Some of the nation’s top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.
Today’s question:
Is the rush toward a jobs bill an implicit admission that February’s $787 billion economic stimulus failed?
Glenn Reynolds, the Instapundit blogger, said:
Admission or not, it’s obvious that the stimulus has been a miserable failure, with unemployment much worse than the Obama Administration said we’d see without the stimulus, and much, much worse what they promised us we’d see if the stimulus passed. Arianna Huffington is calling unemployment Obama’s Katrina, increasing pressure for action. But a “jobs bill” is likely to prove yet another expensive flop. Legislation doesn’t create jobs. Investment creates jobs, and in the current political environment, you’re crazy to invest unless the political fix is in.
Much of the unemployment problem stems from uncertainty created by the Administration and Congress, as they rush one poorly thought out gimmick after another through the system and create the sense that the only good investment is one that’s government-approved. The best thing they could do is probably nothing, but since doing nothing offers no opportunities for political posturing and graft, I predict that we’ll see another expensive yet ineffectual program instead.
Craig Newmark, founder of Craigslist, said:
The jobs bill reflects that the damage done in the prior eight years will take more work to repair. There are many good people in Washington and elsewhere, working very hard on that.
Daniel J. Mitchell, senior fellow at The Cato Institute, said:
The so-called stimulus was a massive waste of tax dollars, but this should not be a surprise.
The $787 billion spending spree was based on the discredited Keynesian theory that did not work for Hoover and Roosevelt in the 1930s and did not work for Japan in the 1990s. It also did not work for Bush last year, so it is baffling that anybody would think it would work this year. Borrowing money out of the economy’s right pocket and then having politicians put the same money in the economy’s left pocket was the political equivalent of a perpetual motion machine. The only surprise was that the White House was foolish enough to make specific claims of the good results that supposedly would flow from all the pork-barrel spending. In part, this is the absurd notion of claiming 600,000-plus “jobs saved or created” when total employment actually has fallen by more than 3 million. But the bigger mistake was claiming that the faux stimulus would keep the unemployment rate from rising above 8 percent and that failure to squander $787 billion would cause the jobless rate to climb to 9 percent. The politicians got their wish, yet now the unemployment rate is above 10 percent. Brilliant.
Dean Baker, co-director of the Center for Economic Policy Research, said:
There is little dispute among economists that the stimulus helped to boost growth and prevented the unemployment rate from rising even higher. This can be seen very clearly in the data. For example, consumption grew in the 2nd quarter even though wage income fell. This was obviously due to the increases in unemployment insurance and other benefits, as well as the Make Work Pay tax cuts. Everyone who has looked at the data recognizes the positive role that the stimulus played.
The reason why there is a need for a jobs bill is that the economy was hit harder than President Obama and most private forecasters anticipated. They can be blamed for not getting their forecast right (they are supposed to be good economists), but on the other hand, President Obama was not the person who let an $8 trillion housing bubble grow unchecked, or insisted that its collapse would be no big deal when it started to deflate. (That person would be Federal Reserve Board Chairman Ben Bernanke).
Anyhow, the economy was worse than was generally recognized, as some of us did try to warn last winter. This means that much more stimulus was needed at the time. The story here is of a hugely overweight person who cut back their food intake by 300 calories a day. If this person had originally been consuming 3000 calories a day, then this reduction in food consumption will probably not be adequate to get their weight down. But the conclusion is not to go back to eating 3000 calories a day, but rather to cut food intake more.
The Republicans will try to take advantage of the Obama administration’s forecasting mistake to claim stimulus doesn’t work. However, if the public gives into this nonsense then we will all end up fat and unemployed.
Bernie Quigley, Pundits Blog contributor, said:
Yes. If you drove south from northern New Hampshire to North Carolina on I-95 as I have done this past weekend, you would see extensive work conspicuously done by women and men in lime green clothing here in the frozen north where almost no one lives. Every road has been resurfaced; the ledges have been torn off the high cliffs by the highways that just last year housed hawks and peregrine falcons, lines have been painted everywhere.
Much of this work has been voted down again and again locally as work that did not need to be done, work that we did not want done; labor that we do not respect; work that we do not consider to be real work. Increasingly, the feds need to New Jersey-fy us so as to removeth chill of the cold, clear, northern night and the coyote’s chant that sends the willies up their spines. But there is less than 2 percent unemployment up here in these parts. This money is a complete waste by nostalgicos channeling the Inner Roosevelt and longing for the days of Woody Gunthrie and Big Bill Broonzy singing folkloric ditties in a box car heading across the western plains on the government’s tab.
