Today marks the three-year anniversary of President Obama’s trillion-dollar “stimulus” plan, whose utter failure to “stimulate” anything is summarized by an exhaustive new “Stimulus Deconstructed” report from the Republican National Committee. Obama’s chimerical promises, billions poured into “green energy” boondoggles, crony capitalism… it’s all in there.
The RNC also commemorated Stimulus Day with a video, entitled “A Promise That Became a Punch Line,” in honor of President Obama’s decidedly unfunny joking about the “shovel-ready jobs” he used to take very seriously indeed.
“Consider the source!” liberals will shriek, just like Al Pacino’s Satan dismissed Biblical predictions of his downfall in The Devil’s Advocate. Actually, Pacino was grinning when he said it – he saved the shrieking for later.
The RNC can respond by noting how extensively it has sourced its report. One of their sources is the Congressional Budget Office, which also has a new report out, “Understanding and Responding to Persistently High Unemployment.” After noting that Obama has brought us the longest run of unemployment above 8 percent since the Great Depression, the report spotlights four factors contributing to our dismal job situation: weak demand for goods and services, mismatches between employer needs and employee skills, massively extended unemployment insurance providing a disincentive to work, and the “stigma” attached to the long-term unemployed when they compete for scarce jobs with those who have more recent resumes.
The “stimulus” was supposed to boost aggregate demand, which the CBO cites as the most important of the four factors listed, but it was a total and complete failure in this regard. For one thing, government purchases driven by centrally-funded stimulus produces only short-term spikes in demand. Obama’s failure to artificially create sustained market demand is legendary – all those billions poured into “green energy” have produced nothing but a string of bankruptcies.
As for all the goofy public-works projects Obama seized a trillion dollars from your children to fund, well, eventually all the bat-friendly cupolas, mouse habitats, and Clinton libraries have been built, and there is no sustained demand for continued employment.
Obamanomics is very heavily premised on the notion that seizing money from the public, and re-distributing it to the deserving poor, stimulates job creation. When the little people go forth to spend their unemployment checks and $40 “payroll tax cuts,” job-creating businesses will blossom to meet their demand. In fact, both Obama and that legendary economist, House Minority Leader Nancy Pelosi, have called unemployment insurance the most potent form of job-creating stimulus in existence, period,
But the CBO says the exact opposite! Endless unemployment insurance depresses job creation. At best, the benefits of “trickle-up” cash distribution are a wash against the depressing effects of extended unemployment, and overshadowed by the dangers of our rising national debt. “Despite the near-term economic benefits,” of these “stimulus” initiatives, the CBO warns, “such actions would add to the already large projected budget deficits that would exist under current policies, either immediately or over time. Unless other actions were taken to reverse the accumulation of government debt, the nation’s output and people’s income would ultimately be lower than they otherwise would have been.”
Overcoming the “stigma” of the long-term unemployed – whose situation, the CBO report notes, is much more dire than “would be expected on the basis of its historical relationship with the overall unemployment rate” – calls for healthy, natural aggregate demand, not politically-mandated artificial markets. Dramatically reducing the marginal cost of hiring, by junking expensive regulation like ObamaCare, is also crucial. We need a larger private sector, which necessarily requires smaller government. The last thing we should do is give in to Obama’s demands for more “stimulus” loot.