Obama’s plan stimulates the deficit, not the economy

Obama’s plan stimulates the deficit, not the economy
By: Examiner Editorial
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05/19/09 12:05 AM EDT President Obama’s much-ballyhooed American Recovery and Reinvestment Act of 2009 – the economic stimulus plan - isn’t stimulating much of anything except federal employment, despite having been rammed through Congress as emergency legislation in February. That’s the only conclusion to be drawn from the most recent Labor Department unemployment figures. Since the $787 billion spending measure was approved, 1.2 million Americans have lost their jobs and unemployment has ratcheted up to 8.9 percent – the highest it’s been since 1983. Unemployment is beyond even what President Barack Obama’s own economic advisors predicted it would be with no recovery plan – and definitely not what Americans were told to expect.

Meanwhile, spending touted as “timely, temporary and targeted” that was supposed to be flooding the economy is barely trickling out of the federal bureaucracy. Less than $29 billion – a mere four percent of the stimulus package– has been spent so far. So much for the “timely” part of the Obama mantra. Let’s not forget here that Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi were so hell-bent to get the bill through Congress that they refused to allow members sufficient time to read the massive 1,079-page spending bill before voting on it. One consequence was that the bill was stuffed with spending that is anything but temporary. So we can all wave goodbye to that part of the mantra.

Obama said on national television not long ago that the stimulus bill had “saved or created over 150,000 jobs.” But how can that be when joblessness increased a full percentage point after his stimulus package was passed? And there’s that uncomfortable fact uncovered by an Associated Press study that found that states hit hardest by the recession are getting the least amount of stimulus spending. There goes the targeted part of the mantra.

The failure of the stimulus bill to boost the economy as promised is further exacerbated by the president’s budget, which explodes the 2010 federal deficit to $1.8 trillion, and the bailouts of two of Detroit’s Big Three automakers. George Mason economist Tyler Cowen predicted such dismal results when he pointed out that “it is very hard to find [historical] examples of successful fiscal stimulus driving an economic recovery. Ever.” In other words, the stimulus package was passed without any evidence that it would work. “It is becoming increasingly clear that the long-term fiscal strategy of the White House is based on large doses of wishful thinking,” concludes Harvard economist and former Bush administration advisor Greg Mankiw. But when you insist on ignoring basic economic principles, wishful thinking is all that's left.