Obama Stimulus Turns Three: What Has It Achieved?

  • Posted by a hidden member.
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    Feb 19, 2012 7:01 PM GMT
    More at the link for perspective of what they told you versus what actually happened.

    http://news.investors.com/article/601526/201202171525/obama-economic-stimulus-turns-three.htm

    At the time, Obama claimed that it would "create or save" up to 3.5 million jobs, and that "a new wave of innovation, activity and construction will be unleashed across America." The stimulus, would, he promised""ignite spending by businesses and consumers" and bring "real and lasting change for generations to come."

    So three years later, how do the stimulus results stack up? Here's where various indicators stood in or around February 2009, and where they stand today.

    Unemployment rate: The jobless rate is unchanged from February 2009 to January 2012, the latest month for which we have data. Both stood at 8.3%, according to the Bureau of Labor Statistics. Obama's economists had initially predicted that with the stimulus, unemployment would stay below 8%.

    Number of long-term unemployed: The number of workers who have been unable to find a job in 27 months or more has shot up 83%, with their ranks now at 5.5 million.

    Civilian labor force: It has shrunk by 126,000. In past recoveries, the labor force climbed an average of more than 3 million over comparable time periods.

    Labor force participation: The share of adults in the labor force — either looking or working — has dropped 3% — also highly unusual in a recovery. At 63.7%, labor force participation is at a low not seen since the middle of the very deep 1981-82 recession, when fewer women were in the work force. A lower participation rate makes the unemployment rate look better.
  • maxferguson

    Posts: 321

    Feb 20, 2012 11:42 AM GMT
    This is an extremely interesting topic and I have to say that I'm sad no one else is talking about it icon_sad.gif.

    First, I'd like to outline my view of how society works with respect to government spending.
    Government is a part of society, created within it. It is not separate. It is there to serve and benefit the common interests of that society. To do this, it requires money. Since it is a part of society, it must get this money from the part of society that is not in government. It does this in two ways 1.) collects taxes 2.) Issues debt. Regardless of where that money comes from, the way it spends that money must benefit society in some way. Whether that's defending the fort, cleaning up after a natural disaster, policing, law courts, etc....it must be beneficial for society. These benefits should be benefits that are best provided by a government and not in a more efficient way by the rest of society. Paraphrasing all of this, consider the two sources of money for a government (a western gov;t). First, think of tax payers as shareholders that the government uses money from by way of taxation. It pays them back in the form of those social benefits. Suppose that society needed a 10% return on t its investment in this machine called a government. If the government collects $1000 in taxes one year, it should provide societal benefits worth $1100 the next, like a dividend. In other words, A government is effective when it can benefit society by a factor greater than what it costs the rest of society. Now consider the second main source of gov't dough. Debt. Since any benefit that debt could possibly generate should be passed onto the society of that government, that society ought to pay it back. And it does, with taxes.

    Now we have two sources of future social benefits. Taxes and debt. Gov't takes them in and hopefully offers society (the shareholders) a high enough return. Just like a business. Looking back to just the taxes, the dividend payments that the gov't made on society's capital came in the form of broad societal benefits, then we can say that we'd only take out debt if we'd expect those benefits to be worth more than the ACTUAL interest on that debt + whatever is needed to make society itself valuable enough to produce enough tax dollars in the future to pay down the debt. Taxes used to pay down debt cannot be used to benefit society in another way.

    To this point, we have the government, which we can think of as a large business owned by the part of society that is not the government itself. For a government to be worthwhile, it should be profitable to society. It should only spend the shareholders money on projects that the rest of society cannot do as well as a machine as large as government. This business can also take out debt to offer its society more benefits at no immediate cost to them. This is awesome..... but only if it benefits society in a way that enables it to "come up a notch" and pay that debt down in the future. Like any business, debt can make returns much much higher, or much much lower. In short, it makes the earnings of the business more volatile. The government better be damn sure that when it takes out debt, it is spending it on projects that cannot be done as well by the rest of society.

    As for Obama, I generally like his social attitude. He is presidential -- much more so than Romney, Gingrich, etc... but it is a fact that he has taken out more debt than all of the presidents from George Washington to Bill Clinton COMBINED. Unless he has found a spectacular number of projects that the government could do better than society could itself, then he is harming society by a lot more than if he hadn't taken it out at all. The value of the lost benefits = [(How well society could do something) - (how well gov't did it) + the lost value of how much harder it will be for the taxpayers future tax dollars to pay down that inefficiency and eat that loss]. I can't remember exact figures, but bailing out a bank without changing regulation is just arming them with the same target and bigger guns. If someone offered for you to play Russian roulette, but instead of pulling the trigger on yourself, you got to pull it on the gov't, would you be more likely to play? Of course. When you bail out banks and other institutions that dug their own grave, you eliminate a lot of risk. Especially once they realize they have you by the balls. By not changing regulation, or making the loans more conditional, gov't has made themselves the target of a game of Russian roulette. Society creates and funds government -- when gov't gets shot -- so do the shareholders. Like any business, shareholders only get paid if there's enough after paying back the debt holders. I'm sure by now you see the vicious cycle. Government takes money and redistributes it to a risky client while it bears all the risk. This backlashes on society, making it harder for them to fund gov't programs at the level they used to be at. Gov't takes out more debt, plays the same risky game, and so on. In between each stage, more debt has to be taken out, and society is worse off at each stage. More debt + lower ability to pay it off = where we are today.

