United Liberty

I was reading an article regarding some ideas of what President Obama’s jobs plan will contain, and came across a paragraph that I felt I needed to address.  It contains some thinking that many people feel is pretty sound, but it misses something that is pretty key to how government works when it comes to spending.

The two-phase plan would probably require Obama to argue for spending more money in the short term while reducing the federal deficit over a longer period. Many economists support that combination, saying cuts in spending should wait until the economy is stronger. But political strategists say it has been difficult to communicate that idea to voters.

The idea of spend now, cut later, sounds just fine to a lot of voters.  The problem is that those cuts are for down the road, and there’s no guarantee that those cuts will ever happen.  A program becomes popular, or the cuts themselves become unpopular, and so it never materializes.  For example, take the so-called Doc Fix in Medicare.  In fact, here’s Paul Krugman’s explanation of the Doc Fix back in January:

The reason we keep needing doc fixes is that back in 1997 Congress established a formula for Medicare reimbursements that was, in fact, unworkable. Applying that formula would set reimbursements so low that doctors would drop out, leaving seniors without care. Congress should have fixed the formula once and for all; but nobody wanted to take the budget hit, so instead we’ve had a series of temporary patches. And everyone knows that these patches will continue to be necessary.

Bankrupting America brings us this video about the unemployment crisis in the country, emphasizing the broader unemployment rate, which is currently 17.1%.

The Las Vegas Review-Journal is taking issue with Sen. Harry Reid, who is locked in a tough battle for re-election with Sharron Angle, and his latest ad:

In his zeal to buy the votes he needs to beat Republican challenger Sharron Angle, Sen. Reid pushed though legislation that sends $10 billion in borrowed money to school districts dealing with revenue shortfalls. Nevada’s share of that loot amounts to $83 million, with the Clark County School District set to get $54.2 million.

Santa Harry assured Nevadans that this money would spare teachers from layoffs and classrooms from further cuts.

“Fourteen-hundred teachers and school workers facing September layoffs,” one of Sen. Reid’s newest TV ads tells voters. “Then Harry Reid got emergency aid to keep them teaching.”

The ad is intended to highlight “the 1,400 education jobs that are no longer on the chopping block thanks to $83 million in emergency funding Sen. Reid delivered” to Nevada, Reid campaign spokeswoman Kelly Steele wrote in a news release last week, attacking GOP challenger Sharron Angle for being dismissive of the funding.

But Sen. Reid’s side of the story isn’t the slightest bit true.

The Congressional Budget Office released a report yesterday that our liberal friends are touting as proof the stimulus bill created jobs. But as Peter Suderman notes over at Reason, it’s nothing new:

Once again, the Congressional Budget Office reruns the same models that it used to estimate that the stimulus would create jobs and finds that, to the surprise of no one, that the model still says that the stimulus creates jobs. Hooray for the stimulus! Nevermind that the CBO’s director has confirmed that these reports do not serve as independent checks on the real-world effects of the spending, it’s news!

Over at The Atlantic, Megam McArdle agrees with Suderman:

The CBO has another report out on ARRA.  Every few months, this comes out, and every few months, a bunch of commentators treat this as if this were an empirical analysis, rather than a case of the CBO sticking the numbers back into the same model, re-running them, and conclusively proving that … their model still generates the same results.

As the editoral board of the Wall Street Journal opined last month while slamming the stimulus bill:

We all knew that the “created or saved jobs” rhetoric was a red herring. The administration’s attempt to spin declining jobs after passing massive Keynesian-style spending to “bring us from the brink.” The Congressional Budget Office has gone along with it, but recently we got some truth from the head of that government agency:

CBO director Doug Elmendorf has finally conceded that they never actual examined this stimulus bills’ affect on the economy. Responding to a questioner following a recent speech, he admitted that the CBO’s jobs count was “essentially repeating the same exercise” as their initial projections. When asked if this means their jobs projections would have ignored any failures of stimulus spending to perform as CBO predicted, Mr. Elmendorf responded “that’s right.” (Exchange begins at 38:20.)

CBO never actually counted the jobs. Nor did their analysis take into account the rising unemployment rate. Or the economic figures. Or how effectively the money was spent. They merely assumed this government spending “must have” saved 1.5 million jobs.

There you have it. Now, if only the media give it some attention.

Sen. Evan Bayh (D-IN) continues to cause Democrats headaches. When asked about his future plans on The Early Show, Bayh said, “If I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months.”

Here is the video: