Morning Bell: A Clunker of a Stimulus

Conn Carroll / August 18, 2009

Yesterday was the six month anniversary of President Barack Obama’s $787 billion stimulus package. Since the “American Recovery and Reinvestment Act” became law, the United States economy has shed nearly 2.8 million net jobs. When Obama signed the stimulus the nation’s unemployment rate stood at 7.6%. Today it is 9.4%. Nationwide, a total of fifteen states are now suffering from 10% unemployment. No wonder 57% of Americans recently told Gallup that the stimulus package is either having no impact on the economy or making it worse.

The White House has a different view than the American people. Last week when new data revealed that United States Gross Domestic Product fell by only 1% in the 2nd quarter of this year, President Obama rushed to the Diplomatic Reception Room to announce that, “in the last few months the economy has done measurably better than we had thought … And as many economists will tell you, that part of the progress is directly attributable to the Recovery Act.” Oh really? As stimulus tracker ProPublica points out, only 12% of the $580 billion in new spending of the bill has actually been spent. As New York University Associate Professor of Economics Mario Rizzo asks: “what is the mechanism by which about $70 billion in extra spending reduces the rate of increase in unemployment and reduces the rate of decrease in output in a $14 trillion economy? If my advanced arithmetic is correct this is ½ of 1 percent of the GDP. What kind of Super Multiplier is that?” (more…)