Fwd: Morning Bell: The Audacity of Failure

09/03/2010 The Audacity of Failure In April, while campaigning in Pennsylvania, Vice President Joe Biden promised the American people: "I'm here to tell you, some time in the next couple of months, we're going to be creating between 250,000 jobs a month and 500,000 jobs a month. ... We caught a lot of bad breaks on the way down. We're going to catch a few good breaks because of good planning on the way up." And for a while it looked like Biden was a genius. In May, the Labor Department reported that nonfarm payroll employment rose by 290,000 the previous month and in June they reported that the U.S. economy added another 431,000 jobs. President Barack Obama's "good planning" was working! But then the next report showed the U.S. economy lost 125,000 jobs in June and then the August report found another 131,000 jobs were lost in July. Today the Labor Department released the September jobs report, showing nonfarm payrolls decreased again by 54,000 and that the nation's unemployment rate rose to 9.6%. By every objective measure, President Barack Obama's economic stimulus package has been a complete failure. When President Obama was selling his stimulus plan to the American people, he promised it would save or create 3.5 million jobs by the end of 2010. At the time, employment stood at about 135.1 million, according to the Labor Department's most commonly used measure. That established an Obama jobs target for December 2010 at 138.6 million. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million. Despite the mounting evidence of failure, the Obama administration is still completely unapologetic. Defending her tenure as chair of the President's Council of Economic Advisers, Christina Romer told journalists at the National Press Club Wednesday: "The current recession has been fundamentally different from other postwar recessions. ... Precisely because such severe financial shocks have been rare, there were no reliable estimates of the likely impact. To this day, economists don't fully understand why firms cut production as much as they did, and why they cut labor so much more than they normally would, given the decline in output." But after first admitting that the experts don't understand the current crisis, she then confidently asserts: It is clear that the Recovery Act has played a large role in the turnaround in GDP and employment. In a report that Jared Bernstein and I issued during the transition, we estimated that by the end of 2010, a stimulus package like the Recovery Act would raise real GDP by about 3½ percent and employment by about 3½ million jobs, relative to what otherwise would have occurred.... The nonpartisan Congressional Budget Office, CEA's own estimates, and estimates from a range of respected private sector analysts suggest that the Act has already raised employment by approximately two to three million jobs relative to what it otherwise would have been. Got that? Romer first admits that her magic Keynesian formulas were completely useless in predicting how bad the recession would be, and then she turns right around and uses those exact same formulas to justify the success of the stimulus. If that bootstrapping weren't audacious enough, Romer then went on to claim that "the United States still faces a substantial shortfall of aggregate demand" and that "structural changes in the composition of our output or a mismatch between worker skills and jobs" having nothing to do with continued high unemployment. So instead of changing course, Romer wants us to double down with a second round of economic stimulus. How much more stimulus does the Obama administration want to spend? Romer wouldn't say, and the White House is desperate to avoid calling any new action "stimulus," but The Atlantic's Megan McArdle has crunched the numbers and come up with a ballpark size of how big the original economic stimulus package would have to have been if we take the left's Keynesian economics as gospel: "Full employment is perhaps 4.5-5%. If we assume that stimulus benefits increase linearly, that means we would have needed a stimulus of, on the low end, $2.5 trillion. On the high end, it would have been in the $4-5 trillion range." Even the Obama administration doesn't want to add another $5 trillion to our $13.5 trillion national debt. That is why the Obama administration is pushing a $921 billion tax hike set to take effect on January 1, 2011. There is only one word for proposing $981 billion in taxes to pay for trillions in failed stimulus spending in the midst of 9.6% unemployment: audacity. Print | Comments | Forward RECENT ENTRIES Second Gulf Explosion Doesn't Take Away Need for Drilling Guest Blogger: Rep. Peter Roskam (R-IL) on Obamacare Drop in Illegal Immigration Proves Amnesty Is the Wrong Approach Social Security: Waving the Bloody Shirt Will Delay Needed Reform The Repeal Windfall QUICK HITS Thanks to even more expensive coverage mandated by Obamacare, companies are increasingly passing on higher health care premium costs to workers. Thanks to a proposed oil drilling ban, BP says it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico. Thanks to a weak job market, far fewer 18 to 29 year olds now identify themselves as Democrats, compared with 2008. According to a new poll from Arizona, 64% of Arizona voters still support the state's new immigration enforcement law. The Obama Justice Department is now suing Maricopa County Sheriff Joe Arpaio for not cooperating with AG Eric Holder's civil rights probe. Share Today's Morning Bell Facebook Myspace Digg Linkdin Twitter   Know anyone who shares your conservative values and principles and may want to receive the Heritage Foundation newsletters?  Please refer them to Heritage today! Connect with Heritage Facebook Twitter YouTube Kindle Flickr Support our work by becoming a member with your gift of $25 or more. 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