What stimulus?

You can stop wondering whether Obama's economic strategy was a success

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Did President Obama's stimulus actually work? It depends on which numbers you're looking at.

The number you need to look at is the spending multiplier. And the multiplier shows that the stimulus isn't working.

In estimating the impact of the American Recovery and Reinvestment Act of 2009, ciphers in the Obama administration came up with a high-end multiplier of 1.5 -- that is, $1.50 of growth for every $1 of government money spent. That's good, right?

Only if it were true. Historically, the multiplier is more like .7 -- a figure agreed upon by the International Monetary Fund and other distinguished economists.

"That means," writes National Review's Veronique de Rugy, "that in the best-case scenario, the government spends a dollar and we get less than a dollar in growth (and we will have to pay the bill later through our taxes)."

Does that sound like it's working?

The back-and-forth debate about whether Obama's stimulus package actually worked could be described as a tennis match, but it wouldn't be accurate. At least tennis can be fun to watch.

Watching this debate is more like seeing contortionists perform. A new set of statistics or indicators provide the boundaries, and bureaucrats and pundits try their best to fit into the remaining space allowed. Fascinating to watch, perhaps, but it could turn your stomach.

From the Turn-Your-Stomach Department: Two leading economists actually called the game back in July, publishing a paper provocatively titled "How the Great Recession Was Brought to an End." No, we didn't realize it was over then, either.

Part of their argument is that the hundreds of billions in allocated government spending has managed to nudge down a few economic indicators. It just doesn't look as dramatic, some say, because of initial estimates on the state of the economy -- if there wasn't a stimulus, things would be a lot worse.

A similar argument would be to proclaim how great it is to be standing in two feet of manure, because hey, you could be standing in four feet of it!

And now the government is trying to grow economic roses with it.

Spare us. That glass-half-full approach to economic analysis hasn't been selling among rank-and-file Americans whose glasses have been empty for some time.

Comments (18) Add comment
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robaroo
857
Points
robaroo 01/02/11 - 11:09 pm
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0
Why bother with spending

Why bother with spending multipliers to see if stimuli work? A more straight forward indicator is the national debt. If it goes down, the stimulus worked. If it goes up, the stimulus failed.

So far, all the stimulus packages - spending packages and tax cuts - have been spectacularly dismal failures.

Whether you are talking about individuals, businesses, states, or countries, you cannot have more spending than income over a long time.

Rhetor
1037
Points
Rhetor 01/03/11 - 06:14 am
0
0
In two years, we have

In two years, we have survived the worst economic shock since the Great Depression and the economy is slowly recovering. More slowly than we hoped? Yes. A failure? Of course not. How silly.

55 F-100
1
Points
55 F-100 01/03/11 - 06:48 am
0
0
Once a community organizer,

Once a community organizer, always a community organizer.....the only difference now is that Prezbhojangles' "rock star" image has faded, and his incompetency is glaringly apparent.

Rather
56
Points
Rather 01/03/11 - 08:00 am
0
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Rhetor - The economy is

Rhetor - The economy is recovering? Because the Govt says so? Several months ago at least two of the major banks announced they were holding off on forclosures as good will over the Christmas holidays. Now, the Obama administration is claiming that forclosures are down proving the economy is recovering. Also, new unemployment claims are down, again proving better. Could that be because of temporary hiring for the holidays? Go figure. Things are getting worse, not better.

Carleton Duvall
6305
Points
Carleton Duvall 01/03/11 - 08:09 am
0
0
After years of education and

After years of education and many more years of experience economists are split on whether the stimulus has worked based on their political beliefs rather than their education and training. So, who do you believe?

follower
59
Points
follower 01/03/11 - 09:33 am
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If forclosures were acted

If forclosures were acted upon according to the deliquency, the scenario would be very dismal indeed.

From the standpoint of the lending institutions, forclosing on every property that actually deserves it would throw the economy into a tailspin that would prove devastating. The property values of many neighborhoods would drop drastically and at the same time reduce the tax base, putting cities and municipalities in an insolvent position, destroying their bond rating.

It's much more complicated than the average citizen can comprehend.

