We have spent $787 billion on a stimulus plan. President Obama ridiculed opponents whom he said wanted to “do nothing.” Now, Republican officials never actually took that position, but some economists and pundits did. Their argument was simple: stimulus plans of this type are rarely timed well enough to do much good, and the added spending will be hard to reverse while the additional debt will slow growth in the long term.
Indeed, the president’s own economic adviser, Christina Romer, previously disputed the utility of just this sort of Keynesian scheme. It is fair to ask what we got for that money and the debt which accompanies it. Was Romer right in her pre-Obama days?
Let’s look at what we were supposed to accomplish with the stimulus. We were going to “create or save” four million jobs, and then 3.5 million, and — most recently — 2.5 million.
In an interview with the New York Times we heard from the president:
President Obama can’t assure that the economy will bounce back this year, but he says he will “get all the pillars in place for recovery this year.”
But that prediction and the job calculations cooked by the president and his economic advisers have already been proven wrong. A Republican insider on Capitol Hill explains that the “forecast for saving or creating jobs is based on the stimulus ensuring that the unemployment rate not exceed 8% between now and 2014.” But we are already passed the 8% mark.
What would have happened without the stimulus? According to the administration’s calculations, we would then hit 9% unemployment. But that is the very figure that many economists now predict we will hit in a matter of months. Some predict we will hit 10%. Four states have already hit that figure.
Here is the administration’s own chart to illustrate how the stimulus plan was supposed to stave off the threat of growing unemployment:
Well, we have already entered the very territory (namely, 8%-plus unemployment), which the stimulus was designed to prevent. In short, we have paid more than a trillion dollars (including interest) and are no better off than where we would have been by the administration’s own calculations without the stimulus plan.
Now, the administration has hedged its bets all along by saying the stimulus will create or save jobs. But what does that mean? Not even Treasury Secretary Tim Geithner can explain. As Byron York reported:
“That’s a loss avoided, or a rise in unemployment avoided, by getting growth back on track,” Geithner answered. But when he was asked just how we will know when a job loss was prevented from happening, Geithner could only say that we’ll know when the president tells us. Geithner’s answer seemed almost sheepish, as if he knew — and he knew the senators knew — that the administration is making it all up as it goes along.
And even if we don’t exactly know what it means to “save a job,” the president sold his stimulus on its ability to keep employment at that 8% rate.
So we return to the fundamental question, which many Americans are asking: What are we getting for all that money? The answer is: a lot of debt.