The New York Times had some, what was to me, shocking news today.  The article said that there was now consensus that the Obama stimulus plan was working.  Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago?  This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.

Smoke and Mirrors

Early on in the article we have this gem:

“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”

There is no mechanism that exists to measure a job saved. None.  So how do they do it?  It goes something like this:

“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000.  No can you tell me, if I give this to you, how many jobs would you create or save?”

“Create? Er, none.”

“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save?  You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”

“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”

The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.

That’s about how it’s done.  The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus.  And what would you expect them to say?  Keep the check?

Revenue Starved States

What a concept, “Revenue Starved States.”  The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York?  I believe the correct term is states where spending is out of control.  It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base.  After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it.  So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?

The Multiplier Fallacy

The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:

That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.

Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.

Okay, then how is this for a solution.  Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right?  For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.

Where’s the So Called Consensus

From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”

That’s it?  That’s the consensus?  It seems to me that he is pointing out what was wrong with the package rather than what was right.  He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.”  The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs.  Yes, capitalism.  What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks.  The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government.  So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off?  How does it help the unemployed executive from United Technologies?  It doesn’t.  It’s like a drug fix.  You may feel good for a while, but then it wears off and you need another fix.

The Genius of Government

You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy.  Government has to get out of the way and let the market work.

Government must be drastically cut down to size.  Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants.  Let’s see who can lose the most weight.  Ready? Go.

The Obama Administration probably wishes they didn’t spend $18 million to build a website that is making a mockery of their vaunted stimulus package that if not passed might result in an economic calamity from which we might never recover.  Well, here is a random sampling of six beneficiaries of stimulus money:

• Maine — Fish River Rural Health: $491,222. Jobs created — zero
• New Jersey — Southern Regional High School Board of Education: $119,622. Jobs created — zero
• Michigan — West Branch Rose City Area School District: $879,258. Jobs created — zero
• Georgia — Georgia Crisis Family Center: $16,425.  Jobs created — zero
• Minnesota — Regents of the University of Minnesota: $294,200.  Jobs created — zero
• Texas — Port Aransas Independent School District: $143,241. Jobs created — zero

Enough already, I think you get the picture.  Lest you think my sampling was biased you  can play along.  Go to the website, pick a dot at random and see for yourself.  The media seem to be starting to wake up and do their job.  ABC News reported on data from non-existent Congressional Districts.  The New York Times reported on a $1,000 grant that created 50 jobs and upon further investigation found out the $1,000 went to purchase a lawn mower.  But don’t worry, President Obama put that pit bull Joe Biden in charge of making sure the money was spent carefully.  President Obama: \”Nobody Messes with Joe\”  Joe Biden, call your office.

We are on an express train to financial ruin.  This is not just a financial problem but a national security problem as well.  We won the Cold War, not with weapons, but with our economy.  President Reagan ramped up our military and the teetering Soviet economy could not keep up and communism collapsed.  China is becoming more capitalist every day as we chase the ghost of Karl Marx.  I ask a simple question, “Do you trust this administration to spend your tax dollars wisely?”  Do you believe any administration, Republican, Democrat, Independent, can effectively manage the federal government as it exists today? 

A phrase we often heard in the midst of the financial crisis as justification for bailouts was “too big to fail.”  One response to that was “make them smaller.”  If the federal government is too big to manage and is growing without bound, then we, who are the government of the people, must make the government smaller.  It is a fundamental truth of government that programs once started do not end, they just find other things to do.  Here is a case in point.

When I worked for one of the phone company spin offs after the break up of AT&T, I came across a regulatory agency called the Rural Electrification Administration.  Strange I thought, most of America has electricity, and I am not working for the electric company.  It turns out, that agency was created to help bring electricity to rural America.  Okay, that sounds like a good idea.  However, once its mission was completed, instead of going out of business, it found a new mission: bringing phone service to rural America, and it will go on and on.  One of the key problems is how the mission is defined.  In this example, as long as one farm doesn’t have electricity, the agency will still have a reason to exist.  As long as a log cabin in the woods doesn’t have a phone land line, the agency must soldier on.  As any economist will tell you, the cost of serving each additional rural property, will eventually skyrocket.