We've spent beyond our ability to pay back, at the federal, state, local, and personal level. Printing money only band-aids the problem and ignores the inevitable. You cannot borrow your way out of debt and we can't keep giving to those that don't contribute.

Rather
56
Points
Rather 01/03/11 - 10:19 am
0
0
follower - You are correct.

follower - You are correct. But does that mean foreclosures should stop so the banks can be subsidizing more free housing? Don't you expect this would cause more bank failures. I have heard of some homes in Westlake that used to (supposedly) be worth a million dollars, that are now trying to sell for around $400,000, or at least significantly less than previous. I have been curious if the Augusta tax assessor is going to reduce their taxes. I suspect this will be overlooked and kept mighty quiet by the Cities over the US.

Rather
56
Points
Rather 01/03/11 - 10:28 am
0
0
I really believe we are in a

I really believe we are in a Depression, nor a Recession. Wait this year for the $5.00 a gallon gasoline tax. In a depression, money becomes worth more. When you can buy a million dollar house for $400,000, didn't money become worth more? The Govt. is terrified of the "D" word, that's why they always use the "R" word.

soldout
1280
Points
soldout 01/03/11 - 11:08 am
0
0
Good comments. I think we

Good comments. I think we will have a double dip recession. I would have a 3.5% trailing stop on every investment. We had a dotcom bubble, a real estate bubble ( still has more to go) and maybe getting a gold bubble. When everyone is talking about somethng (like the tv show, flip this house) things could be in a bubble. Use market timing and don't lose your 2010 gains you made in your 401K.

Chillen
17
Points
Chillen 01/03/11 - 11:14 am
0
0
Someone got rich off this

Someone got rich off this stimulus & benefitted from it but it sure wasn't the average U.S. taxpayer. We just paid for it.

The tides foundation & the apollo alliance wrote the darn thing. It was "shovel ready" when obama took over. I mean seriously. 1073 pages ready that quickly after the community organizer took over?! It was written far in advance of his "crowning & throning".

They've been waiting for years to redistribute the wealth to their favorites folks. They got their chance and screwed Americans.

This bill was a total waste of our money. It only delayed the inevitable. We will pay the piper this year.

soldout
1280
Points
soldout 01/03/11 - 11:26 am
0
0
The good thing is that God

The good thing is that God can bless us with more than the devil and government can steal.

sjgraci
2
Points
sjgraci 01/03/11 - 11:44 am
0
0
The stimulus was not big

The stimulus was not big enough and too much of it - proportionally - went to tax cuts. More stimulus is needed for infrastructure, technology, and jobs!

follower
59
Points
follower 01/03/11 - 11:59 am
0
0
Rather, no, the foreclosures

Rather, no, the foreclosures shouldn't and won't stop. They are being tempered to lessen the blow and I can't say I disagree with the tactic.

So sjgraci, you are still wanting earners to pay more? Liberals will soon run out of "gooses" to kill. For the umteeth time, taxes were not cut, just left where they were. We don't have a revenue problem, we've got a spending problem.

Cuts my friend. It's what businesses and responsible people do when budgets don't balance and more money is not forthcoming.

nofanofobama
6856
Points
nofanofobama 01/03/11 - 12:12 pm
0
0
in the spring of 2009 a board

in the spring of 2009 a board of economist declared that the recession was officially over..thru their measurement of various indicators the worst was to behind us..in the summer of 2010 BIDEN declared it to be the summer of that magical 3-letter word jobs,jobs,jobs..the carter recession of the seventies had the misery index of approx. 11 percent unemployment, 11 percent inflation and the prime rate of amost 21 percent..now obama isnt quite there yet but dont give up on him yet...everything they have done is a lie remember shovel ready jobs then he admitted after about 18 months there were not any..remember when he told the republicans to sit in the back , elections had meanings....now he crying a different tune...cut the budget etc...none of the stuff he did WORKED...dont believe him now..all we did was kick the can down the road...take our medicence now and get it over with...

soldout
1280
Points
soldout 01/03/11 - 01:05 pm
0
0
Never believe anyone who

Never believe anyone who thinks killing babies is okay. If an unborn baby can't trust him why would you.

