In rolling out his (Cough, cough!) $3.8 trillion budget proposal even as we’re facing a historic national debt, Pres. Obama has included $100 million for a third stimulus package. (A lot of people forget that we had one under Pres. Bush.)
True, the Obama administration has made great claims about what an incredible success his first stimulus was, but the claims haven’t withstood the facts. You don’t need 20 economists to crunch a million numbers to see that.
Back in August I wrote that Cristina Romer, chair of President Obama’s Council of Economic Advisers, declared “Absolutely” the stimulus package was working. Yet she accompanied her talk with contradictory evidence.
Along with her speech, Romer presented a table with calculations of the percentage of 2009 GDP “discretionary fiscal stimulus” spending in various countries. It showed that the U.K. spent 1.5% of its GDP on stimulus, the same as Germany and more than twice that of France at 0.6%.
Nevertheless, even as the German and French economies grew by 0.3% in the second quarter, the British economy plummeted 0.8%. Sweden spent more than twice the proportion of its GDP on stimulus (1.4%), as did France, yet had no growth.
And the U.S.? It outspent everybody, Romer boasted. Her table shows we spent 2.0% of GDP. In her talk, she said “roughly 5% of GDP.”
“Choose whichever figure tickles your fancy,” I wrote. “It remains the case that for all President Obama’s personal back-slapping and media crowing of ‘disproved’ stimulus skeptics, the U.S. economy shrank 1% in the second quarter. It was remarkable only in being a major improvement from the previous quarter.”
This proposed stimulus is just political fodder for the November elections. The fact is the economy is on the mend and jobless rates will start going down.
Believe me, I have more sympathy for jobless people than you can know. But I’ll just point out that my brother is unemployed and my wife spent a good part of last year unemployed. But this latest stimulus plan won’t help. It will just help dig us deeper into long-term debt that will threaten not just jobs and the economy as a whole but America’s standing as a world power.