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  • Stimulus Destined to Fail by Obama Administration's Own Criteria

    summers_012309.jpg

    The Heritage Foundation is no believer in Keynesian economics. There simply is no credible evidence that it works. But there are many in President Barack Obama’s administration that are Keynesians. And before they were in Obama’s administration, some even laid out what a stimulus package would have to have in order to be even theoretically effective. Before he was appointed to be the head of the White House’s National Economic Council Larry Summers wrote (thanks to The Atlantic for the link):

    Poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured. This suggests close attention to three issues:

    Third, fiscal stimulus, to be maximally effective, must be clearly and credibly temporary – with no significant adverse impact on the deficit for more than a year or so after implementation. Otherwise it risks being counterproductive by raising the spectre of enlarged future deficits pushing up longer-term interest rates and undermining confidence and longer-term growth prospects.

    As we documented this morning, there is nothing temporary about the deficit spending in the economic stimulus bill currently winding its way through the House. David Brooks noticed the same fatal flaw today:

    The bill marked up Wednesday in the Appropriations Committee is a muddled mixture of short-term stimulus haste and long-term spending commitments. It is an unholy marriage that manages to combine the worst of each approach — rushed short-term planning with expensive long-term fiscal impact.

    The committee staff took the kernel of President Obama’s vision — infrastructure programs to create jobs — and surrounded it with an undisciplined sprawl of health, education, entitlement and other spending. There’s money for nurse training, Medicare, Head Start, boatyard support, home weatherization and so on. Eleven of the programs in the bill account for the vast majority of the actual job creation. The rest may be worthy or not, but they have little to do with stimulus. The total package is so diffuse, it costs $223,000 to create a single job.

    So by Summers’ own early and honest criteria, the trillion dollar deficit spending package taking shape is already doomed to fail.

    Posted in Ongoing Priorities [slideshow_deploy]

    14 Responses to Stimulus Destined to Fail by Obama Administration's Own Criteria

    1. William Lulias, St. says:

      This would all be comical if it wasn't so profoundly serious. This whole newly elected bunch and their apppointees remind one of children who were given more authority to do something than they can effectively handle. The word "experience" does have a purposeful meaning.

      At our Church we have four families who have been economically impacted by current events, job loss, money loss and security. They have reached out to the Church, as they should. Do we just give them money or do we make sure they have food and necessities and help them find gainful employment? Seems like gainful employment would help everyone, the unfortunate family, and the economy. Or the new administration can just write a check for $223,000 and see what happens.

      God help us!

    2. Barb -mn says:

      The government, federal, state, local, etc have chewed up the people's American constitution and continue to spit it in our face. DAILY!

      It is time the government take a WRITTEN TEST on the people's American constitution as it is written in original form and remove any and all that fail. That stands to be #1 qualification for anybody interested in pursuing government employment at every level.

      WE ARE THE PEOPLE. THEY ARE THE GOVERNMENT! The way the president talks we are all one in the same. Not according to the founding fathers. Not according to my education. Dangerous. Very dangerous.

    3. Austin, Provo, UT says:

      I don't get it?!

      Why is Summers putting his stamp of approval on this pork package (generation theft), if he doesn't believe it will produce sustainable growth?

      Obama just wants to make it seem like he's "doing something."

      This is so sad that our leaders are so inept.

    4. Gary Hammer, Michiga says:

      After looking over where the "intent" of this stimulus package, I see at least two major things nobody is talking about.

      1) Corruption. Every time we have seen a large amount of money, just thrown out there without mandates, restraints, oversights, and accountability, there is blatant corruption. A good portion of this money will never reach the hands it was intended for. The only reason Government is upset over the banker who remodeled his office with "bailout" money is because he beat them too it.

      2) Distributing the stimulus money to a singular discipline(i.e. construction) for the benefit of rebuilding the infrastructure might help the construction companies, but what will it do for the other industries hit just as hard? What good does it do for the carpet industries? What good does it do for he chemical companies? What good does it do for the transportation industries?

      While our roads and bridges all get rebuilt, the remaining industries continue to fail. We then have no need for the new roads or bridges because there will be no commerce to use them.

      The ONLY way to quickly stimulate this economy, and Reagan proved it, is to return the money people earned, and to quit taking additional money from them! A freeze on all federal withholding will instantly induce billions of dollars into all aspects of every industry. There will be no distribution costs or delays. It will spanned over the year controlling rapid inflation or devaluation.

      People will catch up on their mortgages, they will reduce their debt. They will stimulate retail sales, and the consumer confidence will sore. This is turn will stimulate the global economy, which will reciprocate back into the American economy. It will be a win win. We must force the Obama administration to consider this path!

    5. Pingback: Steynian 314 « Free Canuckistan!

    6. Greg Doss , Lexingto says:

      I agree with Gary from Michigan, All we need is a tax cut for business and individuals or the tax holiday as he stated. We don't need to add to the national debt with a government jobs program

    7. len, Alexandria,KY says:

      The Sad thing about too many LOONS in Congress and the Administration is that all they Know is to throw tax payers money into toilets and hope that by Clogging them jobs will be created… Japan.. England have tried it and Failed but since History is aforgotten subject let them just forge ahead with their lunacy and reduce America to athird rate power.. Kruschev predicted it as did Jefferson…

      We got pushed into throwing money away twicew already.. the first stimulus proved a boon to the Porn Industry.. Drug Industry and Liquor indistry.. Bnaks took freebies and bought other banks and now CITI has bought a 50 Mill Private Plane..

