Dan Mitchell: The failure of Obama’s stimulus should have been a learning moment for Washington politicians. But Joe Biden must have slept through that lesson because his first big move after taking office was to saddle the nation with a $1.9 trillion “stimulus” package!

Biden’s “Stimulus” Failure

At the risk of understatement, economists are not good forecasters.

And they are especially incompetent when they make forecasts based on bad policy, such as when the Obama White House projected that his so-called stimulus would quickly lead to falling unemployment.

In reality, the jobless rate immediately increased and then remained much higher than projected for the remainder of the five-year forecast.

The failure of Obama’s stimulus should have been a learning moment for Washington politicians.

But Joe Biden must have slept through that lesson because his first big move after taking office was to saddle the nation with a $1.9 trillion “stimulus” package.

The White House claimed this orgy of new spending would lead to four million additional jobs in 2021, on top of the six million new jobs that already were expected.

So what happened? Matt Weidinger of the American Enterprise Institute looked at the final numbers for 2021 and discovered that employment actually fell compared to pre-stimulus baseline projection.

The nonpartisan Congressional Budget Office projected on February 1, 2021…a gain of 6.252 million jobs over…2021…we now know payroll employment in the fourth quarter of 2021 averaged 148.735 million — an increase of 6.116 million compared with the average of 142.619 million in the fourth quarter of 2020. That means the job growth the President praised this week has fallen 136,000 jobs short of what was expected under the policies he inherited. …President Biden and congressional Democrats promised their $1.9 trillion American Rescue Plan would create millions of additional new jobs this year — on top of what White House economists called the “dire” baseline of 6.252 million new jobs reflected in CBO’s projection without that enormous legislation. …House Speaker Nancy Pelosi (D-CA) repeated that claim, stating that “if we do not enact this package, the results could be catastrophic,” including “4 million fewer jobs.” Yet…not one of those four million additional jobs supposedly resulting from that $1.9 trillion spending plan has appeared, as job creation in 2021 did not even match CBO’s projection without that legislation.

Below you’ll see the chart that accompanied the article.

As you can see, the White House projected more than 10 million new jobs (right bar).

Yet we would up with 6.1 million new jobs (left bar), about 140,000 less than we were projected to get (center bar) without wasting $1.9 trillion.

If pressed, I’m sure the Biden Administration would use the same excuse that we got from the Obama White House (and from the Congressional Budget Office), which is that the initial forecast was wrong and that the so-called stimulus did create jobs.

In other words, the Biden economists now would say they should have projected 2 million new jobs, which means that the $1.9 trillion spending spree added 4 million jobs, for a net increase of 6 million.

You may think I’m joking, but that is exactly how the Keynesian economists tried to justify Obama’s stimulus failure.

The moral of the story is that the best way to really create jobs is to get government out of the way rather than adding new burdens.

 

 


Emailed to White House on 3-20-13.)

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

Stimulus spending back in 2009 did not help at all.

Does Stimulus Spending Work?

After the housing bubble burst, the Bush and Obama administrations turned to stimulus in an effort to “create jobs.” Does such spending lead to economic improvement? Prof. Antony Davies examines the data to see how increases in federal spending relate to economic growth from 1955 to the present. The evidence shows that there is no connection between federal spending and economic improvement; instead, stimulus money only increases government debt. After three years of stimulus spending, the unemployment rate remains at 9 percent. “One thing that has changed,” Davies says, “is that our government is now $4.6 trillion further in debt than it was before the stimulus efforts.”

______________

We have tried it over and over and it never works!!!

People often ask why I put so much political humor on this site. The easy answer is that I like a good joke.

But I also find that some cartoons and jokes do a very good job of helping people understand economics. I’ve always liked this cartoon, for instance, because it cleverly illustrates the impact of government handouts on the labor market. And looking at that cartoon is a lot quicker than taking a class about labor economics.

Well, you can also skip the class about public finance. Here’s a cartoon that shows the economic burden of government “stimulus” spending.

Very funny and very intellectually sound. Indeed, the only thing that would have made the cartoon even better would have been showing that the jockey became bloated by eating the horse’s food. But I reckon it’s not easy making multiple points with one picture.

Anyhow, I’m disappointed that I didn’t notice it at Reason.com a couple of years ago when the debate on the faux stimulus was taking place. It probably would have helped more people understand that you don’t boost economic performance by draining resources from the productive sector of the economy to finance a larger government.

By the way, if you want to understand in greater detail why the cartoon is accurate, this video on Keynesian economics is helpful, as is this video explaining the failure of Obama’s $1 trillion boondoggle.

____________

___________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: