9/24/2010

Stimulus didn't save the nation from depression

Via-Detroit News


Wait a minute -- economists are now saying the Great Recession ended in June of 2009, when the economy began growing again.

But President Barack Obama is defending the $787 billion stimulus package, which failed to deliver the promised reduction in unemployment, by claiming it kept the economy from falling into a depression.

And yet, according to some economists, the recession was over before the stimulus dollars were spent.

We've been had, folks. Nearly $800 billion of our money was spent to end a recession that was already over. The massive spending didn't put Americans back to work. So all we end up with is a hugely expanded government and a gigantic debt that will be repaid with higher taxes on either ourselves or our grandchildren

Worse, all that spending likely made conditions worse and prolonged our misery because it sucked money out of the private sector, and the policy-making that surrounded it gave job creators the jitters.

"The stimulus had no effect at all," says Harry Veryser, a University of Detroit Mercy economics professor and author of an upcoming book on the collapse.

At least it has had no effect on employment, the measure everyday Americans use to determine when a recession has ended.

Gary Wolfram, an economist at Hillsdale College, contends employment is lagging because fears that the deficit will lead to higher taxes, as well as the uncertainty about the costs of Obamacare, have kept investors sitting on more than $3 trillion private dollars that ought to be going into job creation.

"As long as government creates this high level of uncertainty about the future, employment will not rebound," he says.

Wolfram adds that the money was squandered on a wish list of politically motivated projects and programs, and not strategically targeted to impact job creation in the hardest hit states, including Michigan.

"If we'd cut corporate income taxes instead, there would have been an immediate reaction from the economy," he says.

The spending also did little to shore up the housing market, which typically leads an economic comeback.

But Obama and his Democratic cohorts in Congress couldn't demonize corporations for destroying the economy, and then hand them a tax break. And if they had spent the money on a broad reduction in tax rates for individuals, they couldn't have steered the stimulus money toward their political supporters.

So they spent and spent, without a clear strategy of how that spending would impact employment in job-starved places like Michigan. They were more concerned with achieving their ideological wish list than they were in putting Americans back to work.

They acted against all evidence that this version of counter-cyclical spending would produce any better results than it had in the past.

The pinpointing of the recession's end debunks Obama's desperate defense of the stimulus. It ought to also spark a debate on whether a different approach would have produced better results.

"Had we done nothing, we would have been better off than we are now," Wolfram contends.

Doing nothing wasn't an option, given the condition of the economy.

But what Obama did -- spend $800 billion in a single minded pursuit of his far-left agenda -- has produced nothing but a might angry electorate.

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