Jul 09 2009
Administration Tries To Lie About Failed Liberal Stimulus Experiment
Final Update: This is good, and truthful (H/T Gateway Pundit).
Another Major Update: The bad news keeps coming today:
Now the unemployment rate is driving the show more than any other number. Affinity for President Barack Obama doesn’t mean much if you’ve been out of a job since he took office.
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Perhaps most ominously for the Obama administration, the job cuts are affecting voters across the board. Adult male unemployment has already hit 10 percent and is affecting most core Democrats — voters at lower income and education levels. African-American men are already out of work at a 14.7 percent clip.
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Especially given the administration’s earlier commitment to keep unemployment below 8 percent, further grim job numbers will make it more difficult for the administration to push for health care reform and cap-and-trade energy policy. If the tripwire is hit, many will question whether the president is spending adequate time on the deteriorating job and economic front versus longer-term problems.
We know the answer, VP Biden admitted the Dems screwed up and did not understand the problem. And he admitted the stimulus is being spent as expected. So clearly their plan (which is on schedule and doing nothing) is a failure. This doesn’t take a rocket scientist to figure out.
Major Update: The Dems are in deep denial as the polls start to show their expected dip – driven by the independents jumping from the SS Obama has his polices fail miserably:
But a source of the shift appears to be independent voters, who seem to be responding to Republican complaints of excessive spending and government control.
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“This is a huge sea change that is playing itself out in American politics,†said Democratic pollster Doug Schoen. “Independents who had become effectively operational Democrats in 2006 and 2008 are now up for grabs and are trending Republican.
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It is the independents who appear to be currently on the move: Obama dropped 6 percentage points last week from the week before in Gallup’s tracking poll, and Quinnipiac University found a 5-percentage-point drop in approval from independents between early June and early July. Recent state polling shows drops over longer periods.
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“That is fairly consistent with all our polling around the country — Obama tends to be really well-liked personally, but he’s starting to lose a majority of the independents,†said Public Policy’s Dean Debnam. Democrats have “had long enough in some voters’ minds that they’re getting blame for nothing happening, and Republicans are scaring them around healthcare and tax increases.â€
Think its bad now? Wait until we go through an entire summer of growing unemployment. Wait until we have a Thanksgiving Holiday that will be most remembered for all the economic tragedies families are experiencing and sharing over their turkey dinners. Just wait. This is only the beginning and there is NOTHING DC Dems can do to undo their failed liberal stimulus experiment. – end update
I wrote a post before the 4th of July attempting to preempt any BS spin from the DC liberals in charge of the current economic fiasco, showing how little stimulus money as been spent creating jobs directly (not indirectly through the measly tax cuts or state programs). The bottom line is this, less than 1% of the stimulus money budgeted for federal spending programs in the organizations I have been tracking, including those in the two premier job creating agencies of Transportation and Energy, has been actually spent. Here is the government’s own reporting data which came out on July 3rd and covers efforts through June 26th:
In the first graph there are 4 sets of columns showing: (from left to right) (1) the amount budgeted for stimulus programs in that organization, (2) the amount allocated to specific programs, (3) the amount actually spent creating jobs (the bottom line) and (4) the amount unspent from the total budget. (click image to enlarge)
As everyone can see much of the money has not yet even been assigned to programs (an arduous, but legally required process to make sure programs are valid). The second chart translates the dollar amounts for the last three sets of columns into percentages of the budgeted amounts. (click image to enlarge)
Bottom line: around 99% of the job-creating money for these departments/agencies is stuck in the government coffers – doing nothing. Here’s the slatest ummary across all 6 organizations:
- $105 billion was budgeted across the organizations to start new programs and create jobs (the largest amounts going  to the Departments of Energy and Transportation)
- Of that, only $28.4 billion (was $22.7B) as even been allocated to programs to be spent (27%)
- The total amount actually spent to date on stimulus programs: $0.606 billion (was $0.350B), which is a paltry 0.57%.
