More Government Spin on Fiscal Stimulus

It gets more difficult by the day to figure out exactly where the Obama administration stands on their stimulus plan. Early last week the spin seemed to be that we need to give the stimulus a chance to work, that only a small part of the money had been put to work and blah, blah, blah. Now Peter Orszag says on his blog that they are ahead of schedule in spending the money.

Today on Capitol Hill, OMB Deputy Director Rob Nabors testified in front of the House Government Oversight and Reform Committee about the Recovery Act. A major focus at the hearing was a report issued today by the Government Accountability Office (GAO), the non-partisan, independent government watchdog. GAO found that Recovery Act spending was ahead of schedule and was helping to mitigate the economic downturn.

So the line of the day is that the money is getting out there (translation: we’re efficient and getting the job done) and things would be much worse were it not for our efforts. If you read between the lines, this is an offshoot of the claim to create or “save” jobs. In fact, in his post Orszag stakes out some claims to having “saved” 14,000 New York City teachers’ jobs.

I think this is an attempt to temper all of the second stimulus talk and set the stage for a pretty tepid recovery if one does indeed materialize. The administration knows it can’t get more stimulus, climate and health care legislation through this year. Better to start setting expectations low now for the 2010 economy and hope that the dice don’t come up craps.

Comments

[Dave Wrixon:]

Frankly, it was never more than Bait and Switch!

Jul 12 05:32 PM

[Fighting Yoda:]

Stimulus has failed miserably - the unemployment was targeted to stay below 8% - alredy @9.5%- very certainly going above 10% in a couple of months - the next line in the sand BHO has drawn.

"Stimulus is spending" was the strategy of the administration but they forgot "Not all spending is stimulus". Keynesian stimulus has never worked - did not work for us during the Depression, did not work for Japan in the 90s. Our economists claim they have learnt from past mistakes- we did not spend enough during Depression, and Japan did not start quickly enough. We started fast and had a big stimulus - but alas it failed - and the talk now is for 'son of stimulus' or give it more time to work.

Stimulus does not work because:
- it crowds out investment away from the more productive private sector
- leads to misallocation of capital – Govt. investment is led by socialist and populist considerations - not considerations of profit
- Inefficiency and waste: Govt. jobs are lower paying and temporary and take lot $s per job created.

Jul 13 12:30 AM

[Mark Bern:]

Good comment Yoda,

And let's not forget that when you hire a government employee you commit to paying them for 60 years; 30 years on the job and 30 years of retirement. If we're lucky, we get 10 years worth of work, maybe.

I spent over 20 years employed by the federal government and left early because I just couldn't stand the inefficiencies. It took me far too long to break the golden handcuffs (5 weeks paid vacation, a comfortable $85K salary, sick leave, parking space in DC for $10 per month, and job security). The government is not efficient. We had alternative work week schedules that made it almost impossible to have a weekly staff meeting that could accomodate everyone's schedule. Each employee could choose work one hour longer (in theory) four days each week and then get one day off every other week. Rules prohibited more than 20% of the staff to choose the same day off. The most popular days were Fridays and Mondays, but some folks liked to take a day mid-week to break up the monotony. We were required to have a weekly staff meeting, and managers had to hold separate meetings with those unable to attend the regular meetings. Some managers were forced to schedule as many as 3 staff meetings each week to make sure they covered everything with everyone. And then, of course, whether they do their jobs or just come in and read the paper, no one ever got fired. It was ridiculous!

Jul 13 01:08 AM

[Moon Kil Woong:]

Good, I hope they fail getting a 3rd stimulus out next year too.

Furthermore, they can blab all they want about spending for stimulus this year, the simple fact is the spending doesn't peak until next year anyway and there is already commodities and higher long term bond pressure.

The reason why it is not doing anything to help the economy yet and why it won't do anything next year either is because it was not a stimulus plan in the first place as Yoda pointed out. It was a spending bill. Scary... Scary for the elected officials who were more interested in lining their pockets than solving anything yet again.

You would think they would have learned after 8 years of a failed Bush Jr. pork and spend Presidency. Oh sorry, those were the Republicans (they might have learned before they got thrown out of office but I doubt it). It seems the Democrats can't learn vicariously off their opponents.

Jul 13 03:45 AM

[awake09:]

I have heard over and over again that Republicans lost their grip on the House and Senate due to "overspending." How does that makes sense in light of recent history? If overspending gets you thrown out, then 2010 should be a watershed for R's. But do you think it will? Unlikely. It's not WHAT or how much you spend, but WHO gets it.


On Jul 13 03:45 AM Moon Kil Woong wrote:

> Good, I hope they fail getting a 3rd stimulus out next year too.
>
>
> Furthermore, they can blab all they want about spending for stimulus
> this year, the simple fact is the spending doesn't peak until next
> year anyway and there is already commodities and higher long term
> bond pressure.
>
> The reason why it is not doing anything to help the economy yet and
> why it won't do anything next year either is because it was not
> a stimulus plan in the first place as Yoda pointed out. It was a
> spending bill. Scary... Scary for the elected officials who were
> more interested in lining their pockets than solving anything yet
> again.
>
> You would think they would have learned after 8 years of a failed
> Bush Jr. pork and spend Presidency. Oh sorry, those were the Republicans
> (they might have learned before they got thrown out of office but
> I doubt it). It seems the Democrats can't learn vicariously off their
> opponents.

Jul 13 02:34 PM