Er, uh, how’s that stimulus working out for you?
Unemployment rates, age 16 years and older, 2009
January 7.6%
February 8.1%
March 8.5%
April 8.9%
May 9.4%
June 9.5% (Source: Bureau of Labor Statistics)
“Nonfarm payroll employment continued to decline in June (-467,000),
and the unemployment rate was little changed at 9.5 percent, the Bureau
of Labor Statistics of the U.S. Department of Labor reported today.
Job losses were widespread across the major industry sectors, with
large declines occurring in manufacturing, professional and business
services, and construction.” – from BLS News Release, “The Employment Situation,” July 2, 2009
Obama’s own economic advisors predicted an unemployment rate of under 8% by now, with passage of the stimulus, and well under 9% without the stimulus. What we have is 9.5% with the stimulus.[1]
The stimulus has had enough time to show some impact if indeed it is going to have any success. But the economic facts limit its benefit to minimal levels while the debt incurred is very high, although it is just another part of the historically high deficits and public debt that will burden generations to come. It’s a bad bargain.
The government’s efforts to help the unemployment situation, combined with other proposed legislation actually will do serious damage. The unemployment problem is now projected to get worse through 2009 and not improve until some time in 2010. If we get cap and trade, that will put a damper on hope for improvement in employment any time soon, and if we get healthcare “reform” on top of that, financial disaster may turn into catastrophe.
The Heritage Foundation January 15, 2009 article by Brian M. Reidl, “10 Questions About the Economic Stimulus Bill,” points out serious concerns and weaknesses in the Stimulus bill, including this:
“We're told that government spending will add new spending power to the economy. But Congress doesn't have a vault of money waiting to be distributed: Every dollar lawmakers "inject" into the economy must first be taxed or borrowed out of the economy. If government borrows the money from American investors, investment spending drops accordingly. If it's borrowed from foreigners, net exports drop accordingly. How does borrowing $800 billion from one group of people and giving that $800 billion to another group of people make us wealthier?” [2]
Other concerns involve faulty economic models, historical examples of failures of similar approaches, etc.
If the government is truly serious about improving the unemployment situation they could do so quickly, not by more moves to “help” the economy, but by removing some hindrances. First, repeal what’s left of the stimulus. Second, cut corporate tax rates. Third, cut capital gains tax rates. Fourth, stop trying to regulate anyone’s pay or trying to tell business people how to run their businesses. The government does not know how to run them. These things would have a virtually immediate positive effect on employment and economic growth.
Remember when Al Gore called Bush’s proposed tax cuts a “risky tax scheme?” The tax cuts have demonstrated their value. What Obama has done and has proposed is truly risky. It’s very dangerous and we urgently need some corrections.
[1] http://blog.heritage.org/2009/07/02/unemployment-spike-defies-%E2%80%98stimulus%E2%80%99-claims/#more-9921
[2] At http://www.heritage.org/Press/Commentary/ed011509a.cfm
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