Obama’s people made up the above graph back when they were trying to sell the stimulus plan. Says Geoff, who expounds on this at Innocent Bystanders:
“The unemployment rate was never supposed to go over 8%. But when you compare projections to the actual unemployment results (the triangles in maroon), the actual data doesn’t seem to follow the “With Recovery Plan” curve.In a stunning surprise, the data does follow the curve projected by the GOP and the conservative punditry, who said there would be no near-term benefit from the stimulus package. Now the economists are saying that the unemployment rate won’t start dropping until the middle of 2010. Gee, that’s when it would have started dropping if we had done nothing.”
For a better understanding of why government “stimulus” spending does not actually stimulate economic growth, see the Heritage Foundation. Some brief exerts:
“Government spending fails to stimulate economic growth because every dollar Congress “injects” into the economy must first be taxed or borrowed out of the economy. Thus, government spending “stimulus” merely redistributes existing income, doing nothing to increase productivity or employment, and therefore nothing to create additional income. Even worse, many federal expenditures weaken the private sector by directing resources toward less productive uses and thus impede income growth.”
“Economic growth is driven by individuals and entrepreneurs operating in free markets, not by Washington spending and regulations. The outdated idea that transferring spending power from the private sector to Washington will expand the economy has been thoroughly discredited, yet lawmakers continue to return to this strategy. The U.S. economy has soared highest when the federal government was shrinking, and it has stagnated at times of government expansion. This experience has been paralleled in Europe, where government expansions have been followed by economic decline. A strong private sector provides the nation with strong economic growth and benefits for all Americans.”
“Rather than redistributing money, lawmakers should focus on improving long-term productivity. This means reducing marginal tax rates to encourage working, saving, and investing. It also means promoting free trade, cutting unnecessary red tape, and streamlining wasteful spending that all weaken the private sector’s ability to generate income and create wealth. Finally, it means strengthening education—not just throwing money at it. Addressing long-term growth and productivity is more challenging than waving the magic wand of short-term “stimulus” spending—but a more productive economy will be better prepared to handle future economic downturns.”
Do you remember that even the Congressional Budget Office said that Obama’s stimulus bill would be more harmful to the economy in the long run than if the government were to do nothing?
But the stimulus bill, or The American Recovery and Reinvestment Plan, Porkulus, or Generational Theft Act (whatever you want to call it…it has taken on many names) was never really about economic growth anyway; it was about “not letting a serious crisis go to waste.” And I would say the Obama team has succeeded somewhat in that respect. They have made great haste in taking full advantage of the economic crisis to grow both the federal government and the Democrat Party. I wonder if we could get a graph that shows the effect of the stimulus on that?