Commodities guru Jim Rogers, in comparing the Obama spending to that of the Chinese, points out that the Chinese are correctly spending infrastructure money by applying it where it is needed for the 130 million new workers recently arrived in the industrial centers. Here it is just tossed anywhere, as if out of an airplane, regardless of need. All patterns of population and economy today point west. When people here in the Land of the Free move they tend to move today to Texas and Alaska. There has been no attempt to follow patterns of rising karma. And then when you get south to New York City, where employment is now most probably above 20% the roads and infrastructure are a mess and not a finger has been lifted. There appears to be no plan whatsoever as Rogers says.
Rep. John Carter (R-Tx.) said:
There is no doubt that the original Stimulus failed to create jobs, and has in fact probably cost additional jobs and prolonged the recession. To create jobs we need to lower the tax burden to stimulate investment, which is the exact opposite of what the Democrats did earlier this year and now contemplate again.
Rep. Mike Honda (D-Calif.) said:
The damage done to our economy by Bush policies will take longer than months to fix, especially to help the millions of American families who are still struggling to make ends meet. The economic recovery package was an important step in a new direction but we need to do more to help Americans who have lost their jobs due to years of deregulation and harm done to our social and economic fabric by failed Republican policies and tax cuts to the wealthiest.
Dick Morris, Pundits Blog contributor, said:
It is the political and economic equivalent of the escalation of the Vietnam war. If 100K troops don’t win, send in 200K and so forth until the fact that the program isn’t working becomes obvious to everyone, even its advocates.
The stimulus spending is not failing because it is inadequate but because it is counter productive. The capital it absorbs could be better spent investing in private sector job growth. All the stimulus is, is a heart lung machine to keep the economy alive. it does nothing to assure that it will be able to live on its own once the machine is disconnected. In fact, by absorbing all the oxygen in the room to pay for its deficit, it assures that it will not be able to do so
Armstrong Williams, Pundits Blog contributor, said:
You can’t help but ask, does this Administration have what it takes to steward the economy? When President Obama signed the $787 billion economic stimulus bill in February, Treasury Secretary Timothy Geithner promised that it would keep the unemployment rate from going any higher than 8.5 percent. Since then, another 3.4 million jobs have been lost and the unemployment rate has risen to 10.2 percent– Great Depression proportions.
So what is the Obama team saying now? More of the same, it seems, amid reports that the US House of Representatives may pass a second stimulus bill-which is being creatively labeled a “jobs initiative”-before the end of the year. With mind-numbing intransigence, the Democrats continue to insist that their stimulus spending is “saving jobs.”
First, the very fact that the Democrats are proposing a second stimulus bill is an implicit admission that the first stimulus package has failed to “save jobs.” Second, the very claim that the stimulus package is saving jobs is nonsensical. It is impossible to prove that a job has been “saved.” In order to even tote that claim, the Administration has tortured the existing data. As reported by a GAO audit released last week, the Administration’s reported job numbers are riddled by statistical errors and invalid reporting. For example, the GAO report found that jobs have been overstated or counted multiple times. Other media outlets have reported various statistical and reporting anomalies, including an estimated $6.4 billion in Recovery Act funds going to imaginary places, like the 26th District in Louisiana or the 12th in Virginia.
A second stimulus package…sorry…”jobs initiative”… is the Democrats’ attempt to give the appearance that their plan is working. They know that if the levee cracks before the 2010 midterms, they will be swept out of office, just like the1994 U.S. midterm elections. Calling a second stimulus package a “jobs initiative” doesn’t change the fact that the Administration’s response to the unemployment crisis has been an economic bust. It’s hard to see how more of the same will change that.
John Feehery, Pundits Blog contributor, said:
Clearly, the stimulus has failed to do the one thing that it is most important to the political future of the vulnerable Democrats: Create jobs. It has failed because it was not designed to stimulate the job creators of the private sector, small business. It was designed to keep public sector employees employed. The so-called stimulus has stimulated an expansion of the public sector at the expense of the private sector. And it is unlikely that anything else the Democrats come up with will be much better because Democrats just don’t get the private sector. They don’t understand how it works or why it works. They would be better off to stop digging us into a deeper financial whole and focus of keeping the currency stable.