Nativeson1
2
Points
Nativeson1 01/03/11 - 06:00 pm
0
0
^^^Above comment is a prime

^^^Above comment is a prime example of what ADD in a comment thread looks like...In case you weren't aware the discussion is about the stimulus(which not specified by the writer) is working, not abortion...Now that that is said obviously the writer doesn't understand economics clearly nor does he/she have investments or monitor the Stock market. DOW above 11500 and climbing, housing bouncing back, and the banks and GM have paid back all the money loaned to them with interest. If these things are failures sign me up everyday to fail...Given where we were headed prior to the current POTUS you/we should be thankful things aren't worse...Of course we can only blame the POTUS for all the bad things right now, he definitely has no bearing on anything good happening...People need to learn to give credit where credit is due and get over the fact that just because you don't particularly agree with someone doesn't necessarily mean they are bad or wrong...Even Bush admitted on Oprah that President Obama was doing a good job...Community organizer or not he is doing far better that what the fearmongers said he woud...If you can allow yourselves to think back to 2008 let them tell it we would all be destroyed and dead by now if he were elected...Call me what you want I see no reason for all the doom and gloom the daily complainers rant here about SMH....btw, for the person above griping about gas, please understand that there is a such thing as a global market, and global demand for gas is up due to the rise of China and India. More cars were sold in China last year than in the U.S., and actually more american cars were sold there than here as well...Please understand that as long as gas is in high demand in a country of 1.5 billion we here in the U.S. (a country of 310mil) will see higher gas prices...We have very little impact on gas prices, but of course that's Obama's fault as well...

carcraft
27831
Points
carcraft 01/03/11 - 07:47 pm
0
0
The Banks and GM have not

The Banks and GM have not paid back all they owed seekingalpha.com/article/200384-did-gm-pay-back-its-loa...
and www.nytimes.com/2009/08/31/business/economy/31taxpayer.... we are facing another round of housing problems thanks to Fannie and Freddie and the sub prime paper they guaranteed. Unemployment is down due to seasonal hiring. Obama caving to the Republicans and extending the current tax rates have given businesses the assurance that the tax structure will not hurt and prevent them from hiring. Our increasing national debt will keep the brakes on and prevent full recovery until US spending is under controll. Meanwhile Obama is trying to use regulations to produce federal control he could not achieve under legislation (read Kruathammer today). All of this debt and fedreal meddling is going to slow recovery.

usapatriot
0
Points
usapatriot 01/04/11 - 01:02 am
0
0
http://www.eia.doe.gov/countr

http://www.eia.doe.gov/country/index.cfm

USA uses 19.4 million barrels a day and imports 10.9 million of that. Obama's DOE figures.

Consider our nation's vast oil reserve resources that are currently unavailable for use due to government ownership of the land or outright bans on drilling in certain areas.

http://www.americanthinker.com/2010/06/the_presidents_oil_reserves_li.html

"According to a June 2008 article in Kiplinger Magazine, the United States has enough oil reserves to power the nation for upwards of three centuries. That's three hundred years, Mr. President. We are not running out of oil reserves -- it's just that those oil reserves have been declared off-limits due to decades of environmental lobbying of our politicians, especially those on the Left. This lobbying has driven the likes of BP and others out deep into the Gulf of Mexico to extract the nation's needed oil."

Many other articles are available to make up your mind about where the oil is. Whether or not you are a "greenie", we need oil until then.

We, the USA, has oil. We need to get it. Obama's socilaist mindset is to choke off American productivity and independence. He hates capitalism and is doing everything regulatory, administratively he can to strangle this nation.

It's time to realize that oil is not a fermintation of dinosaur bones. It's a naturally forming substance of this earth. It ebbs and flows as underground water does.

In 2007, the world used 85 million barrels a day. That's a heck of alot of dinosaurs, don't you think?

It's time to think outside the box America. We have this resource. Paying our enemies for it is absurd. Isn't it about time we took control of our destiny, not only from our oil rich enemies, but from our anti-American energy liberal adversaries?

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