- The Washington Times - Friday, February 19, 2010

ANALYSIS/OPINION:

Anyone watching the network nightly news reports this week heard a very sani -tized review on the one-year anniver -sary of President Obama’s $800 billioneconomic stimulus experiment.

The talking points coming out of the White House said that the spending binge, whose real cost is now about $900 billion (more, counting interest on the debt it incurred) saved the economy from a depression and that it was responsible for creating or preserving 2 million jobs. The preservation part is largely concentrated in state and local government programs that say they would have laid off workers if not for the federal money they received.

But many economic analysts and groups that have been monitoring all of this spending for waste, fraud or abuse either question the veracity of those numbers or maintain that there is no truly objective way to verify how many jobs have been truly saved.

The nightly news reports tended to give the White House’s claims the benefit of the doubt and expressed little if any skepticism about Mr. Obama’s claim that all of that spending - much of it for non-job-creation safety-net programs - somehow averted a depression and turned around the U.S. economy. That’s more credit than they deserve.

For one thing, the great recession officially began near the end of 2007, and the economy is said to have begun expanding last summer, several months or so after the spending stimulus was enacted and when it was just getting started.

It’s hard to believe the Obama stimulus, which by that time had pumped relatively little money into the economy’s pipeline, had much, if any, stimulative effect.

Something else was helping the economy get back on its feet, and most economic analysts think that was the Federal Reserve’s near-zero interest rates and other heavy-duty actions to shore up the economy and stop the financial system’s hemorrhaging.

The economy has lost 8.4 million jobs since December 2007, when the national unemployment rate was a low 5 percent. As of last month, it was losing another 20,000 jobs. The annualized jobless rate fell to 9.7 percent only because thousands of discouraged jobless Americans stopped looking for work and thus were not counted as unemployed. Add them into the equation, plus millions working just part time, and the rate of unemployment is 17 percent or more.

In other words, in the most fundamental measurement of whether the stimulus plan is actually jump-starting the American jobs machine, the numbers suggest that at best, job growth has been tepid this year and will remain so for several years or more.

Who says so? This month’s annual Economic Report of the President. In its review of the report’s forecasts, The Washington Post said: “The economy is projected to add jobs this year at a pace too sluggish to make much of a dent in unemployment,” and added that Mr. Obama’s economic advisers “expect the jobless problem to be a fact of life throughout his term.”

For some reason, this report never found its way into any of last week’s nightly news reports about all the credit the White House thinks it deserves for its stimulus program.

The president’s report says the economy will add an average of 95,000 jobs a month this year. That is a rate of job creation that would not even keep up with population growth.

To put this anemic monthly jobs estimate in sharper perspective, the economy was creating 200,000 to 300,000 jobs or more per month in the last half of the 1980s, when the country was barreling out of a very deep two-year recession thanks to the pro-growth, across-the-board tax cuts implemented under President Reagan. There was a referendum on those stimulus policies in 1984, and Reagan carried 49 states.

If there were a re-election referendum on Mr. Obama’s economic policies today, he would lose. A recent Washington Post-ABC News poll found that just 45 percent of Americans agreed that the economy was recovering.

There are a number of macroeconomic problems with Mr. Obama’s pump-priming economic stimulus spending plan that didn’t create many full-time, permanent private-sector jobs last year and, according to the White House’s own forecasts, won’t be making much of a dent in this year’s jobs picture, either.

The biggest problem is that its spending plans are unsustainable.

The spending (money that is taken out of a weak economy) will dwindle by the end of the year, and the funding for those state and local government jobs will end. Trillion-plus-dollar deficits will make more spending problematic at best.

What the economy’s anemic, capital-starved circulatory system needs is a self-sustaining intravenous feeding of lower tax rates for all businesses and workers that never ends. Until we do that, the economy is in for a long, painfully slow rate of mediocre growth and persistently high unemployment for as far as the eye can see.

Donald Lambro is a nationally syndicated columnist.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide