The care with which we are carrying out the provisions of the Recovery Act has led some people to ask whether we are moving too slowly. But the act was intended to provide steady support for our economy over an extended period — not a jolt that would last only a few months.
– Vice President Joe Biden New York Times, July 26, 2009.
The Recovery Act, as we call it, provides a necessary jolt to our economy to implement what we refer as “shovel-ready” projects, meaning projects that were on the books that were needed in the municipalities and the states that would improve the quality of life for our constituents, the competitiveness of our businesses, but were unable to be funded.
– Vice President Joe Biden, Remarks at The Progressive Governance Conference, March 28, 2009.
Jolt or not jolt, President Barack Obama’s $787 billion stimulus plan is proving to be a colossal failure. President Obama promised the American people that if his stimulus passed, unemployment would not rise above 8% and that the U.S. economy would have 138.6 million jobs by 2010. In reality, the Obama stimulus has already witnessed 9.5% unemployment and is 6.4 million jobs short of what was promised by 2010. Heritage fellow J.D. Foster explains where Obama and Biden went wrong:
The Keynesian stimulus theory fails for the simple reason that it is only half a theory. It correctly describes how deficit spending can raise the level of demand in part of the economy, and ignores how government borrowing to finance deficit spending automatically reduces demand elsewhere. Exculpatory allusions to idle saving simply do not wash in a modern economy supported by a modern financial system. Deficit spending does not create real purchasing power and so it cannot increase total demand in the economy. Deficit spending can only shift the pattern of demand toward government-centric preferences.