Numbers don’t lie.
Three years later, it’s time to declare President Barack Obama’s $800 billion stimulus a failure. The stimulus may have the distinction of being the most money wasted by a piece of legislation in history. The question now is: How did this administration get it so wrong, and what have they learned from their mistakes?
First, the undeniable evidence of failure.
Former Obama advisers Christina Romer and Jared Bernstein sold the stimulus to the public with a claim that it ensured unemployment would never top 8 percent and, by now, would be about 6 percent. It’s now at 8.3 percent.
Newly released confidential memos from Larry Summers, the president’s former top economic adviser, shed more light on what Team Obama was thinking when it embarked on its bold gamble.
A chart in the Summers memo predicts that by the fourth quarter of 2011, without the stimulus plan, the number of working Americans would return to the near pre-recession level of nearly 138 million. In the real world, employment still has yet to crest 132.5 million — even with the stimulus.
In other words, the administration missed its mark by more than 5 million jobs. Stimulus proponents resorted to citing the immeasurable metric of jobs “created or saved,” in an obvious attempt to hide behind false facts. In reality, this make-believe metric ignored Summers’s very specific promises for payroll employment that went woefully unmet.
Summers presciently notes in the memo, “[T]here is a tension between the need to spend the money quickly and the desire to spend the money wisely.”
White House policymakers should have paid more attention here. It’s a good foretelling of what happened at agencies like the Energy Department, where billions of dollars have been put in jeopardy on Solyndra-like gambles that, for the sake of expediency, were not properly vetted. The DOE inspector general describes the department’s mandate to spend funds quickly as akin to “attaching a garden hose to a fire hydrant.”
In response to these shortcomings, the president and his allies offer only excuses.
Administration officials claim they simply misread the fundamentals of the economy. The president just this week confessed, “[A] lot of us didn’t understand at that point how bad it was going to get.”
But then why drive us deep into debt under the pretext that you could devise a spending package that would cure our economic woes? This is akin to a kicker missing a field goal and then saying he misread how far away the uprights were.
How was this allowed to happen? Because the Obama administration’s understanding of job creation is fundamentally flawed and wrapped in an ideology that ignores the state of our nation and economy.
The Stanford economist John Taylor explained the president’s advisers’ thinking in testimony before our committee. “It’s their models of the economy,” Taylor said last fall, “… they simulate them and … say, ‘oh, this is going to work.’ And then they do it after the case, they simulate the same model and say it did work.”
The problem is that the economy is more complex than this brand of test-tube-based economics can plan for. On this point, as Sir Isaac Newton said after he lost money in the South Sea Bubble of 1720, “I can calculate the movement of the stars, but not the madness of men.”
Most troubling is that instead of moving on to real, workable solutions for the 13 million Americans now out of work, the president’s latest budget proposal doubles down on the defunct notion that more government spending is our ticket to prosperity.
The Obama budget shows government spending rising to $3.8 trillion, or 24.3 percent of gross domestic product, through 2012, up from $3.6 trillion, or 24.1 percent of GDP, in 2011. For a comparison, during the most prosperous time in U.S. history, from the end of World War II through the start of the 2008 recession, the federal government averaged less than 20 percent of GDP.
Moreover, in the president’s 2010 budget, he projected a 2012 deficit of $581 billion. However, in his latest budget proposal, released last week, that figure has more than doubled — to $1.33 trillion.
Jack Lew, the president’s new chief of staff and former director of the Office of Management and Budget, said this week, “The time for austerity is not today.”
The problem with Team Obama is that the time for austerity is always tomorrow. It’s high time we cut our losses, shrink the government and get back to tried-and-true pro-growth policies.
Three years of failed stimulus policies is more than enough.
Rep. Darrell Issa (R-Calif.), serves as chairman of the House Oversight and Government Reform Committee. Rep. Jim Jordan (R-Ohio) is chairman of the Republican Study Committee and chairman of the Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending.