stimulus bill?
The stimulus bill includes hundreds of billions of tax cuts. And they've surely helped and were good ideas. But the typical republican answer is "CUT TAXES! CUT TAXES! CUT TAXES!" That's great for the folks who have income to get taxes, but what about those who have lost their jobs?
Posted by: John Jensen on September 8, 2009 01:45 AM"Mr. Obama himself has been saying that without a stimulus plan, the unemployment rate could go into double digits."
What he promised was that the rate would stay down only if we passed his plan. It didn't, and that is why he has lost some trust with the American people. You can argue that his economic panel misjudged things, or whatever. It doesn't matter. Their incompetence is part of the trust problem.
And no, the "everybody was wrong" excuse won't work either. Three Republicans in the entire Congress (one of which is now a Dem) voted for this thing.
Really?
"President Reagan turned Jimmy Carter's stagnation into increased investment, job growth and economic growth and the longest recorded period of peacetime prosperity without recession."
Again, really????
Or maybe just a series of a priori assertions?
Posted by: MikeBoyScout on September 8, 2009 07:47 AM"Raising America's Debt Limit Is a Sign of Leadership Failure"
Obama 2009: Senate must raise debt ceiling above $12T
So...? Even *he* knows he's a failed leader, by his own standard. I look forward to the excuses with great glee.
Folks, what is happening before our eyes is bad. It's real bad. I know you like his charisma, and all, but please try to see what is happening.
Posted by: Gary on September 8, 2009 08:33 AM
Really?"
Yes, really. Roosevelt in the 1930's and Japan in the 1990's. Short term they may give a boost, but have little long term benefit. It didn't get us out of the depression in the 1930's and the 1990's are called Japan's "lost decade".
"'President Reagan turned Jimmy Carter's stagnation into increased investment, job growth and economic growth and the longest recorded period of peacetime prosperity without recession.'
Again, really????"
Again, yes, really!!
Are you saying that the 1980's were NOT the longest peacetime expansion up to that point? After Volcker pushed up interest rates--monetary policy--and Reagan slashed tax rates--fiscal policy--together they broke the back of inflation and brought tremendous growth throughout the 1980's. Anyone who lived through the 1970's and 1980's would have MUCH prefered the Reagan economy to the Nixon/Carter economy.
"Unemployment got worse instead of better... The stimulus didn't help."
He seems to believe that the first part of this proves the second, but this is something even the most dedicated anti-keynsian would have to agree is an absurd argument: it was clear that no matter what, unemployment was going to get worse, so to claim this proved anything at all is stupid at best, and disingenuous at worst.
The only question back then was how much worse unemployment would get, and the forecast of 8% was widely acknowledged by all sides at the time to be overly optimistic.
Did the fraction of the stimulus money spent so far reduce unemployment from what it would have been otherwise? No serious economist of any stripe would disagree with that, though some might claim that the longer term consequences outweigh the benefits of the stimulus, and the size of the improvement could be debated.
But if you're going to be taken seriously, you have to at least not pretend to prove things based on arguments that are on their face absurd, and fairly acknowledge that the tradeoffs that result from these kinds of policy choices.
Posted by: Igor on September 8, 2009 11:16 AMThe bottom line is that the stimulus plans, both the first one passed by Bush last year, and the second passed by Obama are working. The horror of mass default was averted, key banks were able to stay solvent, and a major depression was mitigated into a recession.
Wall St. is now recovering. Since Obama took office on Jan 20, the S&P 500 is up 20.84%. I'd say thats pretty damned good. Main St. typically lags 6-9 months behind Wall St, so we should be out of the worst of it soon. Heck, I'm already seeing new open job reqs, and headhunter activity in the tech industry.
I have to give credit to Bush for moving Treasury from a political hack (Jon Snow) to an experienced pro like Paulson. Bush was able to step back from ideology, and recognize that MASSIVE government spending was needed to avert disaster. Economics has much to do with crowd psychology..the very fact that governments around the world cooperated on a plan to fix the problem helped to stabilize the global economy, even before the first dollar was spent. Obama was able to continue and refine the stimulus. This is basic macroeconomics
Posted by: Proteus on September 8, 2009 12:00 PMYou seemed to have conveniently forgotten that President Reagan did not only cut taxes. He also increased spending. So, the assertion that Reagan was some sort of Supply Side purist is flat out wrong, and concluding that pure Supply Side led to the outcome you assert is wrong.
Next.... "Are you saying that the 1980's were NOT the longest peacetime expansion up to that point?"
No. I am laughing at the a priori assertion made by Ron that Reagan Supply Side policies led to "the longest recorded period of peacetime prosperity. without recession."
You said "Anyone who lived through the 1970's and 1980's would have MUCH prefered [sic] the Reagan economy to the Nixon/Carter economy."
And if we can believe that you speak for everyone, then we can believe that you speak for anyone. But you don't speak for everyone.
Some did better out of the 80-s than they did out of the 70-s, but the economic data speaks more about how many were better vs. otherwise.
Declaring "demand-side incentives" failures and then qualifying that statement with "peacetime" is just plain silly.
If stimulating demand is bad economic policy it should be bad both as economic policy in peace and war. The mere fact that one tries to split the difference shows either an ignorance of economics or simply a partisan attack.
Then you said "And if we can believe that you speak for everyone, then we can believe that you speak for anyone. But you don't speak for everyone. Some did better out of the 80-s than they did out of the 70-s, but the economic data speaks more about how many were better vs. otherwise." How asinine is that statement! I stand by my statement that you quoted.
