The Obama Administration, the Stimulus Plan, and Low Expectations
The first data-backed evaluation of President Obama's stimulus plan is in. The White House enthuses that the data "exceeded their projections." Super! What does the data show? It shows that taxpayers (or their decendants) paid over $500,000 per job. If that exceeds expectations, I wonder what the expectations were.
What does it all mean? One thing is for sure; it means that the White House concludes that Americans believe hype over facts.
Though the stimulus was a big waste of money, that is far from the worst of it. The effect of pouring so many artificial dollars into circulation has been to significantly devalue the dollar -- meaning that everyone who does have a job is effectively making less money than they otherwise would have. (Most things we buy or, at least, their components and materials are part of a global market; a devalued dollar means that each of us can now afford less of those things). Also, our recovery is stalled as foreign assets move from the dollar to other investments. As I predicted, the Administration is hurting the Country by chasing away capital.
What does it all mean? One thing is for sure; it means that the White House concludes that Americans believe hype over facts.
Though the stimulus was a big waste of money, that is far from the worst of it. The effect of pouring so many artificial dollars into circulation has been to significantly devalue the dollar -- meaning that everyone who does have a job is effectively making less money than they otherwise would have. (Most things we buy or, at least, their components and materials are part of a global market; a devalued dollar means that each of us can now afford less of those things). Also, our recovery is stalled as foreign assets move from the dollar to other investments. As I predicted, the Administration is hurting the Country by chasing away capital.
posted by steve u. at 10/15/2009
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18 Comments:
You are conveniently leaving out the fact that the actions taken by the administration helped to prevent a much larger economic crash that would have taken place had they not acted in the way they did. Also ignored is the fact that the nation currently is still in the beginning stages of the recovery from the economic crisis that was in large part a result of the policies of the Bush Administration.
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Steve, when you pontificate on economic issues, I never know if you are in serious need of an economics refresher course, or being intentionally obtuse for partisan fun.
I could respect the former. The second, you should be ashamed of.
Some more data you conveniently missed in this missive of "analysis" you've spit up.
Posted reports record 5% money spent, and provide a number of 30,000 jobs DIRECTLY tied to that spending. When you consider those two facts (which you didn't), 5% tied to a firm 30,000 that wouldn't be there without that 5%. If the trend keeps up, 100% of the stimulus will equate to 600,000 jobs tied DIRECTLY to this spending. That's something only an idiot with no knowledge of economic machines would shake a stick at (you pick a team... I'd hate to be uncivil about it).
Economic theory (all we have to go on in economic prospecting) would tell us that for every DIRECT job created, it's more than reasonable to assume there is one INDIRECT job saved. That's 60,000 jobs total, and again at only 5% of the total appropriated spent. At 100% spent, the total would be 600,000 jobs created DIRECTLY, and 600,000 jobs saved INDIRECTLY by this stimulus spending.
If anything, the data reports show us only one thing: the stimulus money is not being spent fast enough.
As for the conclusions you have somehow come to... I simply cannot find a logical justification for your assertions. You've got to think these things through more before posting. Those reading may understand more than you give them credit for.
And it's a shame to see such an embarrassingly transparent attempt to say something the numbers obviously do not say.
Appreciate the opportunity to keep you honest -- again -- though.
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One more thing, since math doesn't seem to be your strong suit:
600,000 plus 600,000 is...
1.2 million.
Jobs.
That's a very big number.
I'm not leaving your out your points. I simply don't think they're true.
To the contrary, I am stating my theory that we'd be much further along in a recovery, but for the government meddling. Economies cycle up and down. When an economy cycles down, bad companies are weeded out, strong companies gain market share, new opportunities arise, and -- as people take advantage of those opportunities -- the economy cycles back up. The stimulus has lengthened the trough, by preventing those forces from working, and -- as I believe we are clearly seeing -- weakening the dollar (and, by extension, every paycheck and business in America).
The Administration's own numbers stated where the economy would be were nothing done. The stimulus made things much worse than the "do nothing" position. You can argue that the Administration's projections were wildly off the mark. I don't. I think the stimulus simply did not work as they had envisioned. I would think, at $500K per job, it is pretty clear that the plan did not work as envisioned.
To a certain point, government intervention isn't necessarily a bad thing. It can have some effect of smoothing the fall. But, again, at $500K per job, something went wrong. Rather than saving the economy, as you believe, my belief is that it significantly harmed the economy by chasing away capital and weakening the dollar.
JB,
A Blogger gremlin got my first attempted response. The second left off the part where I thanked you for your thoughtful comments; I intend to directly take on your points, not you.
Ah, the "we should've done nothing" argument.
Yes, that always made sense.
The trouble is that no one knew where the bottom of this thing was, and no one will ever be able to say exactly how bad it could've gotten (or to be fair, not gotten) had we not employed some sort of stimulus.
But it's naive to ignore the economic indicators that existed, and say something as doubly naive as "the market just cycles, ride it out." In fact, I think that's why we dodged a bullet not listening to Hoover.
It's a convenient argument for low-information conservatives to use, and you can state over an over that "you just don't think it's true."
But what you did here was attempt to make the numbers say something they most definitely do not, with is intellectually dishonest.
Keep your theories, and the idea that inaction would've been better than action. There will be no changing your mind I'm sure.
But don't attempt to twist the numbers as they trickle out into something that backs up such a backwards notion. The numbers said no such thing.
