One Final Pass At Obama's Failed Economic Stimulus Program

I know we have beat this issue to death over the past year so this is hopefully the last time we have to review what a failure it has been. I do it one more time since I am tired of the midterm election political rhetoric from the Democrats that claim how successful it was. Much like the failed bank bailout program (TARP) that gave taxpayer money to banks that did not need it or that deserved to go out of business because of their own incompetence, Obama's economic stimulus program also severely over promised and  under delivered, mostly because they were 1) based on faulty assumptions about life and reality and 2) were developed and administered by the low performing political class.

 

So, one last time:

 

- In order to get the stimulus package passed, Obama administration representatives tried to scare us with economic horror stories that might come to pass if the stimulus bill was not passed. The most famous horror story was the one that said U.S. unemployment would soar to 8% if the legislation was not passed. Well, the legislation was passed and unemployment soared right past 8% and keep rising before setting into about 10% for the past untold number of months. This number probably underestimates the true unemployment rate since it does not include those Americans that have dropped out of the workforce due to the frustration of not finding a job. Hundreds of billions of dollars spent under the stimulus umbrella and unemployment soars, not a good plan.
- The November, 2010 issue of Reason magazine has a fine article called "How To Slash The State." The article does a detailed and meticulous job of going through Federal government functions and identifying places where the Federal budget could be slashed with minimal impact on most Americans' lives. One of the article's recommendations is to not spend the remaining portion of the economic stimulus legislation, $301 billion. Given that the stimulus legislation authorized $794 billion to be spent, that means that about $493 billion was spent in order to drive up the unemployment rate to 10%. The article points out that through June, 2010, a government operated website, http://www.recovery.gov/, had estimated that the stimulus money spent so far had created 749,143 jobs. What the article does not do is do the basic math which is to divide the amount of money spent to create jobs by the number of jobs created, which in this case equals $658,085. I doubt that we can fix the unemployment problem by spending over $650,000 per new job.
- And these numbers assume that the government estimate of jobs created is accurate. When the first set of numbers came out, it was widely reported that a lot of double counting had taken place, inflating the jobs created total. A Florida day care center reportedly saved 129 jobs with stimulus spending but when you got to the core of their estimates, it turns out that the day care center gave raises to 129 workers with the stimulus money, no jobs were created or saved. Thus, the numbers in the above paragraph are probably worst than calculated.
- The sad thing about these numbers is that even if they had worked as advertised, this program would still be a disaster. For example, the administration claimed that if we spent the $749 billion, we would create 3 million jobs. If the program had worked as promised,the cost per job created would have been about $250,000 per job created ($749 billion divided by 3 million new jobs). Again, you cannot solve the unemployment problem if it costs you a quarter million dollars to create one job. Did no one in the Obama administration think to do this simple math calculation ahead of time?
- Why did the economic stimulus bill not stimulate? Well, maybe it was because of how the money was spent in some cases, as detailed in the Wall Street Journal in January, 2009:

• $554,763 to replace windows in a closed Forest Service visitor center in Washington state.
• $762,372 to create an interactive dance software program.
• $72 million for a useless tunnel in Pittsburgh that even the Pennsylvania Governor did not want.
• $1.9 million for international ant research.
• $89,298 to replace a new sidewalk that leads to a ditch in Boynton, Oklahoma.
• $16 million to help Boeing clean up an environmental mess that Boeing itself created in 2007.
• $200,000 to help Siberian communities lobby Russian policy makers.
• $39.7 million to upgrade the statehouse and political offices in Kansas.
• $760,000 to Georgia Tech to study improvised music.
• $456,663 to study the circulation of Neptune's atmosphere.
• $529,648 to study the effects of local populations on the environment in the Himalayas.

Is there any doubt now why the economic stimulus bill did not economically stimulate? You cannot stimulate the economy if you pay to research ants or Neptune's atmosphere or spend U.S. taxpayer money in Siberia or the Himalayas. I would bet that if you peeled back the cover to each of these expenditures you would find a politician that personally benefited from the project that was funded. Kansas politicians can now go home and brag about how they got the rest of the country to pay for the Kansas statehouse renovation, a renovation that only Kansas citizens should have paid for. The Georgia politicians can go home and brag about the money they grabbed from the U.S. taxpayer for an in-state university for a project that has no economic bearing or potential. I would bet that some politician got an election campaign donation for giving Boeing $16 million to clean up a mess that Boeing made. As always, our politicians were looking out only for their own political careers and their perpetual re-election, the good of the country be damned.

Consider for a moment if a different approach had been taken to the economic crisis. Would if the $794 billion had been returned to the taxpayers? It is our wealth and our money so why not return it to us? We are going to have to pay off the debt of Obama's failed stimulus package so why shouldn't we get the rewards? It is not the government's money, it is not Obama's money, it is not the politicians' money, it is our money. Consider:

• If each American household got an equal portion  of the $794 billion, each household would have received a check for about $6,900.
• This comes out to about $133 a week.
• This money would have helped a struggling family put meals on the table for a year while they tried to get back on their feet.
• This money might have helped some families avoid foreclosures on their house or least help pay down their mortgage.
• This money might have been used to buy a new car, go on a vacation, go out to a restaurant once in a while, repair or refurbish their homes, buy a new television, or spend the money on something else and thus, stimulating the economy themselves for things they wanted, far more efficiently than spending it on ant research  and dance software.
• Families might have been able to use the money to seed a new business venture, also stimulating the economy.

It does not matter what they would have spent the money on, they would have spent it immediately and injected most of the money into the a moribund economy. Ask yourself:  how much worse could this approach have been vs. the doomed Obama economic stimulus approach? At least as citizens we could have seen where our financial futures were going, we would have been spending it ourselves.

That's it, hopefully forever. The economic stimulus program did not work, the numbers do not lie. Depressed GDP numbers, stubbornly high unemployment numbers, and political approval ratings for both the President and Congress heading south. Enough said.

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