You Call This Recovery?

“We have to do something.”  We are six months into the Presidency of Barack Obama, and we have heard this line from the White House at least a thousand times.  From Stimulus to Omnibus, it’s been the same excuse.  Now we are facing Cap-and-Trade and government-run healthcare.  Before we decide that the best course of action is to just do something about the environment and healthcare, let’s take a look at where that logic has gotten us so far.

The American Recovery and Reinvestment Act of 2009 has become the rallying point of both conservatives and liberals alike.  The left sees it as a progressive program, symbolic of a more empathetic style of government and a step towards recovery.  The right sees it as a monstrous waste of money and proof that big-government programs never produce results.  Since this seems to be a bill that most people view as characteristic of the new administration, I think this is a fair place to begin the discussion.

After the 2008 election, the nation was swept up in a wave of hopeful, change-is-on-the-way, emotion.  The newly elected President had an ambitious agenda.  First on the list, was a massive “recovery” package. People were legitimately frightened about the state of the economy.  We were in a recession (although the degree of economic decline is widely disputed) and unemployment was on the rise.  The mainstream media and democratic strategists all carried the same message.  We must do something.  Most Americans believed that this plan was as good as any and, after all, we owed the new administration a shot at trying out its ideas.  Conservatives argued that this was not the sort of thing you just “tried.”  They believed that this bill was not only doomed from the beginning, but that an investment of this size would have consequences for years to come.  The line was drawn.  Were Americans being asked to take a leap of faith toward recovery, or were they being led to a foolish plunge into bankruptcy? To allay the fears of detractors, President Obama made a few promises, and Congress gave him the go-ahead.  Let’s take a look at a few of the assurances the President gave us.

Unemployment

The concern over rising unemployment played a crucial role in the passage of this bill.  The President played on these fears by claiming to have the only solution and promising dire consequences if his warnings were not taken seriously.

• President Obama claimed that without the stimulus plan unemployment would rise above 8% this year and would hit 9% next year.  He argued that with his plan, it would peak at 8% and then begin to go down.- Unemployment hit 9.5% at the end of June and appears as though it will hit 10% in the very near future.
• The President promised to “save or create” 3.5 million jobs. – He has never explained how to measure jobs that were “saved or created,” but, overall, more than 2 million jobs have been lost since the stimulus was passed.
• In May, President Obama claimed to have saved 150,000 jobs already, a rate of about 1,500 jobs/a day. -A whole 42 days later, the White House released a statement that the numbers were in-and they had saved………….. 150,000 jobs.  Weird, huh?  They later admitted that this number came from the amount of jobs they think would have been lost without the stimulus, not an actual job count.  My question is this: If they believed that unemployment would have only been at 8.5% at this point without the stimulus, hasn’t Barack Obama actually cost us jobs?
• The administration adjusted their previous prediction and now claim they will save 750,000 jobs by August. – Again this number seems to be based on the same “equation,” as those mentioned above.  I would recommend everyone update his or her résumé just in case.

Spending

Opponents of this bill believed it was nothing more than a way for legislators to expand government programs and return political favors with hefty handouts.  The President assured us that this was not the case.

• “We are going to ban all earmarks.”  In fact, after the bill was passed, he said, “we passed the recovery plan free of earmarks.”- In truth, the bill was full of pet projects.  The clever members of Congress simply didn’t name a specific recipient.  For example: $2 billion was tagged to aid in the development of a zero emissions power plant. Friend-of-Dick, Durbin FutureGen, is the only company with a project that meets that criteria.  Sen. Harry Reid has been pushing for a magnetic-levitation train from Las Vegas to Disneyland for sometime.  Amazingly, the bill provides for $8 billion to be divvied up on a “competitive basis” to companies developing high-speed rail projects. How many companies do you think were currently working on such a project? You can find a complete list of “non-earmark” spending here.
• As if this “emergency” spending wasn’t enough, immediately following the passage of this bill the omnibus bill was passed.  Any pet projects that couldn’t be slipped into the Recovery and Reinvestment Act were slipped into the omnibus spending bill, to a tune of 9,000 earmarks.

Deficit

Many warned that this bill would cause the federal deficit to soar.  The President assured us that the stimulus plan would actually reduce the deficit.

