For all of this week’s talk about President Obama’s “second stimulus,” why do so many Americans feel less stimulated than chafed? The parade of stimuli that Pres. G. W. Bush launched and the stimulator-in-chief has accelerated has left America impoverished, indebted, and increasingly jobless. And now, Obama wants more.
Obama unveiled an attractive item or two while attempting to defibrillate the dreary economy and Democrats’ dismal electoral prospects. Supply-siders long have wanted to scrap the depreciation tables and let businesses immediately deduct capital purchases. Too bad Obama wants to permit this tax-and-simplification benefit for only one year.
However, that expenditure would span six years, despite the touted “shovel-readiness” of public-works projects. Even if one applauds such spending, shouldn’t it happen right now?
What about Obama’s previous magnum opus? In February 2009, he signed a $787 billion stimulus that has swelled to $814 billion. The Congressional Budget Office on August 24 estimated that this measure “created or saved” between 1.4 million and 3.3 million jobs while spending, so far, about 70 percent of this money. Assuming the rosiest scenario, this $570 billion created 3.3 million jobs at a stunning $172,727 each.
Paradoxically, these alleged jobs have grown even as jobs have disappeared. Unemployment somehow has risen from 7.4 percent when Obama was sworn in to 9.6 percent today. Obama’s rosy scenario seems choked with weeds.
Further figures are as jaw-dropping as they are irritating.
The Heritage Foundation examined data from the U.S. Labor Department, the Bureau of Labor Statistics, and Haver Analytics. In January 2008, one month after the Great Recession officially began, President Bush and a Democratic Congress spent $168 billion to give every American a $600 tax rebate to go buy something pretty. July 2010 was the middle of President Obama’s much heralded “Recovery Summer.” Between those dates, Heritage calculates, private-sector employment plunged by 7.8 million jobs — a 6.8 percent slide. Meanwhile, federal-government employment soared by 198,100 positions — a 10 percent increase. So, while Americans do less with more, the feds have spent 30 months stimulating themselves in a Jacuzzi of taxpayer dollars.
Obama’s “Trains, Planes, and Automobiles” plan is not his “second stimulus,” as claimed by journalists who barely can count to three. After Bush’s first stimulus and his $700 billion TARP bailout, Obama followed his first stimulus with Cash for Clunkers ($2.85 billion), Cash for Caulkers ($5.7 billion), First-Time Homebuyer Tax Credits ($23.5 billion), mortgage assistance ($75 billion), up to 99 weeks of unemployment benefits ($34 billion), the Advanced Technology Vehicles Manufacturing program ($25 billion), and last month’s sop to government-school teachers and other public-sector-union members ($26 billion — “paid for” with phony offsets that “would be easiest for Congress to reverse later, such as Food Stamps,” explains Heritage Foundation budget analyst Brian Riedl).
Add Obama’s so-called second stimulus, and these nine stimuli total almost exactly $1 trillion. What has this bought us? Auto and home sales collapsed when these temporary rebates and credits expired. Meanwhile, gross-domestic-product growth has sputtered to 1.6 percent. This economy has walking pneumonia.
“This most recent stimulus is the last desperate gasp of Obama’s failed Keynesian economics,” says Chris Edwards, editor of the Cato Institute’s downsizinggovernment.org. “More government deficit spending will steal more resources from the private sector, and would be another kick in the teeth of future taxpayers.”
Obama still lusts for a $30 billion Small Business Lending Fund to pay community banks to lend to small companies. He has learned nothing from Bush’s blockheaded policy of spending on banks in hopes that they would lend to private enterprises. Instead, banks used this money to purchase low-risk Treasury bonds, thus sending hard cash right back to Washington. Meanwhile, credit has evaporated as borrowing by non-financial corporations has fallen 62 percent — from $754.7 billion in 2007 to a seasonally adjusted $288.7 billion in 2010’s first quarter. In terms of lending, Bloomberg News describes this as “the deepest contraction in more than 35 years.”
Rather than continue Bush’s folly, Obama should permanently slash or scrap income and corporate taxes so entrepreneurs and companies can keep more of the money already in their pockets. Never mind the banks.
So, thank you, Mr. President, for offering to stimulate America yet again. But not now; we’ve got a headache.
– Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University. Manhattan financier Brett A. Shisler contributed research for this piece.