…that prediction and the job calculations cooked by the president and his economic advisers have already been proven wrong. A Republican insider on Capitol Hill explains that the “forecast for saving or creating jobs is based on the stimulus ensuring that the unemployment rate not exceed 8% between now and 2014.” But we are already passed the 8% mark.
What would have happened without the stimulus? According to the administration’s calculations, we would then hit 9% unemployment. But that is the very figure that many economists now predict we will hit in a matter of months. Some predict we will hit 10%. Four states have already hit that figure.
This is the biggest financial fraud in history. It makes Madoff look like a humanitarian.
I’m not sure “bupkis” is the correct answer, since it implies zero effect. Clearly the effect is real — and negative.
He lies promising salvation, then takes you money and gives it to his friends, and you get nothing for it.
Wait, was I talking about Obama, Madoff or Stanford? I’m not sure. Why the different standards for reviewing their behavior?
Stealing is stealing. It doesn’t matter who does it. You can’t stimulate the economy with tax money. You can’t stimulate the economy by rewarding bad business. These two things always do exactly the opposite. I want to smack every talking head that suggest something other than that.
I’m sick and tired to the bone of being this angry at these morons.
Breaking windows takes more out of the economy that the glazier gets in new business. Talking heads telling me about how good this is for the glazier need to be strangled, horsewhipped, drawn and quartered (even if I don’t know exactly what that is) tarred, feathered, boiled in oil, then…. we find a way to publicly humiliate them to the point that they never show their face again. After that I say we deport them.
I really don’t like being this angry.
This “Republican insider” is mistaken. The forecast was not based on unemployment not exceeding 8% — if anything, the fact that unemployment is higher than expected makes the need for the stimulus bill more urgent.
A man is in a hole. He borrows money to get a rope. The hole is deeper than he first thought. Is the problem that he shouldn’t have bought a rope, or that he should have bought a longer one?
Comparing the ARRA — an open, transparent, democratically supported attempt to use Keynesian theory to fight the biggest financial crisis in our lifetime — to fraud or Ponzi schemes, is outrageous.
McGehee: how exactly did passing the ARRA cause unemployment to increase before it was passed?
A man is in a hole. He borrows money to get a rope. The hole is deeper than he first thought. Is the problem that he shouldn’t have bought a rope, or that he should have bought a longer one?
The problem is that he should have bought a rope instead of an earth mover and hydraulic drill.
an open, transparent, democratically
It was so “transparent” that no one was allowed to read the bill before voting on it.
From what planet did you type this? Sometimes I think you’re being a deliberate parody of the mindless left.
Mr. Simberg,
People were “allowed” to read it, but it was unreadable in the time between release and vote.
I agree w/ your reply to President Oba…. er, Jim.
A man is in a hole. He borrows money to get a rope. The hole is deeper than he first thought. Is the problem that he shouldn’t have bought a rope, or that he should have bought a longer one?
Absolutely correct, Jim. The problem is, of course, that it has yet to be proven that the Democrat’s stimulus bill was in any sense like a rope thrown to a man in a hole.
For example, I believe if we use your analogy (man in a hole), then the Democrat’s stimulus bill is like a shovel. So…we throw the man in the hole a shovel and tell him to get digging, he digs for a bit, and damn he’s still in the hole. Matter of fact, the hole even looks a trifle deeper (unemployment still going up, market still in the toilet, banks coming back for Bailout Round 2 or 3).
Should we throw him a bigger shovel, you think? Or is it time to rethink the whole digging business as a sure-fire method for getting out of holes?
Now you’re entitled to your belief that the preferred Republican solution, which would be to cut taxes like crazy, just get government off the back of the people when they’re already bowed under by misfortune, is equally unproven and crazy. Economists can debate it with big charts.
But what I personally would suggest is that if you don’t know for sure certain what the hell you’re doing, you should first of all stop doing stuff. Fiddling with extremely complex machinery when you don’t know what you’re doing is almost certainly going to make things worse, since there are by definition so many more ways to be mistaken than to be right, to make things worse rather than make things better.
