Christina Romer, chairman of the president’s Council of Economic Advisers, told Congress on Oct. 22 that most of the economic growth from President Obama’s stimulus package has occurred already. This underwhelming revelation presents an opportune time to evaluate what - if anything - has been accomplished by the $239 billion that already has been doled out. The results are depressing.
On Feb. 28, the council predicted that with passage of the $787 billion stimulus package, the unemployment rate would only reach 8.1 percent this year. With current unemployment at 9.8 percent and rising, the president’s promises of millions of jobs being created or saved haven’t panned out. The administration has tried to claim that its earlier estimates couldn’t be held against the White House because Team Obama didn’t know how bad the economy was, but that’s implausible, given that Mr. Obama repeatedly said we were facing an “unprecedented crisis that calls for unprecedented action” in speeches during the campaign and in January and February.
There is no evidence that states that have gotten the most money have seen improvements in their unemployment rate. From January through September, just two states - Minnesota and Vermont - have seen their unemployment rates fall, and both received less than the average per-capita stimulus dollars. Using the government’s Recovery.gov Web site, we find that the states that have gotten the most money per capita actually saw a slightly larger increase in their unemployment rates on average. The relationship isn’t close to being statistically significant, but given how much money is being spent, it is reasonable to hope for some evidence of a decline in unemployment - not weak evidence of an increase.
New Mexico is a particularly interesting example. By Oct. 22, the state had received more than twice as much stimulus money per capita from federal contracts as the second state, Idaho, but New Mexico’s unemployment rate has gone up by 2.6 percentage points. Idaho’s unemployment went up by 2.2 percentage points, which mirrors the country as a whole.
According to Fox News, the U.S. unemployment rate has soared faster than the rate in most other countries. Mr. Obama frequently has claimed that we are in a global recession, but data for 27 other countries from January through August show the U.S. unemployment rate rose faster than 22 of them. The countries with the largest so-called stimulus packages tended to have the biggest increases in unemployment.
The irony is that the countries Mr. Obama berated in March for not properly spending their way out of the recession have fared much better than the United States. Germany’s unemployment rose by just 0.4 percentage points from January to August; France’s went up by 1.2 percentage points; and the entire European Union’s rate rose by 1.2 percentage points.
After the Obama administration tried to pressure European countries into spending more money, the president of the European Union, then-Prime Minister Mirek Topolanek of the Czech Republic, warned that Mr. Obama’s deficit spending and bank bailouts were “a road to hell.” Mr. Obama’s policies are putting America in the fast lane to that destination.