Just three weeks in to his Presidency, Barack Obama’s era as a post-partisan president is pretty much gone as he attacks Republicans for questioning the wisdom of his “economic recovery” bill. Obama is forgetting that Republicans, being the loyal opposition, have a duty to raise questions and when it comes to the stimulus package, there are plenty, and they are queries that have not been poised by Obama’s minions in the media.
In his first press conference in the White House, President Obama asserted that, “the federal government is the only entity left with the resources to jolt our economy back to life.” It is as if the private sector had no hope of recovering on its own, as is usually the case in a recession. But if government is our savior, then it is capricious – maybe irresponsible – NOT to scrutinize any stimulus bill.
At his most optimistic, President Obama hopes that the economic stimulus plan will create four million jobs. With a labor force of around 100 million, that could reduce unemployment by more than half – an admirable goal.
But let’s analyze this prospect.
At a cost of $800-900 billion, the president is hoping to create three to four million jobs. A simple cost-benefit analysis tool known to elementary school children as “long division” tells us that taxpayers will be spending $200,000 to $300,000 for each job created by Obama’s stimulus plan – plus interest. If it takes 30 years to pay off the debt incurred by the stimulus, we’re looking at somewhere near $500,000 per job created. And that’s a number which should sound wierdly familiar for anyone following political debates about the economy since it’s the cap suggested for corporate honchos interested in government assistance.
Once the stimulus money runs out, when all the bridges are built and solar panels installed, will these jobs still exist? Where will these workers go once the federal government is no longer in the business of bailing out the economy? No one has answered that question yet.
President Obama boasts that there is no “pork” in the stimulus bill because there are no earmarks in the package. Literally, this may be true, but does that make economic sense?
Most of Obama’s stimulus package spending is based on existing federal government formulas. States that get more money in regular federal appropriations cycles, get more money from the stimulus. States that get less, like California, get a smaller piece of the stimulus pie. While using formulas protects the bill’s sponsors from being accused of “earmarking,” it is an inefficient means for fixing the economy.
Despite the president’s assertion that government spending is, by definition, economic stimulus, to really stimulate the economy, shouldn’t these funds be targeted to the parts of the country and sectors of the economy that have been hit the hardest in the current recession? Sounds like an administration that has short-changed us on hope isn’t offering much change either.
The current liquidity crisis in credit markets came as a result of the bursting of the housing bubble, with California leading the pack. But only a fraction of the package goes towards helping out the housing industry. The $15,000 credit offered to new homebuyers does little to help people who are under-water on their current mortgages, and because it is only good on “conforming” loans of less than $150,000, the hardest-hit housing markets will see little benefit from the plan.
President Obama means well with his attempts to help the economy, but he needs to understand that it is possible to support an economic stimulus, but oppose his plan. In all of his bravado over winning in November, President Obama should remember that not everyone who voted for “hope” and “change” were voting for his policy and position papers papers and those principles–hope and change–should still guide him now that the campaign is over.