Oct 19 2009
Liberal’s Stimulus Plan An Abysmal Failure
Major Update Below
Remember the rush last February to get a stimulus package through Congress so the Democrats could turn the economy around and start creating jobs? Remember almost 8 months ago, when it passed, all the hype and promises spewed by the Democrats?
Here we sit 8 months later, with unemployment and underemployment creeping ever higher, and the Democrats are trying to pat themselves on the back for a job well done. In what has got to be the mother of asinine PR stunts, the Obama administration has announced the stimulus package has saved or created ….
Wait for it …
Wait for it …
God help us from arrogant incompetents. One left wing dupe has the nerve to claim (or actually admit)Â this was always how it was expected to go (like we can’t remember or Google the hype?).
As was planned from the start, in fact, only a small portion of the $787 billion has been spent. The Council of Economic Advisers recently issued a comprehensive report on the impact of the stimulus. “As of the end of August, $151.4 billion of the original $787 billion has been outlaid or has gone to American taxpayers and businesses in the form of tax reductions,” the CEA reports. That’s 19 percent. If projections made for September expenditures are right, “between one-fifth and one-quarter of the total $787 billion” was spent by the beginning of October.
…
In other words, nearly eight months after its passage, a large majority of the stimulus has yet to start impacting the economy—as was the plan.
Well if this delay in getting the money into the economy in order to create jobs was by design- Â then it was a completely eff’d up design! This is why Presidents Kennedy, Reagan and George W Bush used across the board tax cuts to stimulate growth and create jobs. They work quickly, they minimize the suffering. They are a better plan!
All the liberals have done is soak the taxpayer and corporations, let them money get suck in the bowels of the bloated federal bureaucracy and create massive historic deficits. Now we learn this was by design! Wow, that just makes it all better, doesn’t it? For 8 months I have said this liberal fiasco would never begin to spend money for at least a year. And now all of sudden I am being proven right because, that was the plan along.
Since spring I have been tracking 6 federal organizations and their share of the stimulus spending designed for make work projects (supposedly to create jobs). Here is the latest data on the $105 billion I have been tracking (1/3rd the jobs projects), and as can be seen nearly NONE of the job creating money has been spent to date.
In the first graph there are 4 sets of columns showing (from left to right): (1) the amount originally budgeted for stimulus programs in the faux stimulus bill for each of the 6 organizations I have been tracking, (2) the amount allocated to date to specific job-creating programs in that organization, (3) the amount actually spent to date creating jobs and (4) the amount left unspent from the original total budget. (click image to enlarge)
The second chart translates the dollar amounts for the last three sets of columns from  the previous chart into percentages of the budgeted amounts for each organization, showing what is the percent allocated, percent spent and percent unspent. (again, click image to enlarge)
Summary:
- $105 billion was budgeted for job creation efforts across the 6 organizations (1/3rd of all job creating stimulus programs in the stimulus bill).
- 50%, or $52.4 billion, has been allocated to programs which can be then competed and/or contracted
- Just 4.6%, $4.87 billion, has been spent creating jobs
- Over 95% of the money, or $100 billion, budgeted for job creation in these organizations has yet to make its way out of the federal bureaucracy and into the economy.
And this was all by design!
Was this was part of the design as well:
Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.
“They were the worst three months of all time,” said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.
Many foreclosures now are directly linked to the spread of unemployment and underemployment. But remember, that was the plan! It was all part of the grand liberal scheme!
And I guess this was part of the plan too:
A bad economy and low inflation are starting to drag down wages for millions of everyday workers and freeze benefits for millions of retirees.
Average weekly wages have fallen 1.4% this year for private-sector workers through September, after adjusting for inflation, to $616.11, a USA TODAY analysis of Bureau of Labor Statistics data found. If that trend holds, it will mark the biggest annual decline in real wages since 1991.
What a an impressive creation these liberals have wrought. What a benefit to America. Now we have 30,083 new jobs as an answer to all our woes.
