The Non-Working Stimulus
Thu, 02/18/2010 - 09:23 — Rottenchester
Today's Corning Leader quotes Eric Massa and Tom Reed on the stimulus. Reed says the stimulus "failed", was a "mistake" and "didn't work".
There are many reasons to oppose the stimulus, but saying that it was a failure just flies in the face of reality. The economy, and the jobs picture, is better today than it was a year ago, and the stimulus has created jobs. Whether the short-term benefit was worth the cost is certainly worth discussing, but a reasonable discussion has to begin with the facts, not ungrounded assertions of failure.
Comments
The administration set up the talking point by saying that it expected that the stimulus would cause unemployment to top out much sooner and much lower than it did. High expectations lead to disappointed voters. Further, as a Keynesian stimulus it's absurdly designed, with huge amounts being spent in year two AFTER big job losses. That the economy is better off is hardly proof of a significant positive effect, considering that the global economy stabilized and the financial sector stopped falling apart.
Massa is probably better off focusing on things like "imagine how screwed the NY State budget would be", rather than ephemeral "jobs saved" numbers.
I think you're right that the effect on state budgets has not been played up enough. Same is true of the tax cuts.
I agree that the Obama Administration's job numbers were off, as well as that the timing was non-ideal. But some of the timing issue is just the nature of government stimulus - money can't be spent instantaneously.
I disagree that the GDP growth that we saw was completely due to bank stabilization and global recovery. First, lessening of unemployment does help the economy, obviously. Also, some corporate growth was due to tax credits in the stim bill, as well as the obvious growth of industries targeted by stim money.
Correlation is not causation. Just cause job losses have slowed does not mean that the stimulus had anything to do with it. Especially since unemployment has gone above the levels that the President stated would occur if we didn't pass the stimulus. This is more likely the market correcting itself. Then when we have to pay off the stimulus debt we are going to be in deep deep trouble. Buckle up for that double dip. The stimulus didn't solve this crisis, it only created the next one. And anyone who supports the stimulus is both delusional and irresponsible.
What else happened to the economy in the last year, other than the stimulus bill, that would explain the recovery? And so what if Obama didn't call the jobs numbers correctly -- they'd be higher without the jobs created by the stimulus bill.
The term "market correction" explains nothing. Markets correct on new information about economic reality, such as lessening of unemployment (which leads to more consumption because more people are getting a paycheck), bank stabilization, and corporate earnings growth.
I agree the debt is an issue, but do you have a reason to believe there's a debt crisis around the corner? I haven't read any credible economist who thinks that debt is going to cause a double dip.