Michael J. Wilson, national director of Americans for Democratic Action said:
No – we need a jobs bill because the economic stimulus didn’t work enough. Partisan wrangling and misplaced concerns about the deficit limited the effectiveness – but without the stimulus and its COBRA, food stamps, unemployment compensation, aid to states and local governments and infrastructure aid, the Great Recession would have been even worse. The 17½% unemployment rate – not the 10.2% which leaves hundreds of thousands uncounted – is proof that the private sector can’t lift this economy alone, that consumers can’t lift this economy alone, that only the federal government has the muscle to lift this economy. Congress and the Obama Administration must dig deep and invest in the nation in a substantive, direct and robust way. If we don’t, the political ramifications will be nothing compared to the economic consequences of Great Recession doing a double dip – or worse.
Rep. Chaka Fattah (D-Pa.) said:
There is general consensus that the stimulus is working. It stopped the inevitable crash of the U.S. economy and laid the groundwork for a strong recovery. No one thought the recovery would be fast or easy. As a recent article in the New York Times pointed out, a variety of economists agree the stimulus is helping the economy — which a year ago was in free fall — grow and fewer jobs are being lost. The president and Congress understand that this is a very long process and the work will not be over as long as people need jobs. The Democratic Congress will continue its work with the administration to keep people employed and find additional ways to create jobs for the unemployed. It took us years to get into this financial predicament, and it will take years to get out of it.
Michelle D. Bernard, president and CEO of the Independent Women’s Forum, said:
The rush to put out a jobs bill is definitely evidence that the Administration recognizes that the stimulus failed to provide the promised “jump start” to the economy and to stimulate private sector job creation. Worse, the error-filled reports about “jobs saved or created” has increased cynicism: many Americans now believe that Washington is more interested in spinning than solving the problems that confront them.
The new focus on jobs is also evidence that the Administration recognizes that the American people are frustrated that Congress and the White House seem not to recognize that the unemployment crisis is, in fact, a crisis. The Administration and Congressional Leaders spend all of their time pushing a health care bill that fewer and fewer Americans support (just 38 percent of Americans support the health care bill according to the latest poll by Rasmussen) while millions of Americans are struggling to find work. The 10 percent unemployment rate understates the magnitude of the problem: More than one in six (17.5 percent) Americans are either unemployed, working part-time or fewer hours than they want to, or have given up seeking employment.
After months of pushing an agenda of expanded government control of health care, a job-crushing cap-and-trade bill, and budget busting spending with little relation to encouraging private sector hiring, Congress knows that it needs to convince the public that they are capable of advancing policies that will encourage job creation. Otherwise many Members of Congress are going to be joining the ranks of the unemployed after next November.
Michael J. Wilson, director of Americans for Democratic Action, said:
No – we need a jobs bill because the economic stimulus didn’t work enough. Partisan wrangling and misplaced concerns about the deficit limited the effectiveness – but without the stimulus and its COBRA, food stamps, unemployment compensation, aid to states and local governments and infrastructure aid, the Great Recession would have been even worse. The 17.5 percent unemployment rate – not the 10.2 percent which leaves hundreds of thousands uncounted – is proof that the private sector can’t lift this economy alone, that consumers can’t lift this economy alone, that only the federal government has the muscle to lift this economy. Congress and the Obama Administration must dig deep and invest in the nation in a substantive, direct and robust way. If we don’t, the political ramifications will be nothing compared to the economic consequences of Great Recession doing a double dip – or worse.
Rep. Tom Cole (R-Okla.) said:
Several months ago the President suggested that if the Congress passed the $787 billion stimulus, unemployment would not go above 8 percent and hundreds of thousands of jobs would be created. But as we all know, by October the unemployment rate had climbed to 10.2 percent and hundreds of thousands of jobs had been destroyed. Whether or not this latest rush to spend more money is an implicit admission that their previous effort was a failure, one would hope that they have learned that you don’t grow the economy by growing the government and the deficit.