Except each week we see 500,000+ first time unemployment claims (here are last week’s numbers which were considered a good sign). The vaunted, imperative and successful stimulus bill barely dented this one week’s number. Those 30,000 jobs over 8 months is roughly 5% of one week’s new claims.
There are 6,000,000 people on unemployment insurance (same link), which means those 30,083 jobs represent 1/20th of 1 percent of that problem. Only 99.95% more to go!
As of September 19, there were 3,321,210 people clinging to the last rung of unemployment assistance (called the EUC – see graph below, click to enlarge).
That means the stimulus bill has found a solution for 9 tenths of one percent of the people on EUC. Only 3,291,320 more jobs to go! Given the current rate of job creation (30083 jobs per .75 years, carry the 1 …) means we should have this wrapped up some time in 2091. Can’t wait!
Of course, not many of my kids my still be alive by then.
Notice that little blue line on the graph? That is when the stimulus bill passed. See what happened after that? So few jobs were being ‘created or saved’ that people kept slipping closer and closer to the end of the safety net. There has been a 128% increase in the EUC roles since the stimulus bill passed. Thank God the liberals found those 30,083 jobs, we would be in deep doo-doo.
Here’s the problem with this bogus fanfare on jobs: it is not even round off error on the problem facing this country. The number of jobs being lost each week has leveled off, and even begun to shrink a bit, but the hole we are in is massive. Look at the trend lines for unemployment (U3) and underemployment (U6):
They are not turning around. We are not in a net positive job creation posture. Now look at the number of weeks (average and mean) people are staying on unemployment (probably not counting the two phases of EUC benefits).
The time on unemployment is getting longer and longer, and more and more are going on EUC, that is not a good sign.
15 million people are looking for work. 30,083 jobs over 8 months is not going to work, I don’t care how much it was ‘all part of the plan‘. When the new data comes out on the state by state numbers next week we’re going to see those states in the deepest trouble leveling off, but they won’t be getting better. And we will see the cancer of Obamanomics spreading across the country, destroying families and lives.
I said this faux stimulus scheme was going to be a disaster, an albatross around the President’s (D) and Congress’ (D) necks. Sadly, this is one time I would have loved to have been wrong.
Wait until we pass Thanksgiving and Christmas and New Year’s Eve, with these numbers just getting worse and worse. And then come back and tell us this was all part of the grand plan (and running above expectations!).
All data shown was provided by the US Government from the Recovery Bill site, the Bureau of Labor Statistics and the Department of Labor.
Major Update: The news media is starting to finally put 2 and 2 together concerning the failed liberal policies (though it is just barely sinking in), especially when we face up to the wall of debt we and our children’s children now owe:
The federal budget deficit soared to a record $1.4 trillion in the fiscal year that ended in September, a chasm of red ink unequaled in the postwar era that threatens to complicate the most ambitious goals of the Obama administration, including plans for fresh spending to create jobs and spur economic recovery.
We don’t need ‘fresh spending’. What ever they budget today will take 1-2 years to get into the economy because of the federal rules on contracting. What we need are cuts in spending, not more of the same. Look at the accompanying graph! Look at the Bush years verses one year of Obama. It’s frightening in its spending and its failed results.
[Update: Read the comment on the deficit by reader WWS, very interesting theory.]
We have created massive deficits this past year, and we have very little to show for it. Wall Street seems to have stabilized and is back to paying out big bonuses. But Main Street is still hurting. Main Street has every right to throw these incompetents out and start over. Can’t be any worse than what we have seen so far.
As this person notes, President Obama and is PR BS is more lack Bernie Madoff than John Kennedy:
Take one of this year’s most astonishingly successful federal-stimulus contracts touted on the administration’s Web site, a grant for a Head Start program in Danville, Va.
With less than $35,000, the Obama administration managed to create or save 50 jobs in Danville, they boast.
No one was more mystified by this claim than the man who keeps the books for the Community Improvement Council, which won the federal grant.
“It hasn’t created jobs, but it’s helped improve 50 jobs,” Roy Garner explained.
