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  • Obama's Failed Stimulus and Opportunities Forgone

    President Obama speaks on the one-year anniversary of his stimulus bill

    The immediate effects of Obama’s policies are easily seen. We can observe the workers of which billions of dollars have been spent to employ. We are aware of the entitlement checks given by the pen stroke of congress. It is inferred that the recovery plan actually recovers. However, Obama’s legislative activism has farther reaching consequences. Unfortunately, this administration is not able to see beyond the immediate results of its policy proposals. It is the opportunities forgone, those that are not seen, which prove the truly destructive aftermath of such policies.

    It was the classical economist Frederic Bastiat that famously distinguished the difference between a good and bad economist. He stated only one simple difference, “the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” The Obama administration boasts of the millions of jobs created by enormous government spending legislation such as The American Recovery and Reinvestment Plan. Though the instantaneous jobs generated are evident, the error is in neglecting the source of this funding and what its use would have otherwise been.

    Lawrence Reed, president of the Foundation for Economic Education, states it this way, “Government has nothing to give anybody except what it first takes from somebody.” The government produces no wealth of its own—it must obtain it from individuals through either taxation or borrowing. This seems obvious, but the key is recognizing the forgone use of that money. The individual, keeping the fruit of their labor, would have efficiently used it as they saw fit.

    This money, spent in the private sector, would have been used for millions of different purposes. From personal investment and debt reduction to researching new technologies and funding small business startups, the productive uses are endless in the hands of the American people. Every dollar the government spends is one less an individual could have used to further their business or even hire a new employee. It essentially boils down to this—the Obama administration believes it can spend your money more wisely than you can.

    The late economist Percy Greaves, Jr. puts it well, “Money spent by governments cannot create any more jobs or produce any more wealth than it can when spent by private persons. In fact, it creates less… The shift of the money from private citizens to political spenders must result in fewer productive jobs, and thus a smaller amount of goods and higher prices than if the money had been left in private hands.”

    Next time you see a sign on the highway stating “Project Funded by the American Recovery and Investment Act” remember that it comes at the expense of homes, hospitals, businesses, and factories that would have been erected if the money were in the hands of those from whom it was taken. With less money in hand, Americans necessarily must reduce the amounts they invest and spend—thereby employing fewer workers and creating less wealth. The popular adage is right—there’s no such thing as a free lunch. Everything comes at a cost.

    It is a disappointment that the current administration has neglected the practice of sound economics. Unrestrained spending is not philanthropic but harmful to the economy. Policy makers must look beyond the immediate results of their policies and regard the actual costs to society. It is essential to consider the opportunities forgone. If Obama was aware of the true effects of his proposals, he would recognize the shortsightedness of such errors.

    Gabe Rodriguez currently is a member of the Young Leaders Program at the Heritage Foundation.  For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Economics [slideshow_deploy]

    16 Responses to Obama's Failed Stimulus and Opportunities Forgone

    1. Aaron M. Norcia says:

      Conservatives are absurd and draconian to say the least. The stimulus saved thousands upon thousands of jobs. Just ask the 32 Repubs who called it an atrocity & voted against it then in local newspaper articles were photographed handing out giant checks to small business owners and quoted in saying it saved their communities. Get a grip. If a 41 vote minority can gridlock the legislative process, no matter WHAT Democrats do, then we're screwed.

      The Republican party wouldn't piss on this country if it were on fire.

      Blocking jobs, unemployment, stimulus, etc……

      Give the tax breaks to the richest 2% so they can put it in their offshore account, rather than giving the breaks to the middle class who are 2 or 3 months behind on their rent/mortgage. Whose electricity is going to be shut off in a 110 degree summer. To people who will spend it, circulating it right back into the economy immediately. The rich don't create jobs, revenue does.

      Common sense, or so you would think.

      If you make $500,000 or more a year then I can see exactly why you're in support of Republican philosophies. If you're a middle class American, the only other reason (other than obviously loving poverty) that I can possibly fathom is you're a racist and the tea party is the closest in tuned to your beliefs.

    2. Wanda, OBX says:

      Well written article Gabe. The economic welfare of our nation is a one of the key responsibilities of government – and they continue to abuse it – not improve it. Not only is there no such thing as a free lunch – there is no such thing as a free puppy. The costs continue for years and years. Thank you for being a young person of courage and conviction!

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      As you learn to fight for my blog http://www.39qywy.com do as good to you.

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    6. Keith, WA says:

      Why do Libs continue to say, Americans have to be more patient with the recovery? Are there examples in history that recoveries have taken 2 years or so– besides the Depression? Can Reagan's policies be accurately compared since so many financial conditions were different, e.g. NAFTA, interest rates, demographics, etc.?

    7. SamAdams25, Virginia says:

      As this administration plows forward with destructive economic policies, it seems more and more plausible that the Obama and the "progressives" are pursuing the Cloward and Piven Strategy to intentionally collapse the economy in order to "fundamentally transform America". This course must be stopped and reversed if we are to preserve our country as we know it.

