• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • A Third Stimulus? Repeating Mistakes Only Creates New Mistakes

    Panic seems to be setting in among some Democrats as the economy continues to falter. Important political leaders, such as Majority Leader Stenny Hoyer (D-MD), and economic commentators, such as Laura D’Andrea Tyson, unofficial economic advisor the President, are calling for yet another stimulus bill. Already we have had two stimulus bills, totaling almost a trillion dollars in the last eighteen months. Both were ineffective. House Democrats especially are worried they will be held responsible in the 2010 election for the failure of the recent stimulus bill enacted during the winter to boost the economy and lower unemployment. Indeed, Vice-President Biden has already said that the Administration misread the economy and that things are not going according to their projections.

    Defenders of the stimulus bill claim that that it either was not meant to take effect until later this year or that the stimulus bill will be more effective as more money is spent.

    The Administration also claimed that the stimulus bill would have an immediate impact, alleviating unemployment by the end of the second quarter. This was an optimistic projection that ignored the fact that a recovery in the labor market lags the overall economic recovery, and this projection has proven to be utterly false.

    The idea that stimulus spending is too slow is not being born out. A report released by the General Accounting Office found that some of the funding to the states is actually being spent ahead of schedule.

    So stimulus spending is flowing according to plan: states are spending. The reason that the economy is not recovering, according to the expectations of the big government spenders, is that their stimulus plan was fatally flawed from the start. Perfect execution of a bad plan is still doomed to failure.

    The stimulus plan is a failure because governments cannot simply spend the economy out of a recession. If Congress passes a third stimulus bill this year following the same policy prescriptions, that stimulus will be yet another failure that will add to the government deficit and impede future economic recovery.

    It is never too late to pass good policy, and so Congress could pursue an effective stimulus bill repealing the remaining wasteful spending from the first bill and focusing on policy proposals to encourage capital formulation and reduce tax rates on successful companies, both large and small. Another positive action for the economy would be to stop raising business uncertainties by threatening disastrous climate change legislation, health care reforms, protectionism, and heavier regulations. If Congress wanted to help the labor market, it should delay implementation of the minimum wage increase scheduled for July. The labor market is already contracting with flat wages, and an artificial wage increase will increase layoffs and reduce the number of hours worked.

    Posted in Ongoing Priorities [slideshow_deploy]

    11 Responses to A Third Stimulus? Repeating Mistakes Only Creates New Mistakes

    1. Al Wisconsin says:

      I would like them to produce the Law "Fully Ratified" on which they base this tax? Show us the Law that says they have the right to tax us. They can not! there is no law.

    2. Keith somewhere in t says:

      This is blind faith, I can't follow the reasoning. Commend the liberal proponents for their Progressive conviction.

    3. HSR0601 says:

      In regard to the stimulus investment, my understanding is as follows:

      1. The current surging fuel cost is overwhelming the market rally.

      And the pending clean energy bill might serve as a second stimulus package world-wide boosting private investments.

      2. People are so worried about losing their job, coverage, denial of treatment, which seems to increase bank deposit latetly. That means stimulus funding mainly goes toward bank deposit for a rainy day increasing jobless rate. It proves again that a healthy society yields better productivity, prosperity.

      It is time to 'Change' the notion of the public health as a fundamental human right and install 'a safety system for all' like all of the other industrialized nations, I think.

      3. The stimulus funding begins to mobilize just 11%, meanwhile, the auto industry has moved to its restructuring with the massive job-related impact.

      4. The pandemic swine flu has been hurting the global economy seriously.

      Thank You !

    4. Pingback: News You Won’t See In The Liberal Media Thursday, July 9, 2009 — ExposeTheMedia.com

    5. Jim Charleston, SC says:

      Isn't "repeating the same behavior over and over again expecting different results" the definition of insanity?

    6. Sundowner04, TN says:

      Wake up America! Re-think your W-4 and ensure that next to NOTHING is being taken out of your check. Decide, as a people, that since the government can no longer spend within their means THEY ARE NOT ENTITLED TO OURS!!!

      Term limits now!!

    7. Pingback: A Third Stimulus? Repeating Mistakes Only Creates New Mistakes « Conservative Thoughts and Profundity

    8. Jerry from Chicago says:

      Another "Stimulous" bill? Sure, why not? What's another trillion? The first one worked so well. Another 1,100 pages that no one, including the President, will read. Maybe we can give John Murtha another $20 million for his personal airport. Maybe this time they will be able to take the smell out of pig manure. Maybe we can give the banks more money they won't lend out. Maybe we can give the geniuses at Fannie Mae bigger bonuses.

      The problems are so obvious a blind man could see them. The government decided that everyone, and I mean everyone, should own a home whether they could afford one or not. They have been so used to spending money they don't have that it never occurred to them that individuals couldn't do the same. They pushed the banks to suspend rational lending practices, even gave the banks quotas on how many substandard loans they had to make. And when the inevitable happened, and those substandard loans couldn't be repaid, foreclosures skyrocketed. Blame this on the Democrats.

      Then you have some geniuses at AIG who decide to "insure" mortgages from default without having the slightest idea of what they were doing and without having the necessary capitol to cover the potential losses. Blame this on the State regulatory agencies that are supposed to regulate insurance practices.

      When the Wall Street brokerage firms decided to bundle up mortgages and sell them as "securities" to all of the hundreds of mutual funds, the defaulted loans made those "securities" very unsecure. This you can blame on the SEC and the Republicans.

      The government gets involved where it shouldn't (the banking, automobile and health insurance businesses) and fails to get involved where it should (through its financial regulatory agencies).

      Mr. Obama through his sheer ignorance of economics and his socialistic bent, has determined to solve our economic problems by spending this country back to prosperity. Sounds stupid doesn't it? That's because it is stupid.

      You can't spend your way out of debt any more than you can drink your way to sobriety.

      We have veto-proof Democrat majorities in the Congress and Senate who are allowing our socialist president to do whatever the hell he wants. Damn the cost, full speed ahead. Why? Because they are counting on enough people believing that the government will give them everything they want or need. Open the borders, let in the third world, 'promise' them jobs, government cash subsidizes, food stamps, welfare payments, free medical care, free education, subsidized housing, Medicare, Medicaid, Social Security pensions — all you have to remember is to vote Democrat. Who's going to pay? Those left with jobs, of course. Don't we Americans with jobs owe the whole world a living, and a comfortable one at that?

    9. Barb -mn says:

      Didn't Obama just mention "make no mistake, the recovery plan is working!"? There he goes again. Insulting our intelligence.

      Mr. President, make no mistake. The recovery plan IS working the way you planned, for your sake only. Those of us living in reality, know "the recovery plan" to be a failure to society and freedom and accountability and, and, and.

    10. Michael Turner, Coll says:

      Big Government is the enemy of Christianity. Separation of Church & State allows individuals the freedom from Government prescribed religion. It DOES NOT imply that the Government should be void of faith. Our Gov. wants to remove any signs of faith everywhere. As the government gets bigger, moves into our homes and businesses, they will use this idea to totally destroy faith in America.

    11. billy ray: atlanta.g says:

      We need another stimulus($1000 per household)no one over $100,000 qualifies.I would like all the people who say they have to pay for it/or(paid) for it.. to post a copy of the receipt or a bill with their name on it!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×