- The Washington Times - Tuesday, October 6, 2009

The nation’s nearly 10 percent unemployment rate has raised fresh doubts about the impact of President Obama’s $787 billion stimulus plan, with some economic analysts arguing there is little or no evidence that it has helped create or preserve the millions of jobs Mr. Obama promised.

“Simply put, there is no evidence that the stimulus package has helped the economy. Virtually all of the improvement in the economy’s growth from the first to the second quarter is the result of private investment in plant, equipment, and inventories that are unrelated to anything in the stimulus package,” said Stanford economist John Cogan.

Administration officials talked up the economy this past summer, pointing to a slowdown in the monthly job losses, a pickup in housing sales and a temporary spurt in auto sales from the now-ended “Cash-for-Clunkers” program. The data, they said, showed the stimulus spending plan was working and would create between 3.5 million and 4 million jobs.

“In my wildest dreams, I never thought it would work this well,” Vice President Joseph R. Biden Jr. said last month at the Brookings Institution.

However, Friday’s Labor Department unemployment report found that 263,000 jobs were lost last month, up from 201,000 job losses in August and much higher than the 180,000 job losses forecasters were expecting. A total of 15.1 million Americans were unemployed in September, while factory orders tumbled by the largest amount in five months, and U.S. auto sales also plunged.

The economy has shed 2.7 million jobs since the president signed the American Recovery and Reinvestment Act on Feb. 17, according to the Labor Department.

The latest unemployment figures came out at a time when independent polls showed that an increasing number of Americans are unhappy with Mr. Obama’s handling of the economy, which - far more than health care - remains the most important issue facing the country.

Until now, administration and Democratic economists have maintained that the stimulus was working, and they credited early signs of the economy’s recovery to the stimulus spending. Though hard job-creation numbers were never provided, officials said increased aid to state and local governments and public-works projects had resulted in fewer layoffs than would have occurred without the stimulus money.

“The fingerprints of the [stimulus package] are all over this data,” Jared Bernstein, chief economic adviser to Mr. Biden, said in August.

But critics of the stimulus program said they could find no evidence that the massive government spending plan was having an impact on consumer spending, investment or job creation.

“The package’s income transfers and tax rebates had no discernible impact on consumption, just as they had no impact when the Bush administration tried the same policy in 2008. Similarly, the government-purchases part of the stimulus plan appears to have had no impact,” Stanford’s Mr. Cogan said.

Other economists have noted the long lead time it takes to get the stimulus money into the nation’s economic bloodstream.

“The stimulus legislation has thus far had a very small impact on the economy and job creation. The original transfer payments and tax cuts barely nudged consumer spending, and the federal spending has been painfully slow,” said economist Michael J. Boskin, former chairman of the Council of Economic Advisers under President George H.W. Bush.

While Mr. Obama’s stimulus package has been defined by its nearly $800 billion price tag, critics said only a small fraction of that money has been spent thus far this year, swallowed up by a massive U.S. economy.

“It’s a stretch to conclude that the $86 billion spent to date, a figure some believe is padded by the administration, would have an impact on a $14 trillion economy,” said Cesar Conda, an economic adviser to former Massachusetts Gov. Mitt Romney, who ran for the 2008 GOP presidential nomination.

“Instead, this recovery has been fueled by the eye-popping monetary stimulus from the Federal Reserve Board,” Mr. Conda said.


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