It's Way Too Early To Decide Stimulus Bill's Success/failure

July 10, 2009|By Jay Hancock | Jay Hancock,

President Barack Obama's stimulus bill was passed fewer than five months ago. Only a small fraction of the money has been spent, but Republicans already know it's a failure.

"The trillion-dollar stimulus passed in February has not produced the jobs that were promised," Florida Rep. Vern Buchanan said in a news release.

"I am convinced that it won't work," California Rep. Darrell Issa said on Capitol Hill.

"A second stimulus is an even worse idea than the first stimulus, which has been demonstrably proven to have failed," Senate Minority Leader Mitch McConnell told reporters.

Republicans, of all people, are supposed to know instant gratification isn't always possible. Be patient, guys. Save yourselves for marriage.

More puzzling are similar sounds from Democrats, who in talking about a second stimulus package seem as if they're writing off the one they already passed like a Citigroup subprime mortgage.

"We need to be open to whether or not we need additional action," House Majority Leader Steny Hoyer said on Capitol Hill.

The country "should be planning on a contingency basis for a second round of stimulus," Obama economic adviser Laura Tyson told a conference in Singapore.

Don't pay much attention. Republicans just want to rile the base by damning helpful measures passed by their opponents.

Democrats are setting up excuses for next year's elections, when no matter what happens, the economy won't be making us all rich. It's not our fault, they'll say. The Republicans blocked a new stimulus.

But give the old stimulus a chance.

People keep grumping to me about Obama's "socialism" and then, in practically the same sentence, criticizing the paltry extra in their paycheck that the stimulus made possible.

"Thirty dollars a month. What a joke," they'll say, conjuring the old story of the Catskills resort customer who complains about the terrible food as well as the small portions.

Presumably for, say, $500 a month, socialism would be OK.

Nothing government does to the economy happens immediately.

When the Federal Reserve cuts or raises interest rates, it takes about 18 months to make a difference, economists estimate. Tax cuts or tax increases aren't fully felt for years.

The Obama stimulus isn't even out the door.

Only about $100 billion of the $787 billion package has been spent. As pointed out in yesterday's Wall Street Journal by Edward Lazear, who was head of the Council of Economic Advisers under President George W. Bush, much of that money was transferred to state agencies, which are still sitting on it.

But it will all get spent, much of it this year. It'll finance highway construction and fixing water systems and improving homes for soldiers. It'll weatherize government buildings, saving taxpayers on energy costs. It'll improve telecom connections, flood control, the electricity grid and the computers at the Social Security Administration in Woodlawn.

All this will create jobs. Most of the package is direct spending, approved on the not unreasonable notion that it will prompt hiring and buying whereas a tax cut of equal size would likely have been stashed in the bank. But Republicans conveniently forget that the deal includes $288 billion in individual and corporate tax cuts.

The fiscal stimulus is only part of the government's response. Other injections haven't been fully deployed, either. The Federal Reserve's and Treasury Department's Public-Private Investment Program, which has the potential to take billions in dubious mortgage assets off Wall Street books, hasn't spent a dime yet. The government isn't anywhere near done issuing credit to grease consumer lending or helping marginally troubled homeowners stay in their houses.

Did the Democrats tell a whopper about how bad the economy might get or how much the stimulus would help? Yes. It's very reminiscent of the fabulous job growth that Bush said would result from his 2003 tax cuts. Didn't happen.

Last week's miserable employment report was the main cause of the stimulus failure talk. The nation shed 467,000 jobs in June, according to preliminary estimates, far more than economists predicted. Unemployment rose to 9.5 percent.

Even so, job losses were worse in every other month this year but one. New claims for unemployment benefits peaked months ago. Factory orders for May rose the third time in four months. Consumer confidence has been rising.

The worst economy in 80 years won't heal in a few months. Republicans need to stop complaining about the medicine when most of it hasn't even been swallowed.

And Democrats ought to stop mixing up another dose. (Senate Majority Leader Harry Reid gets it: "There's no showing to me that a second stimulus is needed," he said, according to USA Today.) They've got enough work to do dispensing the one they already prescribed.

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