Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
I almost feel sorry for the Obama administration’s spin doctors. Every month, they probably wait for the unemployment numbers from the Bureau of Labor Statistics with the same level of excitement that people on death row wait for their execution date.
This has been going on for a while, and today’s new data provide another good example.
As the chart below indicates, the White House promised that the unemployment rate today would be almost 5 percent if we enacted the so-called stimulus back in 2009. Instead, the new numbers show that the jobless rate is 7.9 percent, almost 3.0 percentage points higher.
I enjoy using this chart to indict Obamanomics, in part because it’s a two-fer. I get to criticize the administration’s economic record, and I simultaneously get to take a jab at Keynesian spending schemes.
What’s not to love?
That being said, I don’t think the above chart is completely persuasive. The White House argues, with some justification, that these data simply show that they underestimated the initial severity of the recession. There’s some truth to that, and I’ll be the first to admit that it wouldn’t be fair to blame Obama for a bleak trendline that existed when he took office (but I will blame him for continuing George W. Bush’s policies of excessive spending and costly intervention).
That’s why I think the data from the Minneapolis Federal Reserve are more damning. They show all the recessions and recoveries in the post-World War II era, which presumably provides a more neutral benchmark with which to judge the Obama record.
Written by Randal O’Toole, Senior Fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Best known for admitting to the National Press Club that the Obama administration wants to “coerce people out of their cars,” Secretary of Transportation Ray LaHood has announced his plans to leave office as soon as a replacement can be found. Aside from an admirable emphasis on transportation safety, the main legacy he leaves behind is a record of wild spending on ridiculous projects that do little to improve transportation but do much to add to the nation’s debt.
Much of that spending came out of the 2009 stimulus bill. Prior to the stimulus bill, a Bush (II) administration rule required that most spending on transit projects meet certain measures of “cost effectiveness.” Streetcars, for example, had to be cost-effective relative to buses, which they never are, so no streetcar projects could be funded. The stimulus money was exempt from these rules, so LaHood immediately gave funds to Atlanta, Cincinnati, Dallas, and Tuscon for new streetcar lines. LaHood then announced that he was rescinding the Bush rule, an action that was formally completed on January 9 of this year.
Similarly, at the request of the Obama administration, the stimulus bill included $8 billion for so-called high-speed rail projects. But most of the projects funded are anything but high speed. Vermont, for example, spent $52 million speeding up a New York-to-Burlington train to an average of 38 miles per hour. Washington State is spending $590 million speeding up a Portland-to-Seattle train from an average of 53.4 to 56.1 miles per hour.
The main criteria for elibility for these funds was not whether a project was worthwhile but whether the environmental documentation had been written. Florida, for example, had written an environmental impact statement for high-speed rail that concluded that the environmental costs exceeded the benefits, but LaHood was happy to give the state $2.4 billion to build it anyway until the state had second thoughts.
As a result, cities and states all over the country are scrambling to write environmental impact statements for all sorts of inane projects so they will be ready the next time the floodgates of federal spending open. Reconnecting America, a pro-transit group, has cataloged more than 600 transit plans under way in more than 100 metro areas. These include 125 streetcar projects in at least 50 cities which may now be eligible for funding now that the Bush cost-effectiveness requirement has been eliminated.
Altogether, the nearly 500 projects for which costs have been estimated would require more than $250 billion in capital expenditures, which rail advocates lament mean that it would take more than 100 years of federal funding at the current rate to fund them all.
In “FA$T CA$H: Easy Credit & the Economic Crash,” Electra tells a cautionary tale about monetary stimulus in a catchy pop-song. Enjoy:
Here are the lyrics:
The economy is tricky, it’s a coordination game.
Like driving on the highway, knowing when to switch your lane.
Traffic lights coordinate those who go and stop.
The price of credit coordinates those who save and shop.
That fast, fast, cash how fast can you get it?
Pump that gas, gas, gas, inject easy credit.
But will it last? Or will you regret…
The market crash, crash, crash, and don’t you forget it.
If consumers save up, it means they’re more willing
To wait before spending, before shedding a shilling.
What they put into banks, the banks can now lend.
Banks lower interest rates to get producers to spend.
Producers borrow big, when that interest rate’s low.
To start up big projects that take a while to grow.
They assume the low rate means consumers want to wait
Saving up for big, big purchases at a later date.
Last month, a pro-Democrat “super PAC” targeted State Rep. Lee Anderson, who is challenging U.S. Rep. John Barrow in Georgia 12th Congressional District, in an ad for signing the Taxpayer Protection Pledge from Americans for Tax Reform.
The ad, produced by Center Forward, claimed Anderson, a Republican, “signed a special interest pledge that keeps tax breaks for companies that ship out American jobs.” That, of course, is misleading, if not outright false. The pledge simply states that the candidate will “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses” and “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”
Americans for Tax Reform (ATR) has decided not to sit on the sidelines in this race any longer. In a new ad slated to run in Southeast Georgia in a $496,000 buy, ATR is coming right after U.S. Rep. Barrow, hitting him on supporting President Barack Obama’s runaway spending spree, including his support of the 2009 stimulus bill.