The Department of Transportation is well ahead of the other organizations, in that it has 43% of its money now obligated to programs. But it still has only spent <1% of the money budgeted by Congress. The Department of State has spent just over 1% of its tiny budget, making it the lead job creator in this pack of turtles. Five months since passage of the stimulus money and less than 1% is stimulating any jobs.
Remember that word ‘spent‘, vs the new word in vogue in the DC spin ‘obligated‘. As I noted, if you look at the Department of Transportation it has ‘obligated’ 40% of its budgeted money for stimulus. It has spent less than 1%.Â
When the government goes to spend money it has to go through a lot of phases before any project can begin actually doing something. The obligation phase is the part where programs are defined and scoped, specifically where the required steps are laid out on a feasible schedule with funding attached to the schedule. There will be analyses and reports required, and plans to do many other analyses and reports as required by long standing, congressionally mandated, legally necessary standard operating procedures.
Once obligated, the government can go out and get proposals from companies. that process takes months and another slew of analyses and reports. Once the contractors is selected 6-9 months later, then design begins and the process of checking with the EPA, etc and providing other organization congressionally mandates studies on impacts to the environment to minority business plans must be produced. After 3-6 months of design and review and signatures, work can begin and the spending starts in earnest.
This is the federal government way. I know it because I live every day as a government contractor. I have no idea how to run a restaurant, a tax service, a grocery store, etc. So I have no expectations normal people who do not deal with the government don’t know the details of my world. That is the beauty of diversity in this country. But trust me on this, this is how it works and why many of us do know could predict the economic failure of the liberal stimulus experiment. And if you don’t believe me, believe these folks:
Call it the $787 billion question: Where is all that government stimulus money, and why hasn’t it stemmed the heart-stopping slide in U.S. employment?
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Yet analysts and federal contracting experts say that, in many ways, stimulus spending is going about as quickly as expected. Dispensing billions of dollars, it turns out, simply takes time, particularly given government contracting rules and the fact that much of federal spending is funneled through the states. Moreover, some spending was intentionally spread out over several years, and other projects are fundamentally more long-term in nature. “There are real constraints — physical, legal, and then just the process of how fast you can commit funds,” says George Guess, co-director of the Center for Public Finance Research at American University’s School of Public Affairs. “It’s the way it works in a decentralized democracy, and that’s what we’re stuck with.”
Instead of tax cuts (which leave money in the economy, in people’s pockets and company accounts to stimulate growth), the liberals went with sluggish federal spending via pork projects. It was doomed and is doomed, and the Dems know it, if you can decipher the BS spin.
For example. lets start with the liberal NY Times and their version of liberal DC BS spin:
With unemployment already at 9.5 percent and likely to exceed 10 percent, much higher than White House officials predicted back in February, Mr. Obama has been facing attacks that his $787 billion stimulus program was either too timid or wrong-headed or both. Now, just five months after Congress agreed on the plan, with only a fraction of the money actually out the door, Washington is debating the need for a second round of stimulus amid economic and political crosscurrents.
They start off well, telling the basic truth. But then they allow the pols to spin and spin and spin:
For the moment, Mr. Obama and his top economic advisers are fending off calls for more action, combining a message of hard-headed realism about the magnitude of the economy’s problems with more cheerful predictions about an imminent boost as the government spending begins to hit the streets.
“The stimulus is on track,â€Â Lawrence H. Summers, director of the White House National Economic Council, said Wednesday in an interview. “We planned for a program that would stimulate the economy over a two-year period, with a force that increases significantly over calendar year 2009. The implementation is on track to deliver that.â€
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“People know that problems of this seriousness cannot be turned around in six months or nine months,†Mr. Summers said. “One of the president’s strengths is his extraordinary candor. The president has been honest with the American people about the enormity of the challenge and the amount of time it will take to turn things around.â€
Pure BS. Here is their plan and reality – and it is not on track:
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If anything, it could be argued they made things worse with their transparently obvious shuck and jive. Most business people know how these things work, and they probably decided to play it safe and go into cocoon mode by shedding non essential jobs and trying to weather out the storm. But it is a lie to say the plan is on track. The lack of SPENDING is on track, as anyone in DC would know, including the idiots who made up the original chart above. So if the spending is on track, the plan is a failure because it has failed to slow the crisis down.