Could we please just get Doctors Fine, Howard and Fine to sit down, sit still, and STFU? That would be great. I’d do without my tax cut if they’d just agree to go on an inspection trip of Alpha Centaurus or something.
A man is in a hole.
And Obama applauds him for responding to the shovel ready project, and hands him a bigger shovel to keep digging.
The ARRA text has been online for weeks; no Congressmen or Senators have come forward to say that it isn’t what they thought they were voting for. There’s tons of information about the implementation of ARRA at Recovery.gov. I know about a failing bridge five miles away that is being replaced with ARRA funds, and a highway interchange that will be improved years ahead of earlier plans. Our state will layoff fewer people thanks to ARRA aid, and the unemployed will get extended benefits, cheaper health insurance, and more food stamps. It may not be enough, but what it’s doing is badly needed.
To compare this with what Madoff did — promising to invest funds, stealing them instead, and covering it up by publishing false accounting statements — that’s what I’d call mindless.
Carl: your “know for certain” standard would bar virtually everything the government does, both good (DARPA’s creation of ARPAnet) and bad (the Iraq war). In 2001 were you insisting that Bush do nothing in the wake of 9/11, because he couldn’t be sure he wasn’t going to make it worse? [If so, I applaud your foresight!]
Jim,
Like a stopped watch, you can be accurate twice a day. Yes, ARRA to replace a bridge may be a good use of the funds, as there is a capital improvement to show for it. Funds for ACORN and other social spending are just waste.
Many of us are involved in churches and other social groups that give immediate aid; however, the government has special hoops to jump through. Once on the dole, they never seem to get off, as the Katrina folks. This also applies to unemployment extensions, where jobs are taken only at the end of the period.
To modify Carl Pham’s point, the complexity here is the human response to the benefit given. When given from charity, the recipient might change. From government, it becomes a “right,” even if you know that the recipient has destructive behaviors.
Carl: your “know for certain” standard would bar virtually everything the government does
No it wouldn’t, Jim. It would only bar enormous $1 trillion efforts to reshape the economy in poorly-defined and poorly-understood ways. It certainly wouldn’t bar paying modest and sustainable amounts for a national defense, basic research, hurricane forecasting, et cetera, because these are all clearly beneficial things in themselves.
The problem with the “stimulus” business is that the purpose of the bill is not to do this that and the other thing, because they should be done and we have the money to do them, but in the hopes that they will lead indirectly through some magical “stimulating” linkage to entirely unrelated goods, like falling unemployment or rising house prices. Tell me, Jim: how is that bridge near you being repaired going to help the tumbling price of houses in Southern California? What’s it going to do for Citibank’s toxic asset portfolio? Directly, zip. Indirectly — well, who knows? You’re going to wave your hands and argue about some vague power of generic demand, multipliers, blah blah, and try to draw some long squiggly doubtful chain of deductions between the bridge repair and some subprime mortgage somewhere. Any reasonably skeptical person would laugh.
Put it this way. You ask me whether you should shave your head and pierce your nipples, because you think it will attract a really hot secretary at work. I would tell you: if you want to do those things for yourself, because they will make you happier whether or not you get the girl, then go ahead. Otherwise, not. Because it’s too hard to predict how she’ll react. People are complex. The situation is complex. You would be nuts to make such drastic investments simply hoping that it might pay off.
Same thing here. Government should stick to doing stuff we want it to do whether or not it “helps” the economy, unemployment, job creation, et cetera. That doesn’t require understanding a complicated economy that you’re trying to nudge this way or that. It just requires you to know how to build destroyers or send money to cancer researchers, and we’re confident that after government has spent the money we’ll have warships and more cancer therapies.