• President Obama insisted that, with the help of the stimulus package, we would “restore fiscal responsibility and make tough choices, so that as the economy recovers, the deficit starts to come down.” – The deficit is continuing to rise and shows no sign of “coming down” soon.
• Left-leaning economists told us that temporarily increasing the deficit would lead to increased Gross Domestic Product (GDP), which would lead to increased tax revenues.- The GDP is actually expected to contract by about 2.6% in 2009 (this is the most conservative estimate I could find, many place the contraction as high as 5.4%).
• Obama claimed the recovery act would help to cut the deficit in half by the end of his first term. – The bill was signed into law in February 2009.  The projected deficit numbers, calculated in March, predict that the federal deficit will quadruple by the end of the year.

Immediate Results

Recessions typically last about 20 months.  Conservatives argued that since the economy should have started to rebound shortly, this type of massive spending would actually delay recovery. They suggested that tax-cuts and a decrease in federal spending were, perhaps, the only helpful action the government could take. The President insisted that his plan would be faster and more effective.

• Apparently, just the idea of a stimulus was supposed to jump-start things (this is back when they were still telling us that the biggest problem with the stock market was a “lack of confidence” in the policies of George W. Bush), “But you know psychology is a lot of this.  People sense a new leader with a clear plan, a commitment….that’s going to add confidence.”- (Director of the National Economic Council)
• “You’ll see the effects begin almost immediately.” -  Obama’s economic director Larry Summers
• The Obama-Biden plan will provide (1.) Immediate action to create jobs (2.) Immediate relief for struggling families (3.) Direct immediate assistance for homeowners (4.) A rapid, aggressive response to our financial crisis, using all the tools we have-(from Change.gov)
  
• President Obama said, the stimulus money “will go out the door immediately.”
• White House senior advisor David Axelrod promised this in February, stating, “I think there will be signs of activity very quickly.” “All over the country you’re going to see shovels in the ground.  You’re going to see construction projects underway.  The other thing thing you are going to see are people not being laid off.”
• From Obama’s own Recovery.gov;  The American Recovery and Reinvestment act will “save and create good jobs immediately“
• “I think my initial measure of success is creating or saving 4 million jobs.”-(Barack Obama)
  
• “That is why I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jump-start job creation and long-term growth….at this particular moment, only government can provide the short-term boost necessary to lift us from a recession.”-(Barack Obama)
  

Compare these statements to the ones made more recently;

• President Barack “the money will go out the door immediately” Obama said,”We also knew that it would take some time for the money to get out the door.”
• “This was, from the start, a two year program.”
• Joe Biden, “Remember, we’re only a 140 days into this deal it’s supposed to take 18 months.”
• White House Press Secretary Robert Gibbs said the American Recovery and Reinvestment Act was never intended for economic recovery, “this legislation was designed to cushion  the down-turn.” He claims this administration has always described the bill as a mere leg in a “multi-legged stool.”
• President Obama recently said, the recovery act “wasn’t designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall.”

So, let me get this straight.  Before the stimulus bill was passed, we were facing “the worst financial crisis since the Great Depression.”  Since the recovery act was passed, unemployment has gone up, the GDP has gone down, the deficit continues to grow, and we are to believe the bill “has worked as intended?”A few months ago the President told us that “When it comes to rebuilding our economy, we don’t have a moment to spare.” But now that things are worse we ought to just be patient?

Our President has asked a lot of us lately.   After the inauguration, we were repeatedly asked to “just give him a chance.”  When he began to meddle in the auto industry, he told us to trust him because he had “no interest” in running GM.  Since the passage of the stimulus bill (now known as the “cushion the downturn” bill),  people have started to wonder when we’ll see the “stimulation.” Again we are told to be patient and trust the benevolent White House.   Now the President has his sights set on even bigger legislation.  Cap-and-Trade and universal healthcare promise to be more expensive and less efficient than anything that has come out of this administration so far.  We are once again hearing the cries of “but, we have to do something.”  Why is that “doing something,” always seems to mean giving the federal government more money and power these days?

Most of us had that sinking feeling in our guts when the President first unveiled his Recovery Act, and I’m willing to bet that most Americans are feeling it again.  Let’s not let anyone talk us out of our better instincts this time. We know these are bad policies. We know they are going to cost a whole lot of money, and be far less efficient than free-market solutions.  We know these bills will take power away from the people, and give it to an administration that we trust just a little bit less everyday.  Make no mistake, these two bills will be back time and time again over the next 3-1/2 years.  The American people have already taken one leap of faith for this President, and he hasn’t delivered. Sorry, Mr.President, but that’s how the game is played.  In the words of former President George W. Bush, “Fool me once shame on you. Fool me twice, you fooled me and I can’t get fooled again.”