      Geithner who along with the Finally Departed Sec Treas.. was part of the Debacle and we are supposed to believe that he's the Best of the Best…

      Has anyone in Governmant heard the novel idea that reduction in spending for Broken Projects and Programs may be diverted to job creation along with Tax braks to increase production instead of keep feeding the Insatiable appetite of the Congressional Pig Farm for wasting tax payers money????

    8. karen phelps, spout says:

      I am terrified of what this Congress & President are doing, but I am even more afraid of the people I see everyday who are fawning over a man who wants to spread the wealth! I am a nurse, & I work with nurses who have relocated from Canada because they were unable to secure permanent employment with benefits there. Canada's crushing tax burden probably had nothing to do with it . . . After becoming U.S. citizens & gaining the right to vote in this country, these same nurses voted for the current president, who promises "free" healthcare! Since this recession began, & our employer lost $40 million in the stock market, the number of nursing jobs listed by our almost 600-bed employer has shrunk from dozens to, well, maybe a dozen! Sure, people are hanging on to their jobs, but the nurse managers at our facility are cutting out overtime, & decreasing some full-time positions to part-time per the instructions of hospital administrators. So, where are we all going to work when "free health care is available, & the only jobs available for nurses are those that let us fill in for a few hours as needed & offer no benefits? How many hospitals will close when they can't stay afloat financially because care is rationed & payments are cut? Letting me keep more of my paycheck would be an incentive for me to work more hours & spend money the way I used to! But, why work extra hours when most of the extra money I make goes to the government? I'm cutting back to a bare minimum — on phone service, cable TV, electricity, water, food, & clothing. Our vehicles aren't gas guzzlers (we get 35 – 40 miles per gallon), & we own them free & clear. So, we'll drive them until the die! Then, we'll buy used cars. The democrats' economic stimulus is designed to buy the votes of foolish people by giving them a little taste of money today, then stealing a lot of money away tomorrow (1/1/2010, when the Bush tax cuts have expired). And, a lot of people think raising taxes will really stick it to those "rich people" who have an unfair advantage in life! I guess people who hate "rich people" work for simple folks who have no assets (or the federal gov't)! The way Wall Street is rallying for the last week gives me H – U – G – E confidence! Yep, back-breaking taxation is the best way to improve our economy! :(

    9. Marshall Hill-Michig says:

      These people in Power are not looking for any

      success in anything, but control of the American

      people by their Socialist Moves to control all

      aspects of our lives,while pretending to care

      for us!

    10. Hozro1, Oregon says:

      At $223,000 per job, sounds like government efficiency at its finest! How about doing it this way; Take five hundred billion and give ten million recently laid off unemployed workers $50,000 each, and tell them it is a one time offer. Take this money and start a business, (Banks should be happy to invest a match amount at least) or stay on unemployment benefits till they run out!

      If ten million people start a business and half fail, but the other half succeed and average two employees each, there's twenty million people employed, not even counting the businesses that supply their companies, stay in business and don't have to lay off anyone!

      Hozro

    11. Pingback: Guess Who Came Out Against Keynesian/Obamaian Stimulus? - Pejman_Yousefzadeh’s blog - RedState

    12. Pingback: ChooseTheHero.com » Blog Archive » Guess Who Came Out Against Keynesian/Obamaian Stimulus?

    13. Mike, Hickory, NC says:

      Such things, and more, are examples of the Socialist Left's "Trojan Horse" and "Fifth column" efforts to subvert and destroy from within both the incomparable reality and potential of our individual freedoms, rights, prosperity, and security, both as individuals and thus also as the truly unique and powerful United States of America (which is truly so, or incomparable numbers of people wouldn't have risked and suffered everything including death to come here instead of staying in or going to Leftist or other government elitist countries), and overrule and replace all with a dumbed-down "Collective” ruled by Leftist government elitists.

      Of course it’s all for their Leftist government elitist agenda and power, which they are unfortunately accomplishing here through such means as those cited above, and others, all to permanently establish and entrench control by and dependence upon Leftist government elitists, with their attitudes and actions based upon and derived from such as "The Ten Planks of the Communist Manifesto" (1848, by Karl Marx), no matter in what way, when, and how much longer they may choose to proclaim or deny their Marxist basis and associations as it suits their political expedience.

      You who doubt this can dare to actually think and get the facts for yourself instead of uncritically swallowing whatever the Leftist government elitists and their willing accomplices in academia and the media say, at which point you will most probably find it's all true…which is exactly what the Leftist government elitists and their willing accomplices are afraid of.

    14. Dan Hill, Louisville says:

      The Democrats and the far left are going to destroy themselves just as the Republicans have done over the past 8 years. Both parties have become so focused on centralized planning and government spending they are no longer capable of any form of successful governing. Without significant changes in their modern ideologies their failure will continue. This is the classic liberals time. We must move away from relegating ourselves to critics and start taking action to build a powerful coalition over the next 10 years. What many see as the end of the American way of life is also a unique opportunity to capitalize on government failure and restore classic liberalism in America. Without a wealthy American free market the social democracys of Europe will show their true weakness. No longer will the be able to piggy back off the American market machine in order to pay for the top heavy centralized governments.

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