When we see the state unemployment numbers I think that will settle it. Obama blue states like CA, OR and MI are going to be in dire straights. Ohio has seen a complete reversal of fortune for Obama:
Nothing may be more important to public assessments of President Obama’s leadership than the state of the economy, and at this point there are political warning lights flashing.
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The administration is trying to tamp down talk that it didn’t get it quite right — talk created by Vice President Biden. On Sunday, he told ABC’s George Stephanopoulos, “We and everyone else misread the economy.” But he insisted that the stimulus “is the right package given the circumstances we’re in.”
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A recent Washington Post-ABC News poll recorded a noticeable decline in the percentage of people who said they believed the stimulus package had worked or would — and that was before the unemployment rate rose again. That poll also found that rising optimism about the direction of the country had hit a plateau — or even begun to slip.
On Tuesday came another, perhaps more troublesome, signal of disenchantment with the president’s policies, in a survey of attitudes in Ohio by Quinnipiac University. In the past two months, Obama’s overall approval rating in the state dropped from 62 percent to 49 percent. His economic approval rating also fell, from 57 percent to 46 percent.
Most significant was the sharp decline among independents. Obama’s economic approval rating among these critically important voters plummeted from 51 percent to 33 percent. His overall approval dropped from 59 percent to 38 percent.
Once the middle gives up on Hope & Change, there is no turning it back. And this is not only in Obama’s Ohio, but also in the purple state of VA:
A new Public Policy Polling survey looking at how likely voters for this fall’s election view Barack Obama finds his approval rating at just 48%, with 46% disapproving.
Nationally, the slide in Hope & Change is also beginning to really show
 
I am fairly certain this slide is just beginning, not ending. There is nothing a new stimulus would do except put us farther in debt and underscore how badly the Dems screwed up. If they go for a second stimulus and nothing happens (and it won’t, there is too much momentum behind the current path) then it will be crystal clear they are not up to the job of leading this nation. If they do nothing, they are screwed too. Damned if the do, damned if the don’t. But they are damned because they made incredibly dumb decisions and tried a risky liberal economic stimulus scheme which is coming back to roost.
[…] Louder Than Words, Boomers!, Floyd, History, Open Thread, Politics-Schmoliticks | One comment Administration Tries To Lie About Failed Liberal Stimulus Experiment – strata-sphere.com 07/09/2009 I wrote a post before the 4th of July attempting to preempt any BS […]
America’s biggest problem is that Americans have lost confidence in America. We are like deer in the headlights. Those who have the ability to create, hire, work with the frozen credit markets are afraid to move. They are tied in knots with pending legislation that has unlimited financial consequences.
If Obama and his congress doesn’t stop, the unemployed will continue to grow. In two years when the present stimulus is spent, state governments can’t fill the holes, we will be right where we began. Broke, but more broke.
I can’t see any light at the end of this tunnel. My bet, a jobless recovery, because a recovery depends on confidence and Obama has proven his predictions are not trust worthy.
The interesting thing on the Obama approval numbers appears to be erosion of the “strongly support” numbers. The trend since about 6/1 has been obvious. Even the kool-aid drinkers are leaving the train.
AJ you posted a link to this article:
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http://www.realclearmarkets.com/articles/2009/07/06/get_ready_for_14_percent_unemployment_97295.html
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That said the following:
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The BEA numbers (which were revised slightly on June 25) show an accelerating decline in “real nonresidential fixed investment”. This measure decreased 37.3 percent in the first quarter of 2009, compared with a fall of 21.7 percent in the fourth quarter of 2008. Given that employment is a direct, linear function of private business investment (PBI), unemployment can be expected to rise much farther in the months ahead.
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Here’s why. Because a lot of PBI goes toward offsetting depreciation and increasing productivity, it takes a 5% year-over-year increase in PBI to produce a 1% increase in the number of jobs. Correspondingly, a 5% decrease in PBI will yield a 1% reduction in total employment.
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The unemployment rate a year ago was 5.5%. Because the potential labor force is growing, we need employment to increase by 1% annually to keep the unemployment rate from going up. The 37.9% investment decline reported by the BEA can be expected to eventually produce a reduction in total employment of about 8.5%. Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of PBI is reversed.
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IOW, past decreases in capital investment will result in a further increase in the unemployment rate, to about 14%, before the really recent increase in investment will level things off at a 14% unemployment rate.
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Basically that article said that,
a) Just as a certain mininum amount of ongoing capital investment is required to maintain existing capital stocks,
b) A certain minimum amount of hiring new workers is necessary to maintaining a static labor force in terms of the total number employed. (I.e., there is a constant labor force turnover, with new hires replacing retiring and laid off workers.) thus,
c) Any increased workforce capital investment causes increasing employment to happen after about a six month lag time.
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Which means there are two components to a rise in unemployment –
1) A failure to hire new workers to replace normal turnover, and
2) An increased termination rate.
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An outright decline in economic activity might have ceased but, because new hires to replace turnover always lag increased capital investment by about six months, unemployment can continue rising due to past capital disinvestment, even if current investment is increasing.
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In addition, since US population is expanding, a static labor force means an gradually increasing unemployment rate as well as absolute numbers of unemployed.
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This is why you, I and many others talked about the small business/financial capital strike Obama’s regulatory and tax policy uncertainty was causing months ago.
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“Real” economic recovery, i.e., an increase in new hiring producing a decrease in the unemployment rate, will not begin until the summer of 2010 (if then) because those capital strike people were busy conserving — AKA not spending — thier capital.
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All you have to do is look at the BEA capital investment numbers.
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Those were declining until just recently, and have only recently leveled off. This means that unemployment will continue to increase for a while, and then level off.
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Only after unemployment has leveled off for a while *might* employment rates start to increase, and right now I’m not seeing any actual increase in the necessary capital investment beyond replacement levels.
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This is July 2009. Wait for the fourth quarter 2009 BEA numbers on capital investment to come out next spring. Those have to show a significant increase for employment to start picking up in the summer of 2010.
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Concern over this is why Democratic House Majority leader Stennie Hoyer is seriously talking about a “second stimulus plan.” His doom is that any second stimulus plan that the Democrats do that doesn’t consist entirely of massive Ronald Reagan/George W. Bush style tax cuts or tax rebates will work fast enough in the economy to make a difference in the 2010 election.
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Doing that is against Democratic Party religion because of the influence of Government employee unions in Democratic federal House and Senate primary campaigns a’la California.
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As you pointed out, a second stimulus that adds more government spending might have an impact in 2012, but it is getting late even for that because of the 2-3 year slack built into the government contracting process between
a) passing a bill,
b) obligating the money,
c) issuing a contract and
d) actually spending the money over two years covered by the Congressional authorization.
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Note that new big infrastructure programs add a step between “c)” and “d)” that includes environmental impact processes that tag on 1-to-7 years depending on the environmental regulatory issues and the litigation involved.
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Obama’s sub-contracting out the stimulus bill to House and Senate Democrats meant that they timed most of the “Stimulus spending” such that the gap between steps “b)” to “c)” above — where campaign contribution influence buying pays the most — was happening a few months prior to Democratic Party 2010 primaries.
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The Obama Administration counted on the economy bouncing back in 2009 like it did for Clinton after Bush 41 in 1991 so they can do Socialized Healthcare and “Cap & Trade” energy taxes.
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The problem is that the economic bounce back is not happening. It is getting worse, faster, in terms of unemployment.
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And Obama no longer has the policy means or political credibility to do what needs to be done — tax cuts — because the Congressional Democrats spent the money he needed to affect the economy and tarred Obama with their image in the process.
“Dispensing billions of dollars, it turns out, simply takes time, particularly given government contracting rules and the fact that much of federal spending is funneled through the states.”
The rules for stimulus money are weird and some states have requirements for engineering studies before a project even breaks ground that can take years. That is why they wanted to fund only “shovel ready” projects … ones where the engineering studies had been completed, approvals given, and work was ready to begin anyway. Then there are the onerous contractor requirements that are designed to shovel the contracts to union shops and minorities. Remember, they don’t want non-union white people getting this money according to Congress. In areas where minority-owned union shops are in short supply, it is hard to find the “right” people to let a contract to.
