If, like me, you spent the majority of your Labor Day weekend watching college football and cooking out then you likely missed President Obama’s enormous announcement. We’re going to stimulate the economy. I know, I know, it’s an absolutely shocking plan, the likes of which have never been seen or tried before. Here’s the deal, we’re going to pump billions of government money into the economy, sit back, and let the economy roll. It’s a surefire plan. Guaranteed results.
Or should I say, guaranteed to fail. There is simply nothing new about President Obama’s latest Keynesian stimulus package. In 2008, President Bush and Nancy Pelosi teamed up (weird right) and passed $168 billion in stimulus – a combination of federal spending and tax rebates – that was going to act as a “booster shot” for the economy. Oops, unemployment continued to skyrocket.
Undeterred, Congressional Democrats, now with President Obama in office, passed an $814 billion plan. The mother of all stimulus. The largest stimulus package ever attempted. Considering the hype this was much more than just a “booster shot,” this was the freakin’ cure for cancer. Turns out it wasn’t even enough to cure our economic woes. The package was famously predicted to keep the unemployment rate below 8 percent and get the economy back on track to growth. Oops, unemployment remains above 9.5 percent and new predictions show it rising as high as 10.1 percent next year. Even the most optimistic of assessments reveal that the stimulus reduced unemployment by 0.7 to 1.8 percentage points not exactly bang for our buck.
Then we get cash-for-clunkers, the homebuyers tax credit, mortgage relief, and jobless benefit extensions, none of which was enough to nudge the economy out of the recession.
So after three years and $3 trillion in new federal debt what exactly do we have to show for it? The economy lost 54,000 jobs in August and the economy grew at a sluggish 1.6 percent in the second quarter. Neither of these numbers is encouraging. The private sector isn’t even hiring fast enough to keep up with everyone entering the workforce much less make a dent in the unemployment rate. Economic growth is well below the 2.5% needed to keep unemployment at its current rate, nevermind what we actually need to promote job creation.
But here we stand, forced to do something to get this economy on track. Down one path lay more stimulus. Keynes is beckoning us to follow him down this path. It’s a road we’ve travelled before. It was a dark economic path, littered with the bodies of failed economies. We ran into a dead-end. Not only that, we were mugged on the way back, our money ripped from our pockets. Down the second path lay recovery. The path is overgrown, having not been travelled in quite some time, and its contours are unclear. It involved less government spending, a dedication to reducing the uncertainty businesses face, and allowing individuals and businesses to keep more of their money. We can see Great Britain and Germany starting the journey down this road apparently encouraged by what they’ve found. Nevertheless, we’ve been standing at this intersection for months, debating the merits of each road.
Finally, we’ve taken our first step. And which way did we decide to go? President Obama has led us down the dark and dreary path of government stimulus. Surely, things will be different this time! That dead-end will have surely relocated.
Obama’s latest bone-headed stimulus step is $50 billion in new infrastructure spending. Even more ominous, it was described as the first installment of a six-year transportation strategy. My natural first response, what happened to the original $105.3 in the original stimulus bill that was designated for infrastructure investment?
At the time the stimulus was passed President Obama even made a point to say,
“We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s.”
What is he going to say to sell us this new bill? It’s the single largest new investment in national infrastructure since about 16 months ago? Doesn’t quite have the same historical ring. So if $105 billion in infrastructure investment didn’t create the jobs promised or even put us on the path to, as President Obama said in a recent speech, having “the best infrastructure in the world,” then is another $50 billion really going to do much? Seems unlikely.
In his attempts to sell the new stimulus bill President Obama mocked Republicans by saying “We’ve tried what they’re peddling.” But who is the “they” President Obama is referring to. Because we’ve tried the stimulus Democrats are currently peddling. We’ve tried it more times than I care to count and all we have is record levels of debt and deficits to show for it. And frankly, we’re not buying it anymore.
by Brandon Greife, Political Director of the College Republican National Committee