By Peter Roff, Thomas Jefferson Street blog
During the debate over the stimulus package, President Barack Obama and the Democrats in Congress promised all the money would be put to work funding "shovel-ready" projects—that is public works efforts that were in the pipeline and were ready to go. And these projects, now funded, would create jobs and help ameliorate the spike in unemployment the economic downturn had caused.
As we can see, month after month since the stimulus was enacted, by the government's own numbers, either the White House was—let's be charitable—"wrong" or the stimulus just isn't working.
The most recent government figures show unemployment continues to rise. The unemployment rate is now 9.4 percent, the highest it has been in almost 25 years. But never fear: According to the experts, at places like the Obama-friendly MSNBC, "Hundreds of thousands of Americans continue to lose jobs each month, although fewer jobs were lost last month than expected."
"Fewer jobs were lost last month than expected?" The idea that fewer people are losing jobs than might otherwise have because of the stimulus is, well, silly—and in no way based in any kind of rational or serious analysis of the labor market or any other economic discipline I ever studied. You don't have to take my word for it—on March 4, 2009, Senate Finance Committee Chairman Max Baucus, a Montana Democrat, told Obama Treasury Secretary Tim "Turbo Tax" Geithner the same thing.
"You have created a situation where you cannot be wrong. If the economy loses two million jobs over the next few years, you can say, 'Yes, but it would have lost 5.5 million jobs.' If we create a million jobs, you can say, 'Well, it would have lost 2.5 million jobs," Baucus told Geithner, adding, "You've given yourself complete leverage where you cannot be wrong because you can take any scenario and make yourself look correct."
The Obama/Geithner approach to joblessness, from an empirical standard, is like Reagan OMB Director David Stockman's "magic asterisk" on steroids. Except for one thing—and this chart, which was put together by one of the bloggers over at Innocent Bystanders, shows what it is:
As you can clearly see, the actual unemployment figures—as measured by the U.S. government—exceed the Obama administration's own estimates of what the unemployment rate would be—both with and without the passage of their economic stimulus package. And that made Monday the day President Obama had to crank the stimulus spigot up to full.
According to various reports, President Obama now promises the stimulus spending, much of which we are told is already in the works but which the Government Accountability Office admits it has not yet figured out how to track, will deliver 600,000 jobs over the summer. Which is not even half the number of jobs lost since the stimulus package was passed last February.
Perhaps it is time to call this what it is—throwing good money after bad—and try something else. Like maybe some targeted tax cuts on the business investment side of things that have already proven, under Kennedy, Reagan, and George W. Bush, to generate economic activity and produce growth. Except that trying what has been proven to work instead of a massive federal economic stimulus program that, as Amity Shlaes demonstrates in The Forgotten Man, her landmark history of the Great Depression, doesn't work apparently just makes too much sense.