Jul 02 2010
Deficit spending through the bloated and lethargic federal bureaucracy never creates economic stimulus or growth. Government has and always will be a mechanism to either tamp down economic gyrations (best case) or drag down economies as they suck the life blood out of the private sector (worst case). Not enough controls and market cycles create damage. Too much micromanagement and then the innovation and inspiration dry up and the whole thing collapses. Â There is no real life scenario where government creates wealth and jobs – that is naive and best left to kiddy shows.
Under Obama and the liberals in Congress we are tipping way too close to the worst case side of the equation. The stimulus package was all a waste and simply prolonged the suffering for over a year longer than necessary (just like their response to the Gulf Oil spill wasted critical time and let things run amok). Instead of sowing hope and energy they have reaped despair and surrender. While the June Unemployment rate looks at a Â glance like improvement, the math is much more brutal:
Over all, the nation lost 125,000 jobs, according to the monthly snapshot of the job market released by the Labor Department on Friday. Most of the lost jobs came as temporary workers hired by the federal government to help with the census exited their jobs. The unemployment rate, based on a different survey, declined to 9.5 percent in June from the previous 9.7 percent. This decline came only because the nationâ€™s labor force shrank by 652,000 jobs.
Just as last monthâ€™s government job report appeared deceptively robust, as it was swollen by 411,000 workers hired by the federal government to help with the census, so the June report appears deceptively anemic, as the government shedding many of those same temporary census workers.
The problem with the normally reported unemployment rate figure (called U3) is it is incomplete. It computes the number of people on unemployment benefits as a percentage of people working. But what about the people who have given up working and on unemployment? What about those who just walked away from both? There is another factor the government tracks called “discouraged workers”. If you combine the number of people in U3 with discouraged workers you would get something the government calls U4 (Unemployed + Discouraged). This figure is the actual unemployment rate, and it tells a different story right now (click to enlarge):
As can be seen the U4 rate is 10.3%, which has been stubbornly steady for the last 12 months. The stimulus money has done nothing to ‘bend the curve’. And once the one time census jobs haze is removed from the picture we will be right were we have been. Stuck with stupid liberal fantasies, awaiting the needed tax cuts and roll back of federal spending and regulations which ALWAYS result in releasing the energies and innovations of Americans – the real stimulus behind our world class economy.