The money has gone for staff training, pay raises and playground repair.
So how exaggerated is that claim of 30083? I mean $35,000 is equal to one low end or entry level job. Yet by Obamamath it’s really 50 jobs. We have been conned, we are being conned and we are being robbed of our hard earned money for nothing.
It seems we finally have the infomercial presidency, including all the quality of an infomercial’s cheap and shoddy products.
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A.J. – In addition to which, I’m sure we’ll find most of these “new/saved” jobs are in the public sector. Simply put, public sector jobs do NOT contribute to economic “growth” in any sense; they merely represent “redistribution of the wealth” – i.e taxpayer money going to pay some drone’s salary.
As an aside, It IS interesting to note that the AVERAGE federal salary is now $75k+; the private sector? $39k
I could not believe I was hearing this right, that 30,000 jobs had been created in 8 months!
Being reported!
On the news!
On radio!
I thought ,am I going crazy?
30,000 in 8 months and 500,000 per week are still losing jobs?
At this successful rate of stimulus we may all be unemployed in lets see 26 million a year into what 350 million people?
In 15 years we will all be unemployed as the Democrats continue creating 30,000 jobs every 8 months.
How can anyone report this with a straight face. The media whores are so far in the tank for the Pinnochio and the Dems that they have lost their minds, their dignity, any semblence of integrity, and are drinin the Koolaid by the gallon.
How do you battle insane, shamelessly lying, incompetents? How?
These guys just make stuff up and put it out there knowin 1/2 the country is too damn dumb to question or figure it out! Shameless liars and corruptocrats, shameless media adorers and pushers of the Socialist agenda, horrible, dispicable, corrupt, AntiAmerican scum.
No quite up to the Bush standard after the dot com bubble and 911. Bush said he would create 6 million jobs and he did. Maybe Obama should ask Bush how he did it!
a great visual depiction of what’s happened to jobs here:
http://tipstrategies.com/archive/geography-of-jobs/
Combine this news with the reported $1.4 trillion deficit for last year and what we are doing, as well as where we are heading, becomes clear. Also note that the stock market is now back up to 10,000, banks are making lots of money (without having to lend to anyone, which is very important) and commodities are surging. Gold is bouncing around it’s all time historical high.
What model explains all these events? From an economics theory point of view, this is a pile of contradictory items that can’t all be happening at the same time. And yet they are.
Here’s a hypothesis, judge if it fits the observed facts: The American govm’t currently has woefully insufficient revenue to support it’s programs and policies. Since it is politically damaging to cut back on anything, our government has instead chosen to create $1.4 trillion of new money out of thin air and pump it into the economy. (the deficit) However, there are very few productive places for any of this excess liquidity to go (no new plant construction, etc) so instead the liquidity is flowing into any easily marketable assets. Large banks, especially, are able to obtain billions of dollars in near interest fee financing from the Treasury through the remains of the TARP programs and then are able to put this money not into loans, but into stocks and purchases of higher paying US debt. (I give you money for free, to hold, and you then loan it back to me at 3%. Heck of a deal, isn’t it?) Elizaeth Warren, the appointed TARP overseer, said in a recorded interview yesterday that we will never know where the $750 billion in TARP money went, because there were no financial controls at all in place when it was handed out. Thank you, Hank Paulson, and Thank you, Tim Geithner.
Internationally, world investors see this massive printing of money and worry about their dollar denominated investments. So they shift out of dollar holdings and since there is no strong international currency anymore, they shift into items of guaranteed international value, such as gold and future oil delivery contracts. This pushes the price of both commodities up even though there is no great physical demand for either.
Meanwhile, unemployment continues to surge in the US because all of the excess liquidity is going into financial speculation, not productive activity. (building factories, etc)
As unemployment rises, derivatives of that such as foreclosure rates continue to rise. The foreclosure crisis destroys the economic base of the state levels of govm’t which rely upon property taxes for funding, thus throwing the States onto the arms of the Federal Govm’t for relief. The Fed then prints a new round of money to prop things up for another month or two and we take another run through the cycle. Free money, like free anything looks great for a short amount of time. But the bill always come due in the end.