The stimulus was designed to be spread out over a 2 year period, A good chunk of it being used to pull the states out of the fire. Just look at how Utah has used the stimulus funds, Utah cut education spending by an amount greater then what the stimulus provided in fact 13 other states did this as well. So how do we count the jobs lost in Utah's education system due to that in the stimulus tally?
I really have to question the accuracy of any tally given the shell game the states played with the money. These stimulus funds have really saved Utah's budget. If their is complaining to be had lets start with TARP, The Fed holding the interest rates to low, The national republican party's *UNFUNDED* expansions of medicare, The Massive *UNFUNDED* Military spending that started in 2001, The Massive *UNFUNDED* tax cuts in 2001 and 2003.
Deficit spending is a far more insidious means to take money from people then tax's, By lowering the value of each dollar rather then directly taking a bit of that dollar.
That said I don't want you to think I am lumping the State's Republican party in with the National Republican party, I consider them to be 2 completely different groups. Where as Utah has done an good job balancing its Budget due to the work of state republicans, National(federal level) Republicans haven't shown to have this ability.
RD,
So far, Utah state govt and education have lost very few jobs (less than 1%). Next year, though, will be very tough.
I agree with you that the job numbers are loose. A "saved" job is difficult to assess.
States are very concerned about the federal health care debate. If some form of health care reform passes, its cost likely will be masked by offloading huge Medicaid expenses onto the states. Already, Medicaid is the fastest growing element of Utah's budget. An added burden would take a heavy toll on other budget items.
Health care is a difficult Issue the Whole system is going to come crashing down if we don't do something, and the longer we wait the worse off everyone is going to be. The States Medicaid problem, the Feds Medicare problem, and the individuals Medical insurance problem are all in fact the same problem.
Do I think that states should be stuck with paying for Medicaid no, But I don't think that ether national party is prepared to do the type of reform progressive or conservative versions that would remove the need for states to handle medicaid.
oh, the world has been crazy.
I hope everything will be fine as soon as possible.
steve, you ignored the point of rd's comment though, that without the stimulus the state would have had to lay off more due to further spending cuts. the very stimulus you're claiming to be a big waste of money bailed you and your legislative body out of some bad fiscal policy at the state level. thanks to that the state has cut very few jobs relatively, without it, well, you'd either be raising taxes or taking a second look at that regressive tax structure you guys set up (hint: shifting the burden of taxes from upper to middle/low tax via a flat tax makes the state more vulnerable to a recession, as middle and low class wage earners run a higher risk of income loss via wage loss). but way to bring up the health care debate as a distraction.
and the artificial money, well, you should really stop to think about the definition of money and explain to us all what real money is. as to the devaluation of the dollar, well, it's just not true.
no to the comment that cycles go up and cycles go down. that's true to a certain extent. but you fail to point out what would have gotten us out of this recession quicker if the government stayed out. consumer spending is down, investment spending is down (bad economies chase away capital too, moreso than governments even), so who is left to spend the money that would turn the cycle back up if not the government? the only way things cycle back up is for them to get so low that those in the private sector see deals so great they can't pass up on them in spite of the risk involved in spending. we hadn't gotten there yet, nor do i see how we would have (especially with financial markets moving very sluggishly) before now. so by arguing that the government doing nothing you're really saying we should let everything get so bad for so many people that it becomes relatively cheap for the private sector to start spending again. i'm sure your constituents would be glad to know that you hold their well being in such high regard. or would it only get bad outside of utah, and everything would be just fine here? that hardly seems to be the case, since it took the obama stimulus plan to keep our state government running.
Craig41,
Good commentary. Thank you.
Clearly, the State of Utah used millions of stimulus dollars to backfill budget items. Rather than focus just on the State's budget, though, I'm attempting to look at the overall effect of the stimulus on the overall economies of Utah and the US. This task will be easier as more data comes in. For now, though, it seems the job-creation impact is outweighed by the dollar-devaluation impact.
The serious devaluation of the dollar occurred recently. The "retail" impact will lag, but a weakened dollar necessarily means diminished buying power for Americans who are subject to the effects of a world market.
No distraction intended by referring to the ongoing health care debate. RD is interested in mandates, and we simply exchanged thoughts on a huge one coming down the tracks. RD seemed okay with it, and appears capable of holding his own.
If you could broadcast to my constituents that I am in favor of regulated markets being allowed to correct and individuals being allowed to ascertain economic values and opportunities, in lieu of government imposing its decisions on those markets, I would be grateful. I've never had a ticker tape parade.
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I don't think it was a distraction at all, Steve Urquhart has made a perfectly valid statement making more people eligible for Medicaid is going to be a huge thorn in the states budget backside, I am completely understanding of this.
The ARRA does devalue the dollar but it is just one part of a much longer(larger) unfunded spending/mandate problem, targeting it alone ignores a much larger problem.
I believe it is a bit disingenuous to measure the success or failure of the stimulus package by job creation alone since that was just one of the stated goals of the administration.
To quote President Obama: "[The proposed stimulus package] not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term. The package will focus on providing assistance to low- and middle-income Americans, strengthening the nation's infrastructure, and investing in states that are struggling with falling revenues, with the goal of creating or preserving at least 3 million jobs over the next two years."
It may be a Republican notion that providing assistance to low and middle income Americans who are hurting financially, strengthening the nation's infrastructure, and helping states that are experiencing an economic crisis is a "big waste of money", but there are many of us who would strongly disagree with that thinking.
I for one am grateful that the stimulus money that came to Utah helped to avoid much deeper cuts in education and services for Utah's neediest citizens. To call that use a "waste" of money is in my view unconscionable.
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