I’m not sure we’re still in “might have” territory any longer. Between the failed stimuli and Obama’s empowerment and expansion of the regulatory state while also doing all he can to favor Big Labor, businesses and families are both squeezed and uncertain about the future. Add in the still weak housing market, which for many Americans is usually their most stable source of net worth and wealth, and you have a bad mix.
The centerpiece of Obama’s plan to “push the car out of the ditch” was the trillion-dollar (including interest expense on the borrowed money) American Recovery and Reinvestment Act. A recent article in The Weekly Standard determined that it may have cost as much as $278,000 for each job created. But that’s generous. Respected Stanford economist John Taylor, perhaps the next chairman of the Federal Reserve, has analyzed the actual results of the ARRA. Not what the White House’s garbage-in, garbage-out models say happened, but what actually happened as gleaned from government statistics. Taylor, simply put, looked at whether consumers actually consumed and whether government actually spent in a way that produced real growth and jobs. His devastating conclusion:
Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers. Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.
Pethokoukis coins a phrase that from all this wreckage that may resonate: Losing the future.
Pethokoukis isn’t the first to come to the conclusion that Obama’s policies made the economic downturn worse, and he’s unlikely to be the last.