    8. AMSS, NYC says:

      I totally agree, let all these people just go on welfare or even better on the streets where they belong. They are probably just good-for-nothing Democrats, not upstanding money-saavy Mohammed-fearing Republicans like us.

    9. Nalini Karamchandani says:

      Even though I am a democrat, this article really made it crystal clear on how our money is better spent by us!!!! Great article and I definitely agree with you!!!

    10. Drake, South Carolin says:

      These spending actions are not errant and their result is not unintentional. I submit that the current administration in the person of B H Obama is willfully, intentionally and with premeditation attempting the destruction of the US economy. When you swallow this big pill, the rest of everything he does makes perfect sense. Nothing else fits the ultimate purpose of these unprecedented and historically doomed types of expenditures. The stimulus is not failed. It has failed to achieve the result that the President wants the country to believe in, but it is succeeding and will succeed to achieve his unstated and yet obvious goal to bring the US economy down. Each day and each intentional action by this administration furthers the case that a collapse of the economy and a reboot under a non capitalist set of rules is the only purpose of these people. Sad as it is, the truth will make everything clear.

    11. Kevin Habib says:

      Thank you for your comments Aaron – nice to see some actual facts in this swamp of misinformation.

      Amazing to see comments on how much better President Reagan did with unemployment, when President Obama has far outperformed Reagan this far into his first term. There is no comparison.

      Then you have folks like Gabe who call the stimulus a failure. I presume Gabe has not looked at the difference in GDP, industrial production, job losses/increases, the stock markets, personal income, durable goods orders, real hourly earnings, retail sales – since the recovery act was passed. Look at all of these indicators and how they were on downward spiral – and after the recovery bill was passed – how they all shot up.

      Maybe Gabe has looked at these and either cannot understand the numbers or simply decides to be a Republican spokeman – bashing anything the Democrats have done, regardless of success.

      AAMS sums the noecons up great – he calls himself and his colleague Mohammed-fearing Republicans. Sounds like typcial tea party xenophobia – hate anything that is different. I love the ignorant once like AAMS who thinks he/she happens to have be born in the correct country, into the correct religion, into the correct politcal party – obviously a person who has never questioned anything and goes with what they are told to believe.

      Time to open your eyes, look at the numbers and facts and stop listening to brainwashers like Palin and Beck who are in it solely for the money. Don't you see the very rich are using you?

    12. BillB, Tucson, AZ says:

      This is a good read; Mr. Rodriquez has hit the nail on the head.

      Trying to understand Mr. Norcia's writings above are difficult. ("The rich don't create jobs, revenue does.") Who has this "revenue"? I believe he thinks only the govt has it and only the govt deserves to create and spend it. He seems to believe that only the rich favor tax cuts and letting people keep their own money.

      My retirement pensions are funded by the federal govt and the state govt and while, at times, I worked for both the federal govt (20-plus years in the Army) the state govt (11 years as a public school teacher) and at other times for private companies, I know that it's the success of private sector that provides for me and my family even today.

      Those who work for govt need to remember, as stated in this article, that every dollar the govt spends for any and all reasons has to come from the private sector.

      It is amazing to me that many of those who depend on the govt for their pay and their pensions seem to see the private sector as the enemy and as an evil enity that should be punished for its success.

      The government sector is too big and it can't continue to be enlarged in today's economy. It certainly can't be funded at its current level if the private sector economy is not healthy and expanding.

      You would think that government workers at all levels, even if it was only in their self interest, would know this and see a healthy private economy as a benifit to all and to the nation's survival.

    13. Ben C. Ann Arbor, MI says:

      "Just ask the 32 Repubs who called it an atrocity & voted against it then in local newspaper articles were photographed handing out giant checks to small business owners and quoted in saying it saved their communities."

      Mr Norcia – please direct us to these photographs so we can determine who is inconsistent with their rhetoric. Or, in the least, provide a list of these 32 Republicans who handed out these "giant checks." Lastly, please define "giant."

    14. Drew Page, IL says:

      We can't say that Mr. Obama's $800 billion Simulus is a complete failure, there is proof that the Stimulus did save at least one job.

      Oregon State University athletic director, Bob DeCarolis was considering firing basketball coach, Craig Robinson after the team's rather disappointing 8 and 11 start. It seems however that Oregon State became the rather sudden beneficiary of a $17,000,000 Stimulus grant and Mr. Robinson kept his job.

      Coach Robinson is a rather well known coach at Oregon State. It might have something to do with his being President Obama's brother-in-law. Yes, the coach is the brother of First Lady Michele Robinson Obama. I'm sure that the grant to Oregon State and Coach Robinson's family ties had no bearing on the retention of Coach Robinson. And here are these people complaining that you can't prove how many jobs the Stimulus saved.

    15. Kintner--Tennessee says:

      A Clear, understandable logically written presentation of the economic facts of life so far as how the economic engine works and where that engine gets its fuel. Private sector produces, government provides services by using (via taxation) what that private sector produces. Good teaching article.

    16. Billie says:

      Aaron M. Norcia, very insulting but conservatives don't look to government for money to make them feel better. Absurd and draconian, to be free to live for yourself? Why do you state conservatives as rinos? You're way off base in your description of conservatives.

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