Post-script for Jim’s additional comments:
Our state will layoff fewer people thanks to ARRA aid
Yeah? And what happens when the temporary stimilus cash runs out, Jim? Now you’re back to square one. Your state still has more employees than it can pay in bad economic times. Only now you’ve made the problem of how to get state spending under control worse, because you’ve delayed it. Now you’ve got to fire people with a few more years of seniority. And if, as some people hope, good times have returned in the meantime, so the state doesn’t have to confront the problem, you’ve delayed solving the problem even longer, until the next downturn in taxes.
Or is it that, now that The One is in charge, there will never be an economic downturn again? So states just don’t need to solve the problem of unbalanced budgets? Only politicians and dishonest mortgage brokers think this way (“Don’t worry! Prices will never fall! Tax revenue will always rise, never fall!”)
You know, Jim, if you’re addicted to crack, and someone takes it away and you feel awful, the solution is not to get another hit, put off the problem until tomorrow, when you get paid and can score another rock yourself.
The biggest offender, California, has boosted its spending absurdly over the last 10 years. It needs to grasp the nettle and start firing people, slimming down. It’s simply too big for California taxpayers to support. To the extent Stimulusaurus is allowing the California legislator to continue to ignore their problem, it is doing actual harm to the people of California.
the unemployed will get extended benefits, cheaper health insurance, and more food stamps.
And this jumpstarts the recovery…how? Do the unemployed need cheaper COBRA payments for 18 months, Jim, or do they need a new, permanent, full-time job? Now, it would be one thing if your benefits were costless, if it was just a question of a little charity, help people through the bad times. But it’s not. You’re borrowing the money for this charity. A huge amount of money. From where are you borrowing it? From investors, people who have cash to spare, want to get a good return on it.
Now, what do people normally do with cash to spare if government isn’t paying a premium to borrow it from them? Why, they do stuff like buy stocks, invest in VC firms, start businesses, et cetera and so forth — that is, they invest in future business activity, for which you need to hire people. You’ve got a poor sad sack here, who just got fired from his contract HVAC job, because the housing market has bombed out. So what you’re going to do is suck all the capital up in government bonds, so that the guy has to wait twice as long before anyone has money to invest in HVAC workers. But in return, you’ll help pay his COBRA benefits. Gee! You sure he’ll thank you? I’m not. I wouldn’t.
Yeah Jim people in YOUR state get a whole lot of things I have to pay for. And pay for. And pay for. And pay for. And when I can’t pay, my kids have to. And their kids when they’re old enough. We just spent 2 TRILLION dollars to find out if an economic theory works. Of course it’s never worked before but, what the hey, it’s only the economic future of our country.
Now the administration is “open to taxes on health benefits” to pay for government provided health care. When is it enough, Jim? Productive people want to know.
Jim, I’m sorry you assumed my comment was only about unemployment and ARRA. I was talking about Obamanomics in toto, and the economy in general.
“an open, transparent, democratically “
Oh, goodie a whole website that shows me generic categories with dollar figures attached. How precisely is that supposed to show anyone how the money is being spent down on the local level. I certainly applaud the attempt at transparency. However, once you follow a money trail through more than a couple layers of gov’t it gets substantially more difficult to see what is happening. The fact that this money is coming from the federal layer means that it just gets down into the state levels before you really have a hard time figuring out where it is going.
Gov. Rick Perry turned down a healthy portion of the porkulus money that was supposed to go to unemployment services. Problem is that written into Texas law is that the corporations must match a percentage of the funds paid into the system by the state. This would have been a huge drain on businesses in Texas. That would mean more people getting denied unemployment overall because the people already on it would be soaking up the extra money. The congress people on the hill have no idea what was in this package. They have no clue what the consequences of what they just passed into law are.
There was a county sheriffs office around here that must have been salivating at the thought of all the extra cash coming their way. So, they ran out and placed orders for several hundred Tasers and unmanned aerial reconnaissance vehicles. How about hiring someone to, you know, actually hold the Taser instead. Fortunately, this came to light by the local media. However, in areas that are not so hostile to gov’t bailouts, stuff like this will go on and on and on and no one will bat an eye about it.