If we were to take these functions and drive them down to the state and local level, eventually someone will stand up and say, “We’re done,  it’s not worth the increase in taxes to prolong the life of this agency.”  But ensconced in Washington, it costs more to fight it than let it go on.  But we have reached a tipping point where if we don’t cut the beast down to size, the beast will have us for dinner.  Chinese anyone?

The Trick

You may have heard the Obama Administration touting the number of jobs they have saved or created through the stimulus and other economic policies.  I am reminded of the old comedy routine:

Comic: (Stands alone on the stage snapping his fingers, then whistling while he clasps his hands and wiggles his fingers)

Straight man: (Walks on stage as if to pass the comic, sees him and stops) “What are you doing?”

Comic: “Keeping away the elephants.”

Straight man: “There isn’t an elephant within miles of here.”

Comic: “See, it’s working.”

There isn’t an economist around who knows how to count a job saved.  There appears to be an informal survey among those who receive stimulus money to report how many jobs were saved by them receiving the funds.  Do you think they may be encouraged to tell the government what it wants to hear?  Here is my take on Obama’s performance.

Obama:  “If we don’t approve this stimulus package immediatelywe’ll be in deep tapioca.”

Citizen: “What are you doing?”

Obama: “Saving jobs.”

Citizen: “It’s impossible to measure a job saved.”

Obama: “See, it’s working.”

The Treat(?)

Third quarter economic growth came in at 3.5%.  That’s the good news and Obama is quick to credit the stimulus package that has hardly been spent.  But if you look more closely at the numbers a large portion of the growth comes from:

• A sharp slowdown in inventory reduction.  In other words, businesses don’t have much inventory left.
• “Cash for Clunkers” program which is over and whose stimulative effect will not continue
• The crushing effect of the debt that Obama is blissfully piling on has not been felt yet

Is it a real treat to a double dip to come?

BOO!!!

Joe Biden hit the airwaves on Sunday to try to damp down the growing feeling that Americans have that their president is not Barack Obama, but Bernie Madoff.  Sold a bill of goods that the urgently needed stimulus package of $787 billion would cap unemployment at 8% and prevent it from reaching 9% in the absence of said stimulus, the American people are realizing they were fleeced.  Here’s Joe:

“Vice President Joe Biden said on a Monday conference call with reporters that it was “above [his] pay grade” to explain in detail the methodology the White House uses to estimate the number of jobs created or saved by the economic stimulus legislation, but stressed that there had been no “reasonable” challenges to the estimates.”

Biden used the same coy formulation as his boss used to answer the question concerning abortion and when life begins, i.e., “above my pay grade.”  Well, then let’s wheel in the person in the next pay grade up to explain it to you, Joe.  This is the guy who Obama put in charge of watching how the stimulus money is spent.  So as to really put you at ease, Joe added this gem:

“I’m sorry I’m not an economist,” Biden said as he was describing the methodology. “My background is foreign policy and the constitution.”

Just when you thought it was safe to believe that on the job training for President Obama might be working, his sidekick lets go with that thigh slapper. So who’s watching foreign policy and the constitution?  This president insists that $787 billion of your tax dollars are needed to boost the economy and it is left in the hands of a man who admittedly doesn’t know what he’s doing.

You Have to Spin It to Win It

45% of the American people, according to a Rasmussen poll, believe the remainder of the stimulus package should be cancelled.  Uh-oh, start the spin machine.  So Joe Biden says,

“Vice President Joe Biden said Sunday that “everyone guessed wrong” on the impact of the economic stimulus, but he defended the administration’s spending designed to combat rising joblessness.”

Everyone, Joe?  If I’m not mistaken every Republican Congressman voted against that odious bill and only three Republican senators, including Arlen Specter, who has moved over to your team.  So, Joe, you should modify that to “every Democrat guessed wrong, while the Republicans were spot on.”    And if that’s not bad enough, Rasmussen tells us that 48% of Americans do not believe new stimulus spending will create more jobs.  So membership in your “everyone club” is getting mighty lean.

Rubbing Salt in the Wound

If that’s not bad enough for Joe and his team, consider this: a new Rasmussen poll says that 51% of Americans favor an across-the-board tax cut for ALL Americans to stimulate the economy.  So much for soak the rich and class warfare.  Most Americans know that we are all in this together and we all need to pitch in to get out.  Tax cuts work.  Spending doesn’t.