Tag: Economic Stimulus

Today it’s been 5 year since they promised a recovery (UPDATED)

Today marks the 5th anniversary of the Porculus bill that the left told us would solve all the problems causes by evil Boosh dropping taxes and starting all the wars they were for before they were against them. I suspect the LSM will not bring this up, because frankly, things look bleaker, if anything, today then they did then. And we only pissed away some $6 trillion to get here. No problem they don’t think other people’s money can’t fix.

Seems that the WSJ also remembered the anniversary of the biggest rip-off of the American tax payer, and wrote about it. Let me paste the entire thing for people that might not have access, because it is worth reading:

Five years ago today, President Barack Obama signed the American Recovery and Reinvestment Act into law. The $830 billion spending blowout was sold by the White House as a way to keep unemployment from rising above 8%. But the stimulus would fail on its own terms. 2009 marked the first of four straight years when unemployment averaged more than 8%. And of course the unemployment rate would have been even worse in those years and still today if so many people had not quit the labor force, driving labor-participation rates to 1970s levels.

The Obama White House had been egged on by liberal economists like Paul Krugman, who in November of 2008 recommended a stimulus of at least $600 billion. Team Obama worked with Democrats in Congress to exceed his minimum request by more than 30%. But after the failure of the stimulus the same liberal economists who had enthusiastically supported the plan would claim that its main flaw was that it was too small.

Shortly after the passage of the Recovery Act in 2009, Vice President Joseph Biden urged local politicians not to spend the money on “stupid things.” They ignored his advice, and so did Mr. Biden. The federal government poured billions into the government and education sectors, where unemployment was low, but spent only about 10% on promised infrastructure, though the unemployment rate in construction was running in double digits. And some of the individual projects funded by the law were truly appalling. $783,000 was spent on a study of why young people consume malt liquor and marijuana. $92,000 went to the Army Corps of Engineers for costumes for mascots like Bobber the Water Safety Dog. $219,000 funded a study of college “hookups.”

In aggregate, the spending helped drive federal outlays from less than $3 trillion in 2008 to $3.5 trillion in 2009, where federal spending has roughly remained ever since. The legacy is a slow-growth economy: Growth over the last 18 quarters has averaged just 2.4% — pretty shoddy compared to better than 4% growth during the Reagan recovery in the 1980s and almost 4% in the 1990s recovery.

The failure of the stimulus was a failure of the neo-Keynesian belief that economies can be jolted into action by a wave of government spending. In fact, people are smart enough to realize that every dollar poured into the economy via government spending must eventually be taken out of the productive economy in the form of taxes. The way to jolt an economy to life and to sustain long-term growth is to create more incentives for people to work, save and invest. Let’s hope Washington’s next stimulus plan is aimed at reducing the tax and regulatory burden on American job creators.

Let the excuse making begin.

Stimulus … V?

I’ve lost track of the number of stimulus bills our Congress has passed. There were two under Bush (mostly tax cuts), the big Obama spendathon and now two waves of payroll tax cuts:

Two months after vowing to never give up the fight against President Obama’s payroll tax proposal, House Republicans decided Friday that they could not afford the battle any more.

Large bipartisan coalitions in both the House and Senate passed a $143 billion economic package that includes a year-long extension of the payroll tax holiday for 160 million workers, just as Obama had requested more than five months ago, and also extends unemployment benefits for millions of others.

It also includes the doc fix. And this $143 billion hole in the budget is filled by … very little actually. They’ve already quit even pretending to care about the deficit implications. And they wonder why Congress’ approval rate is 10%.

(The WaPo quotes Mark Zandi as saying this will boost the economy. Why that idiot real estate bubble supporter and stimulus maven continues to get press is beyond me. It just shows that no one ever falls out of the MSM rollodex no matter how often or how spectacularly wrong he is.)

A year ago, I thought the payroll tax cut was a decent idea. I now think it was terrible one. Because this tax cut is almost impossible to reverse. Any attempt is branded as “raising” taxes on the middle class (a verb that is conspicuously not used when eliminating the Bush tax cuts is discussed). We seem to now have a permanent $150 billion a year hole in the budget. And no one is interested in fixing it.

Food and ammo, guys. I keep saying it and it keeps looking more and more likely.

The Bill Comes Due

Here’s the great thing about Obama’s speech to Congress about jobs: it’s never going to happen. Lots of libs are jumping all over this story, detailing Republican reluctance to give Obama a win. Fair enough. I have a Republican-slamming post cooking. But this wailing and gnashing of teeth might be more impressive if Obama himself weren’t scuttling the plan:

The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and businesses.

Jack Lew, director of the Office of Management and Budget (OMB), said the tax hikes would pay for Obama’s entire bill, which the administration is sending to Congress Monday evening.

The chief provision announced by Lew would be to limit itemized deductions for individuals who make more than $200,000 a year and families that make more than $250,000, something the Obama administration has previously pushed to do through its budget proposals. Lew told reporters at the White House press briefing that this would raise about $400 billion.

So much for paying for this out of future spending cuts.

The Republicans will not agree to this and they shouldn’t. This takes money from one group of tax payers and gives it to another. Net economic impact: minimal. And paying for this with deduction phase-outs is mind-boggling. Phase-outs of deductions tend to create cliffs in the income tax — places where the phase-out causes the marginal rate to exceed 100%. Indeed, the phase-out of Obamacare subsidies with income, as I’ve noted, creates marginal rates of up to 174% for low-income people.

Obama knows the GOP will not agree to this. And that’s what bothers me more than anything. If he wanted this passed, a promise to cut future expenditures by tiny percentages would pay for it and possibly win some GOP support. By going the tax route, he’s simply trying to put the inevitable failure of this bill on the GOP.

Given what he knows about the GOP, I find it hard to believe that Obama doesn’t want the bill to pass. And I suspect a big reason is that he’s quite aware that it will be of marginal impact, Mark Zandi’s ridiculously precise and optimistic projections not withstanding. Team Obama knows that our biggest problem — private and public debt — is something we can only work around with time. So while they’re waiting for the nation to work its way out from under the boulder, they might as well throw up a flashy jobs plan and blame the GOP for its failure.

(While we’re on it, it’s worth noting just how much $450 billion is and how inefficient this proposal is. Steve Allen notes that $450 billion is enough to give every unemployed person $32,000 to do volunteer work or an unpaid internship for anyone who will unlock the door. But of course, that wouldn’t line the pockets of government contractors and employees.)

Sigh. Just yesterday, I was having positive thoughts about this President. I was looking back over the last 2+ years and seeing the huge ramp-up in drone attacks that have killed more Al-Qaeda leaders than ever before and thinking this was good foreign policy. Then he lays this political bullshit on us.