No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

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Let’s Quit Pretending

by @ 5:01 on January 27, 2009. Filed under Economy, Politics - National.

Long before he was officially inaugurated, while he was still known simply as PEBO, President Obama was telling the country all the horrors of the current economic challenges.   Phrases like “never before” and “Great Depression” seemed to be spoken by PEBO in every media opportunity he had.   Of course he wasn’t just there to tell us how bad things were, and how much worse they were yet going to be, he also had the prescription for what ails us: stimulus.

Obama along with Democrats across the nation, have been planning and preparing  a stimulus package since before the election.   While Obama was initially focused on infrastructure that was “shovel ready,” the plan has taken a look of “anything goes”.   Expansion of abortion funding and perpetual expansions of medicaid and education spending are all now included in  the plan and I don’t see a shovel needed for any of those.

As the price tag grows, Obama and others continue to sound the sirens saying that only with this stimulus will we see a signs of a recovery anytime soon.

Um, no.

In a report  by the non partisan Congressional Budget Office (remember, these were the same folks that he Dems used to  think were geniuses  when they published reports about “Bush’s deficit” or spending in Iraq), less than 2/3rdsof the stimulus package will actually impact the economy before 2011.   In fact, if you back out the $208 billion of “tax cuts,” only about 1/2 of the “investment” stimulus will get to the economy in time to help.   As we run downhill with sharp knives towards the embrace of socialism,  don’t you believe the  government has the capability and wisdom to know when to “stimulate?”

Well, there’s always the jobs that the stimulus will be creating right?

Again, um, no.

In a paper  coauthored by President Obama’s  chair of the Council of Economic Advisors, Christina Romer, it was found that government attempts at using stimulus to “correct” recessions are ineffective.   The abstract of the paper “What Ends Recessions,” sums up her findings succinctly:

This paper analyzes the contributions of monetary and fiscal policy to postwar economic recoveries. We find that the Federal Reserve typically responds to downturns with prompt and large reductions in interest rates. Discretionary fiscal policy, in contrast, rarely reacts before the trough in economic activity, and even then the responses are usually small. Simulations using multipliers from both simple regressions and a large macroeconomic model show that the interest rate falls account for nearly all of the above-average growth that occurs early in recoveries. Our estimates also indicate that on several occasions expansionary policies have contributed substantially to above-normal growth outside of recoveries. Finally, the results suggest that the persistence of aggregate output movements is largely the result of the extreme persistence of the contribution of policy changes.   (emphasis mine)

One can only assume that his ignoring of this issue shows that he doesn’t listen to his personally selected advisors anymore than he does a Republican Congress person.

So let’s recap:

  1. The “Stimulus” is not “Shovel Ready”
  2. The number of jobs created is suspect
  3. The “Stimulus” won’t be stimulating enough to put a tremor in Chris Matthews leg
  4. Any stimulus that does come will likely come after a recovery has already started.

So why do the stimulus?   The answer is fairly simple and came from Rahm Emanuel:

"Never let a serious crisis go to waste"

President Obama and his BFFs Nancy and Harry are taking advantage of the economically gullible to increase their control and influence.   I don’t like what they’re doing but that’s a part of winning elections.   That said let’s be honest enough to quit calling this a stimulus and call it what it is:   a piggy bank of pet projects

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