“The Recovery Act is doing more, faster and more efficiently and more effectively than most people expected,” Vice President Joe Biden said on Thursday. His glowing assessment overlooks many of the program’s problems, the AP reported.
When President Barack Obama sold his $787 billion stimulus package to the American people, he set one metric for success: jobs. Specifically, President Obama promised the American people he would create 4.1 million jobs by the end of 2010. According to the President’s plan, the stimulus should have lowered the nation’s unemployment rate below 8% by this August. That is the objective standard the President set for himself.
And according to objective data released by the Bureau of Labor Statistics this morning, President Obama’s policies, and his stimulus package, have been complete failures. BLS reports that the number of unemployed persons increased by 466,000 in August raising the nation’s unemployment to 9.7% … the highest it has been in 26 years.
Faced with the failure of their signature economic policy, the Obama administration trotted out Vice President Joe Biden to defend the stimulus yesterday in a speech to the Brookings Institute. Biden claimed that the stimulus bill created or saved between 500,000 and 750,000 jobs. This is demonstrably false. Job creation has fallen since the stimulus became law. When Congress passed the stimulus in February the new hire rate had fallen to 3.2%. The most recent data, from June 2009, shows that after the stimulus passed, job creation fell even further to 2.9%. Employers are creating fewer jobs than they did before the stimulus was passed.
Other data also shows that job creation has fallen sharply. Gallup surveys show that far fewer Americans report that their companies are hiring than a year ago. Last August 37% of Americans reported their companies were hiring. That figure has now fallen to 24%. Lower job creation accounts for roughly two-thirds of the increase in unemployment since the recession began.
Why has private-sector job creation fallen so sharply? The obvious and broad answer is the recession. A more precise answer is that business owners have grown wary about the future of the economy and consequently business investment has fallen sharply since the recession began. As businesses cut investments in new projects they have less need to hire, and job creation falls. As long as business investment remains low and entrepreneurs hold back from starting new enterprises, job creation will remain low–and unemployment, high.
Yesterday Vice President Biden said the stimulus “doesn’t reflect a lack of design; that was the design.” This is exactly why the stimulus has failed to reduce unemployment. Congress spending tens of billions of dollars on highway projects does nothing to encourage any business owners who do not build highways that potential investments will succeed. Spending tens of billions more to bail out state governments does not encourage an entrepreneur to take the risk of starting a small business. Government spending programs do not encourage the risk taking and innovation and investment needed to spur lasting job creation.
Who creates jobs? Employers with profitable businesses, investing and creating wealth. The stimulus bill was a grab bag of traditional liberal priorities that did nothing to encourage private sector employers to invest or create jobs. If anything the stimulus discourages investment and job creation. The enormous increase in federal spending that President Obama has undertaken raise the prospects of vastly higher taxes or rapidly rising inflation.
The federal deficit is expected to approach $2 trillion this year, and to remain well above $1 trillion for many years to come, doubling the national debt in just five years. This situation is not sustainable, but businesses can only guess how the federal government will restore order to its fiscal house, knowing full well that successful businesses make an attractive tax target. In the face of such a threatening environment, it is not surprising that job creation has fallen since President Obama signed the stimulus.
The American people rightly believe that President Barack Obama’s $787 billion stimulus package is a miserable failure. Vice President Joe Biden attempted to convince them other wise today announcing that the Obama administration met or exceeded all ten major projects that they claim defined the Recovery Act in its second 100 days. The New York Times reports:
The random violence of buckshot is a perfect analogy for Obama’s stimulus. The Vice-President insists on using the number of projects and grants fulfilled as metrics for success. Those measures are meaningless since they take no account of whether the projects are cost beneficial or what affect they have on the economy. The government has never had difficulty shooting tax dollars out the door. The question is how whether that money is wisely spent. Money spent on the stimulus projects is not available to be invested elsewhere in the economy.
So what are better metrics to measure the stimulus’ impact? Job creation. Which is most different than the “created or saved” rhetoric Biden again referenced today. The Vice-president claimed the stimulus has already “created or saved” between 500-750,000 jobs. This comes on a day when the Department of Labor announced that the number of people receiving unemployment insurance jumped by 92,000 last week to 6.2 million. Additionally, new Unemployment Insurance claims dropped less than expected, with 570,000 new workers filing for unemployment benefits.
And nobody outside of Obama’s hard core base believes jobs “saved” can be measured. But setting that fact aside, even Biden’s 750,000 number falls well below earlier administration projections for jobs saved and ignores the fact that the unemployment rate is almost 1/5th higher than the Administration claimed it would be if the stimulus passed.
The Vice President went on at length about how the President has a vision for America’s 21st Century economy and how the stimulus programs builds on that vision. He said nothing about the role of private entrepreneurs having a vision of their own. The Obama vision of recovery is one planned in Washington that leaves little room for the individual ingenuity, rule of law, and free enterprise that are the true pillars of our economic growth.
WASHINGTON (AP) — Vice President Joe Biden proclaimed success beyond expectations Thursday for the $787 billion economic stimulus, but his glowing assessment overlooks many of the program’s problems, including delays in releasing money, questionable spending priorities and project picks that are under investigation….