So if a county in California wants to put in a new bridge over a creek in their town that is on a state highway, they have to go to the state transportation authority with their drawings and get approvals, encroachment permits, environmental impact surveys. Caltrans has already charged over 6 million dollars to one such project in a rural California town that they have denied as “no need” … that is just the cost of looking at it in order to deny it. If a project is on a state highway, a county or a town needs state approval. The state makes money if they approve or if they deny it.
California’s current mode of operation is to allow infrastructure to crumble until an earthquake, flood, or fire comes along or the infrastructure simply collapses. Then they use “emergency” money to rebuild it. Culverts will be allowed to corrode until they collapse, a road is blocked, and “emergency” funds are given and environmental studies are waived to get the road repaired. You get around all the paperwork by allowing “emergency” work to rule reconstruction.
This means that any non-emergency work in California that hasn’t already been approved can take several (up to 5 isn’t unusual) years before even the first shovel of dirt can be moved.
“Only after unemployment has leveled off for a while *might* employment rates start to increase”
There is an additional problem. Federal Minimum Wage increased dramatically on June 1 at the same time the general economy was deflating. This means that in real dollars, the wage increase was even higher.
The federal minimum wage was $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.
The California minimum wage went from $6.75 on January 1, 2002 to 7.50 on January 1 2007 to 8.00 on January 1 2008.
In a period of deflation, simply leaving the wage the same is a “raise” by the amount of the deflation rate.
So the cost of unskilled labor has skyrocketed from 2006 to 2009. An employer paying someone $6.75 in 2006 is now paying the same person $8.00 for the same job. That also means that social security withholding … which the employer pays half of … also rose in that period. An employer can only pay 8 people now with what it took to pay 10 before.
The government is giving employers disincentives for hiring people and is INCREASING the cost of labor in the middle of a major recession.
Oh, and if you are white and work for government then watch out.
The Democrats are putting racist policies into play, and get away with it.
Cross patch,
I take it you missed the fact that the House Democrats just passed a bill mandating a paid four week maternity/paternity leave policy on all American businesses.
Business will find ways not to hire single women and to make job descriptions preclude pregnancy as a condition of employment.
Also, if your county didn’t support Obama in the election, your changes of getting any stimulus cash are greatly diminished according to USA Today.
Of course I meant “chances”.
I just spoke to a customer of mine from Arizona who is a contractor for roads and highways he explained to me he can not get bid for any new construction because the stimulus bill states that union jobs is mandatory but Arizona is a right to work state and Arizona is now having to get out of state contractors to make the bids and do the work, this poor guy just laid off 80% of his work force which was over 300 people.
ama055131
Now I understand why parapundit published this tidbit:
>Personal income tax receipts are down 54.9% in Arizona.
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>That’s an incredibly large number. What’s the real
>unemployment rate in Arizona?
Obama’s Stimulus has come to Arizona.
The Obama Stimulus plan’s requirement of union work content discriminate against counties and states with right to work laws.
It effectively removes all highway/transportation funds from local contractors in such places and causes an immediate hit on local employment.
Thus there are less total local jobs from taking Stimulus money than forgoing it.
This reduces the size of the private sector and makes what is left a part of the Democrat/Union political power block.
Yet another flaming datum showing that Stimulus was never about jobs. It was about increasing Democratic Party power.
The extent to which things are going to get worse over the next few years isn’t going to be limited to just economics. Look for crime to begin to skyrocket, too, as states are pressured by declining tax revenue to release thousands of prisoners who would otherwise be in jail into our communities.
Crime rates have recently been half of what they were at their peak in the 1980s. Illinois is currently mulling releasing 10,000 prisoners from their jails. California is another state where cutting prison costs is looking attractive. We could see literally hundreds of thousands of criminals release who should be behind bars over the next few years.
Our communities are likely to pay for Democratic Party stupidity with more than just our cash. We might soon begin paying with our lives.