Think about why the idea of a “stimulus” was so important, as opposed to life support. The entire economic purpose of a stimulus is to re-start creative parts of the economy which can then generate tax revenues and employment. Any plan which fails to do that is not even remotely a “stimulus” but instead is just life support. What form does life support take? In a nation like this one, it takes the form of printing money with no backing in order to substitute for the fact that the government in fact has insufficient tax revenues. If this money is used creatively, there is a good chance that the future interest payments due will be less than amount of growth brought about, thus it will have been worth it. HOWEVER, if this excess money is simply consumed, then the future interest due will begin to compound inexorably. When that amount reaches the point where money has to be created just to pay the interest on the debt, hyperinflation begins. (As Argentina, Zimbabwe, and Weimar Germany learned the hard way) Once a nation goes over that brink, nothing except default and mass currency devaluation can bring it back. The visible sign will be $3,000/oz gold and $300/bbl oil which no government decree will be able to change.
We have far less time than most people realize before we reach that point. Maybe just a matter of months.
http://www.usdebtclock.org
hat tip, L.com poster
WWS, would you email your comments to Glenn Beck? me@glennbeck.com
🙂
WWS is close but missing where the real money flows have shifted to.
http://www.atimes.com/atimes/Global_Economy/KJ14Dj04.html
Merlin, good article. That writer and I do not disagree on any major points. What I have been trying to do (and it’s difficult) is to come up with a concise summary that can be used to explain to people how everything we are seeing is all related and interdependant. If you listen to the dinosaur media you’d just get the message A) Stay Calm! Nothing’s Wrong! or B) No one knows why these things are happening, so don’t try figuring it out.
In truch, we are on a clearly defined path.
Florida with $2.3 sent a bunch of students to beauty school. Were their openings for so many new operators? No, not really.
Kathie, without even seeing any details of that transaction you can be pretty sure how that $2.3 (million, I presume) was distributed – $300,000 would have gone towards operational expenses, $1 million would have gone into the pockets of the whoever owned the “school”, and $1 million would have been kicked back to various political organizations related to the functionaries who were responsible for the funding. The “students” are probably going to get a hangout where they listen to music and smoke weed for a few weeks before they get the boot.
That’s going to be a pretty good breakdown for most of the money handed out these days – the fraud and theft is so blatant and so huge that no one is even trying to hide it anymore.
WWS
I sit and watch CNBC clowns every morning and marvel at their glee over companies announcements of ‘beating estimates’. I know in my heart that this is all smoke and mirrors.
Your explanation is very enlightening and I am afraid is spot on.
I am seriously depressed having done ‘all the right things’ such as zero debt, but foresee really bad times ahead with no idea on how to prepare for it. Depressing that no one else around me here in California can remotely see the dark days ahead. I just spent an hour with buddies after golf telling me what a dolt I am for exiting the market. Oh well…
Thanks for the insight…..
Tom in CA
WWS,
The analysts at Comstock Funds have reported that the Bureau of Labor Statistics is reducing the number of jobs it thinks small and medium sized business created for the year ended March 31, 2009 by 824,000.
This more than wiped out the ‘jobs adjustments’ — educated guesses — that overstated small/medium firm job creation by about 68,000 per month from the ARIMA time series model (commonly called the birth/death model). This BLS model is used to estimate employment changes resulting from business births and deaths that are not accounted for by other methods.
Comstock Funds thinks that if the BLS uses the same updated birth/death model for the 1 Apr thru 30 Sept 2009 period, the reported unemployment figures overstated small/medium firm job creation could be more than 135,000 a month higher, AKA more than 815,000 higher over all.
See:
Job Losses Higher Than Reported – Comstock 4 comments
by: The Pragmatic Capitalist October 16, 2009
http://seekingalpha.com/article/166903-job-losses-higher-than-reported-comstock
WWS,
The following is from an economist blog from the Atlanta Fed.