Here’s the ad:
If you listen to President Barack Obama, he’d have you believe that he has been fiscally reponsible and that his stimulus plan got the economy moving again. However, those of us looking at the river of red ink flowing from Washington and stagnant employment numbers seen an entirely different picture.
Indeed, the facts show that Obama has been fiscally profligate by dramatically increasing spending and passing a wasteful stimulus bill, which hasn’t really helped the economy more than three years after becoming law. In fact, the Congressional Budget Office recently noted that the stimulus bill could have a net-negative impact on the economy.
But in a new ad buy, American Crossroads explains that Obama’s spending binge has been problematic for the economy, noting that by the time the 30-second ad ends, the national debt will have grown $1.4 million:
AKA “The Only Scandal Conservatives Need”
- 69,000 jobs added (That’s far too weak for even a piddling recovery)
- +.1% unemployment, up to 8.2%
- 12.7 million Americans unemployed
- +.2% to civilian labor force participation, up to 63.8
- 8.1 million Americans employed just part-time for economic reasons
- 2.4 million Americans marginally attached to the labor force
- 830,000 discouraged workers
- March and April job increases revised downwards
- Sure path to Obama’s defeat in November
The May jobs report has just been released by the Bureau of Labor Statistics…and it’s awful. It’s one of the weakest reports all year, and has shown quite clearly that the “Hope N’ Change” policies of President Obama are not working. According to the BLS press release:
Nonfarm payroll employment changed little in May (+69,000), and the unemployment rate was essentially unchanged at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction. Employment was little changed in most other major industries.
Household Survey Data
Both the number of unemployed persons (12.7 million) and the unemployment rate (8.2 percent) changed little in May. (See table A-1.)
Or, Why Your Worries About Double-Dipping or A “Second” Recession Are Utterly Preposterous And Make You Seem Completely Out Of Touch With Reality
While doing some reading over the weekend, I came across this blog entry by Brad Plumer over at the Washington Post’s Wonkblog (the one headed by Ezra Klein) about the Bush tax cuts expiring and how that will affect the economy:
To put this in perspective, the Federal Reserve expects the economy to grow at a roughly 2.9 percent pace in 2013. If Congress does nothing at the end of this year, much of that growth could be wiped out, and there’s a strong possibility that the United States could lurch back into recession. (Granted, a lot could depend on how the Fed reacts in this situation.)
That bolding is my own emphasis. And it really irritates me.
I know that the National Bureau of Economic Research, the official decider of recessions and other economic forecasts, declared the Great Recession to be officially over in 2009. I know there is an official, academic definition of recession: two consecutive quarters of negative GDP growth (otherwise known, in normal person English, as “GDP shrinking.”) I know this is what Brad is talking about when he says “lurch back into recession.”
Mort Zuckerman one of the top 200 richest men in the world and current editor of U.S. News and World Report has been painted by some conservatives as a liberal that has seen the light”. But has he?
In it he lambasted our current president’s economic policies and labels them a “failure.” I agree with Mort on this point. Mort, like a lot of conservatives and every liberal, does not get to the heart of what has been going wrong in the halls of Congress, in the Oval Office or the chambers of the Supreme Court for the last 100 years. What Mort fails to realize is that the collectivist central planning of our economy and governing of Individual behavior by all the previous administrations, along with the monopoly of the money supply and the setting of interest rates by the Federal Reserve and the endless wars overseas has led us to the where we are today.
Mort’s failure to see that the collectivist ideology that underpins the entire U.S. government budget is the ONLY REASON for the “Great Recession” that most of us are endruing today. (Around Washington D.C. there is no recession.) Instead of advocating for less central planning and control by politicians and bureaucrats over the lives and wallets of individuals he advocates for more. Instead of advocating for more individual liberty, he advocates for more government intervention.
On Friday, the latest jobs numbers were rolled out from the Bureau of Labor Statistics. As you might have read, the economy created 120,000 jobs in March, well below consensus estimates; though the unemployment rate did fall to 8.2%.
But with the election on the way, we can expect a renewed debate on stimulus spending. And as James Pethokoukis notes, the unemployment rate is far above that the Obama Administration claimed it would be at this point with the 2009 stimulus bill:
Swing and a miss. A big miss. A really big miss. U.S. employers added just 120,000 jobs last month, the Labor Department said on Friday. That’s the smallest increase since October. Economists polled by Reuters had expected nonfarm employment to increase by 203,000. And as economist Robert Brusca points out, “The strong amazing run in household jobs came to a crashing halt as employment in that survey fell by 31,000 after rising by 42,000 last month and 847,000 the month before that.”
We’ve been constantly told by Barack Obama and his apologists in Congress that government spending is good to get the economy growing again. It’s not. In fact, as Ramesh Ponnuru notes, that the 2009 stimulus bill really only grew the national debt, not the economy.
But in a new video from Economic Freedom, Professor Antony Davies of Duquesne University explains the reason why so-called “stimulus” spending only contracts the economy by taking dollars away, either by borrowing or taxing, from the private sector and individuals: