What does an economic recovery look like?

I have been arguing for months that economic stimulus is doing exactly what it was supposed to do. It stopped a Depression. Yet, for reasons that are unclear, nobody seems to be interested. It is like this recovery was a foregone conclusion. I can tell you that if John McCain were president the unemployment rate would be sitting around 15% as he would have cut taxes and done little or nothing to stimulate the economy.

This is a great article from NYT:

Imagine if, one year ago, Congress had passed a stimulus bill that really worked.

Let’s say this bill had started spending money within a matter of weeks and had rapidly helped the economy. Let’s also imagine it was large enough to have had a huge impact on jobs — employing something like two million people who would otherwise be unemployed right now.

If that had happened, what would the economy look like today?

Well, it would look almost exactly as it does now. Because those nice descriptions of the stimulus that I just gave aren’t hypothetical. They are descriptions of the actual bill.

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

Yet I’m guessing you don’t think of the stimulus bill as a big success. You’ve read columns (by me, for example) complaining that it should have spent money more quickly. Or you’ve heard about the phantom ZIP code scandal: the fact that a government Web site mistakenly reported money being spent in nonexistent ZIP codes.

And many of the criticisms are valid. The program has had its flaws. But the attention they have received is wildly disproportionate to their importance. To hark back to another big government program, it’s almost as if the lasting image of the lunar space program was Apollo 6, an unmanned 1968 mission that had engine problems, and not Apollo 11, the moon landing. (more…)

Keith has more (BTW, I will be back to Foreign Policy Week tomorrow. I’m going to try to discuss Afghanistan and why Obama was right to increase the troop strength.):

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0 Responses

  1. “The Energy folks did tell ABC they’ve so far spent 522-million Recovery Act dollars on the program. So, let’s see, about 9,100 homes divided into that chunk of stimulation change to believe in is — gee! — about $57,362 worth of very expensive weatherstripping for each home fixed up so far.” from http://latimesblogs.latimes.com/washington/2010/02/obama-stimulus-weatherization.html

    Pocket change we can believe in.

    from the same article:
    “the General Accountability Office will declare today that the Energy Department has fallen woefully behind — about 98.5% behind — the 593,000 homes it initially predicted would be weatherized in the Recovery Act’s very first, very chilly year.”

    Someone forgot to buy the shovels for those ‘shovel ready’ jobs.

  2. So, Joe – 

    Are saying that the program is nothing but fraud and waste? Or are you saying that with a $787 billion program there are going to be some problems. 

    I guess to stop reading the article before you got to the end. Here’s the last paragraph —
    (Energy GAO reaction: “The GAO report cites figures from September 2009 — almost five months out of date. Since then, we have resolved Davis-Bacon wage issues in all 50 states, clarified how states should handle historic preservation and worked with states to resolve any remaining barriers. As a result, by the end of 2009, our programs had weatherized about 124,000 homes in total, and we are on track to weatherize more than 250,000 this year. In fact, since September 2009, we have tripled the pace of Recovery Act funded home weatherization. The report also erroneously implies that our goal was to weatherize 593,000 homes in 2009. That is wrong. The goal has been to weatherize that number by March 2012, and we are on track to meet that goal.”)

    So, if you use the corrected figures become up to approximate $4200 per house. Is that acceptable to you?

    I find it fascinating that you jump on every single problem. You have not mentioned any of the benefits and there are hundreds if not thousands. You haven’t mentioned the fact that even you can go online and find out where the money is spent. This never happened in the history of our government. Although the technology was available, Bush never did this. He even talk about or even suggest it. So Obama does not get any credit for transparency. He does not get any credit for avoiding a depression which every single economist agrees would’ve happened. Unemployment rates are 15-20% would’ve been rampant. They clearly would’ve occurred under a McCain presidency.

    If you want to make a legitimate argument, why don’t you argue about jobs? By some estimates there over 20 million Americans who are either out of work or working in a field that they don’t desire. Where is Obama going to come up with 20 million jobs? Such a jobs program has never been done. Our economy is never created that many jobs all at once. Never! So if we hire one or 2 million people, that isn’t really putting a dent in those 20 million. Obama almost each create a whole new industry in order to put that many people to work.

    My two cents.

  3. A 5 billion dollar program divided by 593,000 homes to be weatherized by the end equals $8400 per home.

    That is a lot of weatherstrip, caulk and foam.

    I weatherize my home for the winter on far less each year. Couple hundred bucks. And I live in a 40-50 year old home.

    And then we can have the discussion on whether the Constitution authorizes the federal government to repair peoples homes.

    It doesn’t.

    The country would be far better off if we werent taxed for this 5 billion to begin with.

    You mention people working in a field that they dont like.

    Since when is it the president’s job to be sure everyone is happy with their job?

    Do you believe that individuals can do ANYTHING for themselves?

    You scare me.

    It seems that you want government to oversee every aspect of our lives.

    This is why the country is turning a deaf ear to liberals.

    We don’t want control. We want freedom.

    I don’t care to work on Obama’s plantation, and smile about ‘he gave me a job that I like’.

    I will decide where I want to work, and if I don’t like my job it is up to me to do something about it.

    The president and Congress should concentrate on fulfilling the specific duties assigned to them by the Constitution , and butt out of everything else.

  4. Dear Guest —

    Where did I say that I wanted the government oversee “every aspect of our lives?” Where did I say that? I’m sorry but I don’t have a clue where you’re getting your list of complaints. Did you read somebody else’s blog and then decided to comment on mine?

    Since I can’t seem to figure out where you’re coming from so it is hard for me to address your multiple issues. Let me just say, in general I believe that the government has the power to offset big business.

    Thanks for your comments

  5. Dr. Thompson:

    Before you go into print on the subject of economics, you should read the rest of the Economic material.

    Yes, pumping more coupons into the system results in more baby sitting for a while.  Then guess what?  The people that are supposed to take these coupons for more baby sitting time begin to demand more coupons per baby sitting hours.  Inflation!  More coupons for less baby sitting, More dollars for less goods.  This goes on and eventually the people that are supposed to render service for those coupons/dollars have reduced service given for coupon/dollar to almost nothing.  Look at Greece Italy, Spain, and the Euro. 

    This obviously didn’t solve the problem.  The real problem is deeper seated and not solved by just pouring more coupons/dollsdollars into the system. 

    What is really needed is more economic activity that results in an increased demand for both baby sitting coupons/dollars and baby sitting services/dollars.

    That’s not easy and often raises cross purpose political conflicts, ie. Free trade and keeping jobs with in the country.

    We want the cheap products from free trade and good(?) international relationships that result.  But, end up with the loss of domestic product producing jobs that it causes. 
    Just a very brief discussion on the issue.

  6. I have read a ton on this subject. Sure inflation could happen but inflation happens after the recession is fixed. 

    Since the Fed pumped billions into our economy in 1991/1992 and 2001 what happened to your inflation theory then?

    Thanks for your comments. 

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Errington C. Thompson, MD

Dr. Thompson is a surgeon, scholar, full-time sports fan and part-time political activist. He is active in a number of community projects and initiatives. Through medicine, he strives to improve the physical health of all he treats.


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