Scott: Show me the place in the ARRA where it stipulates funds for ACORN.
Carl: Again, your philosophy would bar things like Volcker’s raising interest rates in the early 80s to bring down inflation, and his lowering them to end the 82 recession. The government has to act to deal with the economy, and it has to do so in the presence of uncertainty.
The bridge project near me does not directly help anyone in California, but there will be plenty of projects in California that will. The alternative — more unemployment, more foreclosures, more business failures, more toxic debts on bank balance sheets — is worse.
As for cutting back on state payrolls: Even if it would be a good idea, this is the worst possible time. States should lay people off when the private sector is hiring, not when the private sector job market is at its worst. By the same token, we should go ahead with stupid wasteful projects like the F-22, because this isn’t the time to close those plants.
Of course the unemployed would rather have a new job than benefits and food stamps; but the private sector is shedding jobs, not creating them, and if unemployment benefits keep the unemployed in their homes, they help keep the situation from spiraling downward.
Bill: The people in my state send more to D.C. than they get back. And ARRA isn’t $2 trillion — it’s $550 billion in spending.
McGehee: So you expect Obama to reverse the course of the worst economic crisis of our lifetimes in less than 2 months? But let me guess, Bush gets a pass for the 14 months in which it got worse on his watch.
A man is in a hole. He steals money to get a rope. He does this by digging a foot of dirt that doesn’t belong to him and selling it for ten inches of rope. Realizing this is a crisis he repeats until the country is a vassal of China.
Jim says: Of course the unemployed would rather have a new job than benefits and food stamps; but the private sector is shedding jobs, not creating them, and if unemployment benefits keep the unemployed in their homes, they help keep the situation from spiraling downward.
That’s fun. My ex would rather have benefits than work. A lot of unemployed would rather get benefits and stay at home than work. That’s a personal responsibility thing. Be responsible for yourself and your family and go out and get a job…but the private sector is shedding jobs…why is that? Because its extremely costly to run a business right now. If you have a business that employs 100 people and you can only afford to pay 75 of them, do you keep the other 25 just to be fair?
Walter Williams on stimulus packages.
http://www.creators.com/opinion/walter-williams/there-is-no-santa.html
If the unemployment benefits keep people in their homes, where’s the incentive to go out and get a job?
Again, your philosophy would bar things like Volcker’s raising interest rates in the early 80s to bring down inflation, and his lowering them to end the 82 recession.
Correct. Now what you need to show is that nothing the government did in the 70s — Great Society, stimulus left and right, wage and price controls, regulation of all kinds of industries from airlines to banking — sound a bit familiar? — brought on a moribund economy and inflation. Because otherwise you’re in a position of saying that once government has screwed up the economy, they should try to right the ship. Blech.
The government has to act to deal with the economy,
Yeah? Who says? I don’t recall any such duty of government mentioned in the Constitution. No one even suggested government had that function until roughly 1930 or so, and, (1) we did just fine before that, and (2) the results of government meddling since 1930, both here and overseas — Germany, the USSR, France, China, half of Africa — have been appalling.
it has to do so in the presence of uncertainty.
Says who? If you have an unknown ache in your belly, are you going to insist your doctor give you chemotherapy, just in case it might be cancer? Or, given the hideous side-effects, would that be, like, stupid? In general, would acting in the face of near complete ignorance (not merely “uncertainty”) be a good working definition of stupidity and arrogance? I think so.
The bridge project near me does not directly help anyone in California,
Will it help anyone at all, Jim? Anyone who actually needs help, who is particularly suffering as a consequence of the recession? Who is unemployed, Jim? And why? You don’t know. Team Obama doesn’t know. No one has bothered to ask. The weird idea here is just fling money out to whomever is in a position to accept it, and someone magically it will find the right people.
but there will be plenty of projects in California that will.