If you really believe the ridiculous spin you are attempting with regard to Reagan, then you are either a blatant liar or you are a kid that is not old enough to actually remember the 1970's, the 1980's, and the Reagan administration. Which is it? I'm guessing it is the latter since if you were old enough to remember that economic period, you would know that no one would believe you if you lied about it.
"Declaring "demand-side incentives" failures and then qualifying that statement with "peacetime" is just plain silly." I did not qualify that statement and neither did the author of the post. Go back and read what was said.
Before you go on with this, you should actually look at the times when Keynesianism has been tried [1930's in the U.S. and 1990's in Japan]. Your comments thus far have just been, well, silly.
Posted by: Bill on September 8, 2009 03:53 PM"You mean like the tax credit that is the largest single component of the stimulus bill?" I'd like to see some numbers on how much each taxpayer got. If I remember correctly it's like five bucks every paycheck (and it was doled out every paycheck rather than a lump sum). That isn't particularly stimulating for anybody. Also, when Bush tried the same thing (but in a lump sum) it didn't work very well either. Temporary blip at best. The simple fact is that government can't throw enough money around to "stimulate" the economy. It's far to large and diverse for such simplistic solutions. And if they did manage to toss enough dollars into "the economy" then you get what we have now multiple trillions (9 so far) of debt added onto the 56 trillion that is off the books for Social Security and Medicare. An article in the WSJ today quotes administration flunkies that the billions spent on GM and Chrysler will never be paid back because GM has never had (and never will again) the market share needed to generate those kinds of $$. Ditto Chrysler. The country is going broke buddy, while Obama and the screwballs in Congress fiddle.
When I say "the economy" I mean as defined by Congress and Obama. Shovels of taxpayer dollars to big money supporters, the privileged and the well connected that does little on the ground where it is needed. The little guy can go piss up a rope for all they care. Welcome to the Banana Republic of U.S. of A.
Posted by: G Jiggy on September 9, 2009 11:01 AM
Nobody, except for very wealthy individuals and Fortune 500 companies can afford to "self insure".
Posted by: Proteus on September 9, 2009 05:40 PMNobody, except for very wealthy individuals and Fortune 500 companies can afford to "self insure".
Is there an exclusion in HR 3200 for wealthy individuals and companies that self-insure? Can they opt-out of the mandatory payments for health insurance?
Posted by: Shanghai Dan on September 9, 2009 06:01 PMWe ARE paying for your health insurance under the current proposal. Are you unaware of how taxing works?
Posted by: David on September 9, 2009 06:11 PM
#60: Remember, self-insure for a corporation still means they offer insurance for their employees...the difference is that the risk pool is administered by the corp, and the insurance company is used only for administration.
Posted by: Proteus on September 10, 2009 05:25 AMAlso, how does the mandate account for people who are in this country illegally? Or will they absolutely be refused any medical care they cannot pay for out of their pocket?
Posted by: Gary on September 10, 2009 05:32 AMIt's nice someone on the left finally admits that Insurance Companies don't deny pre-existing conditions just because they are greedy, mean and nasty. There is actually a reason for this--it's called moral hazard and adverse selection. Insurance Companies do this to protect both themselves, and the other policyholders in their risk pool.
Posted by: Bill on September 10, 2009 08:06 AMBut it is a significant problem that needs to be fixed. And there is no way to fix it without either an individual mandate or a single-payer system.
Posted by: John Jensen on September 10, 2009 11:22 AMYou didn't answer the question. Is there an exclusion to participation for the wealthy or companies? Can they self-insure and opt-out of the taxation scheme?
Posted by: Shanghai Dan on September 10, 2009 03:04 PMAs the chart shows with the actual unemployment rates shown in red, the actual unemployment rate is higher that Obama projected if they did not pass the stimulus plan. As someone posted earlier, factor in those who have stopped looking for work and the number of unemployed people is considerably higher.
I know that making economic predictions is a mixture of art and science, but boy did Obama's economic team screw up on this one. Each month we hear that more jobs have been lost nationally, but Obama tries to put a positive spin on the numbers by saying that fewer people lost their jobs than in the previous month.
A couple of nights ago, a Congressman who had had enough of Obama's lies proclaimed two words loud and clear - "You lie". I have long suspected that Obama was a serial liar, but is it possible that Obama truly believes what he tells us?
I am not sure what is worse, a President who willfully lies or a President who really believes the falsehood he is spreading.
Posted by: Gary S on September 11, 2009 04:20 PMNo exclusion is necessary. As long as they have insurance, and/or provide it for their employees, they don't get penalized. If its a wealthy individual, insurance is a no-brainer, and a trivial cost. If its a private company, even if they self insure, they have to provide their employees with medical coverage.
#65: Correct. most insurance companies drop peoples coverage AFTER they underwrite their policies for whatever excuse they can, so as to maximize corporate profits. Make insurance companies non-profit, or fixed profit by making them pay out a fixed percentage of premiums, and you've solved the problem.
The profit motive IS the problem in the insurance industry. The only way to acheive steady growth in profits is to increase premiums, AND decrease payouts, all at the expense of consumers. Capitalism has its place, but not in this industry.
Posted by: Proteus on September 12, 2009 02:26 PMTypically the seasonally adjusted data is used for policy decisions and discussions.
Posted by: Bill Greenlaw on September 14, 2009 09:16 AM