  • maxferguson

    Posts: 321

    Feb 20, 2012 11:51 AM GMT
    Then add in the follies of Ben Bernanke. The Fed's balance sheet is sprawling and has only done so in the last 5 or 6 years.

    He can print all the money he wants, but if he wants to maintain a free market economy (non-optional in the US/CAN), there will be inflation at some point. He could print as much money as there was debt to be paid down by the government, and you could erase the debt. But society would still bear the cost. After all that debt goes away, the government needs less taxes to pay it off. So, people have more money. Society no longer has to pay down $15T. That's $15T more for society. Great. Since they've already received the benefits of that $15T, the additional money means very little.

    Bernanke will spew that quantitative easing doesn't create inflation. The bottom line is that the people who buy and sell goods/services are paying the market price given the money they have now. If more money is introduced to the economy, if it reaches the people that need it, you will have inflation. The only way it will not create inflation is if it doesn't get spent. The only way for that to happen is to give to people who won't consume any more given their current purchasing power. And that is exactly what happened. If prices are allowed to change and it reaches the people who would increase consumption, which will ultimately drive employment, then you will have inflation. If it reaches the people who would not increase consumption, then you have the employment situation we're in now.
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    Feb 20, 2012 3:58 PM GMT
    Lets take a clear look at this, what we have here is the side wanting and working for Obama's side to fail, raising its head up in glee over the stimulus not reaching its potential. What a devisive tactic, a quite successfull one at that !!!

    Funny thing is though that where the stimulus was more effective happens to be where the side against the stimuli actually took part in its benefits and took credit for it. This way the repubs seeking Obama's Stimulus failure could talk out of both sides of their mouth, effectively having their cake and eating it too.

    Hell of it is that most Americans are seeing right through republican devisive pratices regarding the stimulus and over many other fronts. In short, the stimulus didn't have nearly the good effect it could have had, had Republicans worked with the Administration rather than against it.
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    Feb 20, 2012 4:46 PM GMT
    realifedad said Lets take a clear look at this, what we have here is the side wanting and working for Obama's side to fail, raising its head up in glee over the stimulus not reaching its potential. What a devisive tactic, a quite successfull one at that !!!

    Funny thing is though that where the stimulus was more effective happens to be where the side against the stimuli actually took part in its benefits and took credit for it. This way the repubs seeking Obama's Stimulus failure could talk out of both sides of their mouth, effectively having their cake and eating it too.

    Hell of it is that most Americans are seeing right through republican devisive pratices regarding the stimulus and over many other fronts. In short, the stimulus didn't have nearly the good effect it could have had, had Republicans worked with the Administration rather than against it.


    You would rather there not be accountability - is this Administration not responsible for its failures? Where was the stimulus most effective and at what cost? As the CBO points out the stimulus will ultimately become a net drag to the economy (and that was even after previously estimating a much more positive impact) through higher interest rates. My guess is that the costs are about to become a lot greater than that. Pointing out the facts isn't raising one's head up in glee. There are many reasons American leadership is needed - sadly it's not coming from this Administration and worse, it has been attempting to implement an ideologically extreme agenda which has resulted in the worst recovery since the depression and worse, will burden Americans for decades to come and reduce its ability to cope with future crises.
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    Feb 20, 2012 11:21 PM GMT
  • GQjock

    Posts: 11649

    Feb 21, 2012 12:02 AM GMT
    images?q=tbn:ANd9GcQsc5IuTdCyUTnFUslWCVw
  • maxferguson

    Posts: 321

    Feb 21, 2012 3:26 AM GMT
    JPtheBITCH saidOh, good...another Canadian who doesn't know shit about the USA but feels free to have opinions.

    Why don't the two of you go off somewhere and discuss Turkmenistan? I imagine you know more about that country than you do about mine.


    Well, what I outlined is applicable to any gov't. Not just the U.S. It is applicable to any government that collects tax and elects officials. And, being your largest trading partner (and obviously ours), I think anyone on either side of the 45th is entitled to their opinion. The global supply chain has become so intertwined that it would be false to say that anything that affected the U.S. wouldn't affect Canada. I assure you, everyone has an interest in watching the actions of the holders of the world's reserve currency.

    GDP numbers sound great in the last quarter, but what nobody told you is that 1.9% of the 2.8% annualized GDP growth in 2011 was inventory stockpiling. Canada, being a net exporter has an EXTREME interest in the things we sell to American distributors being sold by them. Otherwise it all sits on the shelf. (http://www.zerohedge.com/news/q4-gdp-misses-estimates-inventory-stockpiling-accounts-19-28-q4-us-economic-growth)


    Conversely, I think you're very much entitled to your opinion about our politics. They Keystone pipeline for instance. I am from Calgary, AB, where TransCanada headquarters are located, as well as most of the firms that would ship oil through it. It all depended on CDN gov't approval. With all the political volatility and social unrest in Iran, the straight of Hormuz will likely close or be too dangerous for Saudi Arabia to ship oil through at the same pace it did before. Not to mention that someone has to supply the new excess European demand no longer being satisfied by Iran. Libya's production capabilities are pooched for about 2 years, and Canada offers a politically stable source of energy. Our gov't approved it. Obama has shelved it for now. Well, demand is rising, and we have the supply. We've already been to China since Obama shelved it to secure energy contracts. My point is that while people obviously reside in different countries and are better informed on domestic issues, matters of trade and government spending greatly affect everyone even if they have no say in it or do not live in that gov't's jurisdiction.