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Stimulus Spending: What Has It Actually Done For Us?

Blog From
June 23rd, 2010

Apparently, almost $800 billion is not enough to stimulate an economic recovery, at least not one led by Barack Obama. So, he’s back at it, demanding a gazillion more dollars, which, according to him, are necessary to pull off an escape from Great Recession City. For those who doubt the wisdom of layering spending upon spending, the Administration has a new marketing slogan to sell the idea. The “Summer of Recovery”, first heard from the lips of Joe Biden, part of the national touring company for “Unemployment Won’t Rise Above 8%“. Gee, the new pitch sounds so upbeat we can’t help but cheer for a bigger deficit.

Or can we? Before applauding a deeper dive into deficit hell, let’s consider what the Stimulus has done for us. According to the marketing hype, it’ll give us back our robust economy. But, at almost one trillion dollars, what has it actually delivered?

Let’s take a walk down memory lane and visit some of its heavily advertised benefits, starting with Cash For Clunkers. The Clunker promise: to jump-start depressed U.S. auto sales and help clean up air pollution. The reality: only 125,000 additional cars were sold under the Program, with a marginal effect on pollution.

125,000 may sound like a big number, but it averages 24,000 taxpayer dollars per car, making taxpayers the biggest losers. The real winners were foreign automakers. They captured over 61% of the sales while Detroit’s percentage was less than its market share. Cash For Clunkers, at a cost of $3 billion, turned out to be a clunker itself.

Our next stops on the visit list are a couple of homeowner assistance measures, the tax credit and the Home Affordable Mortgage Program. While the tax credit for qualifying home purchases did produce a flurry of sales, experts now say it did not increase demand. It merely pulled summer sales into the spring to take advantage of the credit. Sales for summer are now projected to be very low. Shades of a bad Clunker flashback.

The HAMP program, which restructures both mortgage loans and payments for distressed homeowners, is worse. Experts predict that most HAMP recipients will default on their restructured debt within 12 months. The reason? The average homeowner is still saddled with a debt-to-pretax-income ratio of 64%, a nut too big for most to crack. That kind of outcome makes Fannie and Freddie, soon to be delisted from the Stock Exchanges, look absolutely stellar.

Then there’s the main focus of Stimulus spending, that three-letter word, jobs. Obama has always claimed that the Stimulus will create or save millions of them by the end of this year. So far, we’ve gotten a whole bunch of phony numbers and misspent funds. And, oh yeah, 3.5 million net job losses. Plus, there’s no evidence that the Stimulus has saved or created a single permanent job in the private sector. There has been a big winner, tho’. The Federal Government. By the end of this year it will grow larger than it’s ever been with 2.15 million employees.

The Stimulus isn’t the only thing Obama wants to grow. Under his proposed budgets, the national debt, or sum of the annual deficits, will reach $20.3 trillion by 2020. Our economy will be consumed by this lack of restraint. So, a chorus of experts is calling for spending reductions, starting now, to try to get the debt under control before it’s too late. Taxpayers, who view deficits on a par with terrorism as a national threat, are singing the same tune. But, Obama and Congress, with more big-ticket spending items on their agenda for this year, like energy and education, remain tone deaf.

American Humorist Will Rogers, who died in 1935, once observed, “Be thankful we’re not getting all the government we’re paying for.” Now days, we’re getting more government than we can ever pay for. A lot more. And that’s nothing to be thankful for.

See you on the left-side.


 





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