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Grim Milestone: The Third Anniversary of Obama's Failed Stimulus

Three years ago today, President Obama signed into law the $825 Billion "stimulus" package passed by Nancy Pelosi and Harry Reid's Democratic Congressional super-majority.  This enormous expenditure of borrowed money was sold and justified as a means to jump-start the American economy and "save or create" four million jobs.  It has failed on its own terms (updated from a previous post):


(1) The president's economic advisors projected that in the stimulus would halt unemployment at eight percent.  In its absence, they warned, unemployment could reach as high as nine percent.  This was a major selling point of the bill.  Two years and hundreds of billions of dollars later, the national unemployment rate remains above eight percent, and isn't even close to where it "should" be (six percent), based on the administration's projections.  If the active labor force were the same size as it was when Obama took office (it has shrunk considerably due to discouraged workers), the national unemployment rate would be 11 percent.  The true "U6" unemployment rate remains above 15 percent.

(2) The president said the stimulus would "lift two million Americans from poverty."  US poverty levels have now reached all-time highs.  In the year after the stimulus passed, 2.6 million Americans fell into poverty.  Overall, 6.3 million more Americans are living in poverty today than when Obama took office.

(3) The president said middle class family incomes would soar by thousands of dollars thanks to his stimulus.  As reported above, the national median income (a good measure of the middle class' collective financial standing) has dipped to its lowest level since 1997.

(4) The president incessantly trumpeted the promise of countless "shovel-ready" projects to sell the public on the stimulus.  Earlier this year, Obama himself joked that such projects didn't really exist.  Hilarious!

(5) The president guaranteed "unprecedented transparency" in the process of doling out stimulus dollars.  Funds were then released to phantom Congressional districts and tax cheats, and were used to subsidize wasteful, redundant, and useless pork projects.  As we now know, this "unprecedented transparency" also entailed rushing approval for reckless multimillion dollar loan guarantees to a politically-connected "green" firm, ignoring internal warning flags, and deliberately concealing evidence of impending failure until it was too late for Congress to intervene.  Unprecedented!

(6) As I've discussed on several occasions, even if you *fully accept* the White House's own "jobs saved and/or created by the stimulus" numbers, the math works out to nearly $300,000 per job.  Early analysis suggests that the president's 2012 jobs plan would likely trigger a reprise of that breathtakingly inefficient undertaking.  Also, an independent on-the-ground study that doesn't rely on flawed government multipliers and formulas to measure the stimulus' true employment impact reveals that OMB and CBO's numbers are way off.  To wit, CBO's latest estimate -- again, based on multipliers, not observations -- shows that the stimulus may have "saved or created" as few as 600,000 jobs.

(7) Roughly 1.5 million fewer Americans have jobs today than when the stimulus passed.

I'd also add that GDP growth (the top indicator of national economic expansion or contraction) was sliced nearly in half year-over-year from 2010 to 2011.  Two years ago, our economy grew at 3.0 percent.  Last year, growth slowed to 1.7 percent.  Shouldn't a "stimulus" stimulate growth? With the Big Fail Anniversary fast approaching, Republicans have been coiled and ready to strike.  As the analysis above demonstrates, there's a lot of material to work with.  Here are the RNC and NRSC's web ads commemorating today's grim milestone:

I'll leave you with two data points: (1) The President and his allies are pretty pleased with last month's 8.3 percent unemployment number, which is still higher than Obama's worst-case scenario projection if we passed his porkulus slush fund.  That number, although still appallingly high, vastly understates the issue of joblessness in America.  The Republican Study Committee put together the following chart, which tracks America's shrinking workforce.  The number of working-age citizens participating in the labor force (either by working, or actively seeking work) has sunk to a near three-decade low of 63.7 percent:

(2) Just in time for today's date, the non-partisan CBO has released a damning report on the state of the US economy and unemployment, dovetailing off of the gruesome projections they posted last month.  The nut of their latest study:

"The rate of unemployment in the United States has exceeded 8 percent since February 2009, making the past three years the longest stretch of high unemployment in this country since the Great Depression. Moreover, the Congressional Budget Office (CBO) projects that the unemployment rate will remain above 8 percent until 2014. The official unemployment rate excludes those individuals who would like to work but have not searched for a job in the past four weeks as well as those who are working part-time but would prefer full-time work; if those people were counted among the unemployed, the unemployment rate in January 2012 would have been about 15 percent. Compounding the problem of high unemployment, the share of unemployed people looking for work for more than six months—referred to as the long-term unemployed—topped 40 percent in December 2009 for the first time since 1948, when such data began to be collected; it has remained above that level ever since.

Obama's response: It could have been worse, and it's not my fault.  Four more years!

UPDATE - More employment trouble ahead?


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