On Sunday’s Meet the Press Joe Biden defended the $787 billion economic stimulus spending bill pushed through Congress, but said that “everyone guessed wrong” on the impact it would have.
Ten days before taking office Obama’s economic team released a report predicting unemployment would remain at 8 percent or below through the year if an economic stimulus plan was rushed through Congress (and it was rushed – so much so that no one read it).
The Bureau of Labor Statistics issued a report that unemployment in May rose to 9.4 percent.
“No one realized how bad the economy was. The projections, in fact, turned out to be worse. But we took the mainstream model as to what we thought — and everyone else thought — the unemployment rate would be,” Biden said.
“At the time our forecast seemed reasonable. Now, looking back, it was clearly too optimistic,” he told reporters last Monday.”
“Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment this was passed,” Biden said.
At least Biden admits it was a “guess”.
Perhaps the Stimulus Package has done little to help the number of jobs lost because most of it has yet to be spent. Only 6 percent of the funds have been disbursed.
According to Hans Bader from Open Market.org the stimulus package is harming the economy “both by triggering trade wars that have cost at least 40,000 jobs, and by driving up interest rates for businesses that need to borrow money to expand or create jobs.”
As economist Arnold Kling explains, “most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy. According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now,” when the economy will already be in recovery, and “when the economy will need little, if any, stimulus. This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending. Of course, if the real goal is to promote government at the expense of civil society” through “political favoritism, then the stimulus is working exactly as intended.”
Another Biden admission: “There are going to be mistakes made. . . . We know some of this money is going to be wasted.”
Oh, ok. Thanks for letting us know. I’m glad he knows, and accepts that tax payer money will be wasted. What happened to the online transparency that would allow us to see exactly where and how this money will be spent? Can’t we do something to avoid wasting the money on projects like these:
In Minneapolis, the City Council voted recently to spend $2 million in stimulus funds on a vacant 99-year-old theater that developers want to convert into a center for dance. The project would create about 48 permanent jobs, city documents indicate.
In the competition for the limited stimulus money, the council awarded less than $300,000 to a company that wants to open a solar-energy-panel manufacturing plant that would create 360 jobs by 2011, according to city records.
Because the solar plant didn’t get more funding, its chief executive officer, Joel Cannon, said he wouldn’t be able to open the plant in Minneapolis.
Or this one:
It is a six-mile stretch of guardrail near a manufactured lake in a desolate patch of the Oklahoma Panhandle. There’s little reason for anyone to visit. Weeds are overgrown; the lake bed is virtually dry.
Yet repairing the guardrail is on a list of projects developed by the U.S. Army Corps of Engineers to tap into President Obama’s $787-billion economic stimulus program. The price tag: more than $1.1 million.
As Obama moves to accelerate the flow of federal stimulus funds, public officials are voicing concerns that some of the projects being devised are of dubious merit.
Bill Beach, director of the Center for Data Analysis at the Heritage Foundation, said the unemployment figures are likely to rise even if the economy recovers soon from this worst economic downturn in decades. That is because recessions follow a typical pattern.
“Unemployment usually continues to rise for around six months after the economy has recovered,” he said. “I would expect the unemployment rate to rise into the middle of 2010,” Beach said. As for the length of the recession, economists differ. “I fully expect the recession to be over in the next several months,” Beach said.
Barry Bosworth, former presidential advisor and senior fellow at the Brookings Institution, however, said the downturn is still getting worse and that there are still no signs of a turnaround. As there is no increase in production, there will be no growth in employment, he said.
A Rasmussen poll last week showed that only 39% believed that stimulus spending would help the economy, compared with 44% who said it wouldn’t.
The poll also showed that 45% of respondents believed the stimulus program should be canceled, compared with 36% who wanted to keep it going.
“This is the first time in more than two years that this poll has shown that voters trust Republicans more than Democrats (45 percent to 39 percent) with the economy, perhaps a sign of the effect of the GM and Chrysler bankruptcies (the poll was taken right after GM announced its bankruptcy).”
So…what do you think? Money well (yet to be) spent?
Bill Beach said in the article that if there is one silver lining in this recession, it is that it could spur a rash of entrepreneurialism.
When people are laid off, many opt to start their own businesses. While many new ventures fail, some become successful and grow, creating more jobs.
Recessions are also a good time for entrepreneurs to secure a labor force, as the pool of unemployed people is large and many will jump at a job opportunity, he said.
Well, there’s some good news. So, who has the next big idea? I wish I would have invented the Snuggie…