Yeah? Name one. Give me a project in California that will do something for, say, my neighbors, who are in shock because their property values are going down 20% a year, and some of them have ARMs that are resetting every 6 months, and in about a year they’re going to be stuck, unable to pay the mortgage, unable to sell the house for what they owe.
Furthermore, bear in mind that the fundamental problem around here is that property values are simply too damn high. These properties are not worth nearly as much as anyone who bought in the last five years paid for them. There simply isn’t that kind of demand. There aren’t enough high-paying jobs around here. There aren’t enough wealthy retirees, et cetera.
Those prices must come down. Anything you do to try to prop them up is simply trying to shovel back the tide.
So what are you going to do, Jim? What is Stimulusaurus going to do about this situation? And how is it worth the fantastic opportunity cost? What would $1 trillion buy you elsewhere? How much research could you do on cures for cancer? Could you put a man on Mars? Build a Moon Colony?
In general, would acting in the face of near complete ignorance (not merely “uncertainty”) be a good working definition of stupidity and arrogance?
Hell yeah, Carl… and worth repeating over and over.
Carl: The U.S. Government has been a critical piece of the U.S. economy since Hamilton was Treasury Secretary. We’ve never had laissez-faire capitalism. And the idea that everything was fine until the 1930s is ahistorical; there were regular, severe financial panics in the 19th century. The results of that government “meddling”, as you call it, in the U.S., Europe and Japan, has been the greatest rise in median living standards in the history of humanity.
As to whom will be helped by stimulus projects: there is rising unemployment in the construction industry, because of the collapsed housing bubble, and building roads and bridges gives some of those people a place to go. They in turn don’t get forced from their houses or lose their cars, they spend money at stores, etc.
Yes, house prices have to come down. But that can become a vicious cycle, as foreclosures and vacant houses drive the prices of everything around them down below even reasonable levels. Slowing or arresting that cycle can make a huge difference in real human terms.
There may be an opportunity cost. I say “may” because if Keynesian theory is correct, we will pay more (in terms of lost output) by doing nothing than we would in countervailing stimulus spending. [At the moment the economy is generating trillions less than it would under full employment; that, not the federal budget deficit, is the number to watch.] In this fortunately rare case, there may be a free lunch.
To use an analogy: If you have credit card debts, you may be tempted to sell your car to pay them off. But if that leaves you no way to get to work, you will end up even poorer than you started. Borrowing money to allow you to continue to be productive can be a win. [SC Governor Mark Sanford is asking to use ARRA money to pay off debts rather than create jobs, a real-world example of the sell-the-car strategy.]
If Keynes was wrong, we will have temporarily blunted the worst effects of a once-in-a-lifetime crisis at the cost of slightly lower living standards in following years; a not unreasonable tradeoff.
And, once again, ARRA spends $550 billion, not a trillion. We spent a trillion in Iraq, and for that we got a stronger Iran, a degraded situation in Afghanistan, thousands of jihadists with first-hand experience making IEDs, 4,000 dead Americans, 4 million Iraqis driven from their homes, Abu Ghraib, and tens of thousands of innocent dead Iraqis. We could put the ARRA funds in a pile and set a match to it, it’d still be a better deal than the Iraq War. But I don’t recall any of the ARRA opponents (except Ron Paul) talking about the opportunity cost then.
ARRA spends $550 billion, costs over a trillion.
Fixed that for ya.
The Iraq war took out a serious threat, put us in a better position to deal with Iran, who was growing stronger regardless (I’d love to see you weasel the argument that leaving Saddam in power would have convinced Iran to weaken), convinced Qaddafi to disarm, and provided freedom to millions.
Obama’s Graftulus plan paid back his supporters at the expense of the American people. That’s it. The limited projects you describe will have a temporary effect at best, and be far overshadowed by the crushing tax burden he’s laid on for generations to come.