Rep. John Culberson (R-Tx.) said:
The stimulus bill has been a complete fiscal failure. Earlier this year President Obama and Speaker Pelosi promised that the trillion dollar bill would create jobs “immediately” and unemployment would not rise above 8 percent. Since that promise, unemployment has reached 10.2 percent – the highest level in 26 years and more than 2.8 million jobs have been lost. I believe it is time to let Americans keep more of what they earn and for the government to spend less. It is time to start trusting and empowering individual Americans instead of the federal government. By taking these steps, our economy will see the growth and prosperity that have defined America for generations.
Rep. Todd Tiahrt (R-Kans.) said:
Yes. The Obama/Pelosi stimulus program has earned an “F” for job growth and an “A” for growing the size of the federal bureaucracy. Democrats fail to realize that economies have to grow from the ground up not the government down. We need more opportunity and less government.
The failure of the $787 billion spending plan is unfortunately just one in a series of proposals put forth by the Democrats to spend more money and control more decisions made by American families. Just look at what Speaker Pelosi has tried to do this year with a national energy tax and her plan to eliminate thousands of jobs through a nationalized healthcare system. And today The Hill has reported Democrats are proposing a new $150 billion stock tax that will further stifle investments and slow our economy.
In the end, these spending schemes leave us with more debt, higher taxes, fewer jobs and less personal freedom. We do not need another so-called stimulus plan that will simply spend more money.
As I have said repeatedly, we need to fight for true economic stimulus that will remove barriers to private-sector job creation, put spending decisions back into the hands of families and business owners, and lead us toward energy independence. Only when we allow the free-market to work will we see the true potential of the American economy.
Justin Raimondo, editorial director of Antiwar.com, said:
I had to laugh as I read The Hill’s account of the Democratic push – from the “Jobs Now Caucus,” no less – which wants the money left over from the “stimulus” to go to “jobs creation.” Wasn’t that the alleged purpose of the original stimulus, which totaled out at $838 billion? How quickly they forget!
An occasion for yet more mirth: “White House economists said in January that the jobless rate would peak at about 8 percent if the stimulus were to be enacted. Without the stimulus, the jobless rate would peak at about 9 percent, the White House economists said in the build-up to passing the measure.”
What planet are these people living on? As the White House blithers on about the “success” of the first boondoggle bill, everyone knows the real unemployment rate is closer to 17.5 percent – according to the government’s own figures, as CNBC reports. However, two sectors of the economy seem relatively immune from the devastation that followed the bursting of the Greenspan bubble: first, Wall Street, where massive infusions of freshly-printed dollars are raining down on the banks and the corporate elite, who will be getting big fat Christmas bonuses this year. And of course employment in the Washington, D.C. area is up because the ranks of government employees are swelling. As the Wall Street Journal recently reported:
“College graduates are now looking toward government to start their careers, since there aren’t a lot of other places to look. Unemployment for government employees is about half the rate of almost all private industry workers, and Washington, D.C., is a rare U.S. city that seems recession-proof.”
As the productive private sector sinks, the least productive sectors – empowered by their friends in Washington – rise in power, influence, and income. In the interest of truth in advertising, the “Jobs Now Caucus” needs to rename itself the “Jobs for My Cronies Now” caucus.
There is one and only one road to job creation: instead of trying to re-inflate the bubble by pumping billions into boondoggles, the massive mal-investment caused by prior government policies (and the Federal Reserve) needs to be eliminated. This means that no one is “too big to fail.” Once that is allowed to happen, the economy can begin to heal itself – as long as government regulators get out of the way and stay out of the way.
But of course that won’t happen: what will happen is the massive piling on of debt, the destruction of the dollar, the flight to gold – and the flight of capital away from US shores, as our productivity plummets and the national income shrinks. Which is why I had yet another chuckle as I read the following from The Hill’s reporting:
“An aide to House Majority Leader Steny Hoyer (D-Md.) said that the $787 billion package did what it set out to do: stop the economic downturn from pulling the nation into another Great Depression. ‘Once we averted a depression, the Recovery Act started creating and saving jobs, and a jobs bill will build on that to get Americans back to work,’ said Katie Grant, a Hoyer spokeswoman.”
Don’t count your chickens before they hatch, Katie: the idea that we have “averted” disaster may be a bit premature, and, this holiday season, more than a bit insensitive to the suffering of millions of Americans, who face unemployment, foreclosure on their homes, and some pretty Great Depression-like hardship. The sort of hardship that is, of course, light years away from the world Katie and her Washington friends are living in.
