How NOT To Stimulate An Economy

If there was ever an example of why liberals should not be in control of any macreconomic entity, Barack Obama is it.

We are now 16 months past Obama’s passage of his massive $792 Billion stimulus. According to Propublica, who is tracking the spending, we have spent or are in the process of spending approximately $564 billion of the total amount (or about 71%).

According the Office of Management and Budget, the White House predicted that unemployment would be below 8%, and that we would be creating 400,000 jobs a month.

So how are we doing?

Unemployment numbers came out on Friday morning, showing that the unemployment rate dropped to 9.5%. And that is the only good news there is in this dismal report. And it isn’t even that good. A year ago, June of 2009, the unemployment rate was…9.5%. The underemployment rate was 16.5%…and a year later is…16.5%. The Obama stimulus has not improved the situation one iota.

The reason the unemployment rate dropped was that over 600,000 Americans left the job force in the last month. Therefore, the overall number of people looking for work in America dropped, thus dropping the overall rate of unemployment.

And now, we are starting to get the hangover from the sugar high from the stimulus. You can only deficit spend for so long, no matter what Keynesians such as Paul Krugman (the world’s dumbest Nobel Laureate) say. For example, 200,000 temporary census workers dropped off the rolls last month, and that is only the beginning, as more than a million were hired for the census. Non-farm payrolls (private industry) increased by 83,000, versus 41,000 in May. That is an improvement, but is still a terrible number. Always remember this: to maintain current employment, you must add 125,000 a month simply to keep up with the growth in population.

Since the recession began, there are 7.9 million fewer Americans working.

Then, the double whammy: New orders for factory products tumbled much more than expected in May, posting their sharpest drop since the depth of the recession and their first decline in nine months, a government report showed on Friday. Factory orders fell 1.4 percent in the month, the Commerce Department said, the steepest drop since March of last year. Analysts polled by Reuters were expecting a more modest 0.5 percent decline.

O.K. So that is where we are. So how did we get here, and how do we get out?

First, always, always remember: there was little to no stimulus in the Obama Stimulus. Stimulus should be…well, stimulative. Spending is not inherently stimulative…something liberals fail to understand.

Don’t believe me? Yesterday, Nancy Pelosi said unemployment benefits was the largest stimulus program the federal government could provide. What? Look, unemployment is a compassionate thing to do…but is not stimulative in any manner whatsoever. It shows the simple lack of simple economic knowledge from the Democrat’s Congressional leadership.

Investor’s Business Daily destroys the entire concept of Obama’s stimulus in an editorial titled The Last Refuge of the Incompetent on Friday, which I highly recommend. One quote:

The fact is, $700 billion in TARP bailouts, $862 billion in economic “stimulus,” $70 billion in auto industry aid, $1.2 trillion in Fed money-printing and $146 billion spent on bailing out insolvent government mortgage giants Fannie Mae and Freddie Mac have done nothing to restore our economy’s vigor.

This is among the most incompetent series of economic policy moves in U.S. history — all the more unforgivable because similar Keynesian pump-priming was tried during the Great Depression and in the 1970s, failing miserably each time.

On Thursday, House Speaker Nancy Pelosi said unemployment checks create “jobs faster than almost any other initiative you can name.” We are not making this up. This is what passes for economic wisdom in the Democratic Party.

The current mess is a result of policies in place now — not those put in place years ago. Watching this nightmare unfold, and then listening to our leaders blame the opposition, is getting more grotesque by the day.

Remember Obama talking about ‘shovel ready projects’? Well, there were almost NONE. They were a fiction of the liberal imagination.

Obama has increased regulations on virtually every industry…some necessary, others overkill. But make no mistake: all of them limit job creation. Federal regulations is a careful balance between protecting the public and maintaining jobs…it always has been, and always will be.

And every time you turn around, no only is their no ‘stimulus’; there is anti-stimulus. Obama simply doesn’t understand that every tax, corporate or individual, that they increase limits private sector growth. People simply don’t want to invest in risk when they will have to pay significantly more back to the federal government.

So no real ‘stimulus’, no real jobs: no real surprise.