The economic blood is on the floor from the “small business strike” that many on the Right & small business community predicted before Obama’s election.
The Democrats I am arguing with in other venues are pretending to misunderstand that “Economic Recovery” =/= “Employment Recovery” and it is the latter that people vote on.
See:
——————————————————————————–
http://macroblog.typepad.com/macroblog/2009/10/prospects-for-a-small-business-fueled-employment-recovery.html
October 06, 2009
Prospects for a small business-fueled employment recovery
In a speech yesterday, William Dudley, the president of the Federal Reserve Bank of New York, identified financial constraints for small businesses as a restraint on the pace of economic recovery. Specifically, he said:
“For small business borrowers, there are three problems. First, the fundamentals of their businesses have often deteriorated because of the length and severity of the recession—making many less creditworthy. Second, some sources of funding for small businesses—credit card borrowing and home equity loans—have dried up as banks have responded to rising credit losses in these areas by tightening credit standards. Third, small businesses have few alternative sources of funds. They are too small to borrow in the capital markets and the Small Business Administration programs are not large enough to accommodate more than a small fraction of the demand from this sector.”
President Dudley’s comments are even more relevant in the current recession if one considers the disproportionate effect the recession has had on very small businesses. In general, the Small Business Administration defines a small business as a firm with less than 500 employees. However, for my analysis here I focus on the very small firms (those with less than 50 employees) as the data indicate these firms have been the most affected by the current recession. (Look here for another take on how to define a small business).
http://macroblog.typepad.com/.a/6a00d8341c834f53ef0120a5c632e6970b-popup
During periods when national employment levels were expanding since 1992 (when this data series began), firms with less than 50 employees have made up approximately one-third of the nation’s employment growth. During the employment declines associated with the 2001 recession, these firms made up only 9 percent of job losses. In the current recession, though, these very small firms have made up 45 percent of the nation’s job losses.
Looking ahead, it’s not clear whether small businesses will continue to play their traditional role in hiring staff and helping to fuel an employment recovery. However, if the above-mentioned financial constraints are a major contributor to the disproportionately large employment contractions for very small firms, then the post-recession employment boost these firms typically provide may be less robust than in previous recoveries.
By Melinda Pitts, research economist and associate policy adviser
October 6, 2009 in Labor Markets | Permalink
Good links, Trent. You can tell from those speeches and other statements from the Fed members that they understand what deep trouble we are in – and they also understand that they don’t dare say much about it openly, so their fears are contained in veiled references and reports like this one.
High unemployment is a corrosive acid that eats away at the very foundations of civil society, not just the economy. And unlike most of the drive-by media, the real economists know that if the unemployment situation is not addressed soon, we could be facing circumstances that will actually be worse than those we faced in the 1930’s. (At least in the 30’s the currency was still worth having, and the coins were still silver, not tin)
The real crunch is going to come when Bernanke realises that he has no choice but to start raising interest rates to keep us from going over that inflationary brink. Doing that will of course destroy whatever strength this economy has left and will destroy any election hopes this administration has, so there will be great pressure on the Fed to keep interest rates close to zero no matter what.
A lot of “smart money” is going to bet that this administration will succumb to the inevitable and accept political defeat as a price for saving the country. I’m not so sure, as I think it is probable that the Obama administration will keep the pedal to the metal on their monetary policy all the way to the end, and in effect cause this nation’s economy to burn out with a Thelma and Louise style ending.
I sincerely hope I’m wrong. I don’t think that I am.
On another blog, Richard Fernandez recently noted that the most common last words in history are probably “oh, shit….”
But Bernanke is now saying that the Government needs to find ways to reduce the deficits.
ARGH!!
[…] then the faux liberal stimulus bill did nothing to ’stimulate’ the economy – which we learned this month was ‘as planned’. 95% of the job stimulus money is still stuck in the federal bureaucracy, doing nothing […]