Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

June 6, 2009

Wasn’t the “stimulus” bill supposed to keep unemployment down?

by Jason Pye

Could opponents of the stimulus bill actually have been right? Take a look at the numbers of what the Obama Administration said unemployment would look like with and without the “stimulus” compared to what it is today.


Don’t forget that the ridiculous claim by Obama Administration that 150,000 jobs have been created (total job losses since the beginning of the year are more that 2.8 million) by the “stimulus” bill after spending $112 billion. For those of you keeping score at home, that’s $746k per job “created.”

H/T: QandO

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  • http://anarchangel.blogspot.com Chris Byrne

    It’s not lack of money that causes unemployment, it’s uncertainty.

    Flooding a ton of funny money into certain businesses didn’t make them hire; they KNEW it was temporary funny money. They’d never hire based on that. Any demand spike created by it would also not result in an increase in employment.

    In fact it would have the opposite effect. It would INCREASE uncertainty, and when when businesses are uncertain, they don’t hire people, they fire them.

  • http://hathor-sekhmet.blogspot.com VRB

    The recovery funds would have not had time to have any effect. The real word is not as instant as the internet.

  • http://www.thelibertypapers.org/author/tarran/ tarran

    VRB, Obama promised that it would have a noticeable effect by now.

    Actually, it has; we are worse off than we would be if old Hopey McChange hadn’t decided to continue (an expand!) George Bush’s disastrous economic policies.

  • http://pith-n-vinegar.blogspot.com/ Quincy

    VRB, it’s not the effect of the money that’s driving the numbers above. It’s the current administration’s unabashed intent to pick winners and losers in the economy. The handling of the Chrysler and GM bankruptcies (or non-bankruptcies) in such a way that favored the UAW over the secured creditors was a clear signal from the administration that the economy as we knew it was over. Now employers everywhere are in a hunker-down mode, uncertain about what rules they will be operating under in the future.

  • http://hathor-sekhmet.blogspot.com VRB

    Terran and Quincy,

    I don’t see companies acting like the stock market, where there is an immediate response to every quirk in the financial system. If a company is successful in making a product and sales to keep them successful, why would they reduce their workforce based on anything the government would do. If the company lays off or fires their workforce, they are failing or they are trying to increase their bottom line. Why on earth would you stop production if you have a customer or hire people you don’t need?

  • http://pith-n-vinegar.blogspot.com/ Quincy

    VRB –

    If the company lays off or fires their workforce, they are failing or they are trying to increase their bottom line.

    They may also be companies trying to limit expenses or companies shrinking in response to reduced demand. When a company suddenly has to revalue its investments because the Obama administration screwed secured debt holders in the Chrysler deal, they have less money on hand with which to conduct operations and pay employees. That would cause layoffs in response to government action.

    That’s one example of many, and that’s what makes the economic course of the Obama administration so dangerous. Bush, while spending like a drunken sailor with Bill Gates’ credit card, didn’t alter the ground rules of the economy. Obama has, and has made clear that certain parties will be favored in the Obama economy. The damage from this action has yet to be fully realized, and I can’t even guess as to the gamut of reasoning that went into the job cuts above, but I’ll bet much of it leads straight back to the uncertainty sown by Obama and company.

  • tfr

    Gotta love data. Let’s do a grossly oversimplified analysis: If this cycle is similar to the past several, and we extrapolate the current rate of rise, we should see a peak of 14-19% in 2010-2011, and then a slower fall of 5-8 years, getting back to “normal” around 2015-2019. Yikes.

  • http://hathor-sekhmet.blogspot.com VRB

    When a company suddenly has to revalue its investments because the Obama administration screwed secured debt holders in the Chrysler deal, they have less money on hand with which to conduct operations and pay employees. That would cause layoffs in response to government action.

    Huh?

  • Merf

    Uncertainty, VRB. If a company is uncertain about the future, they take fewer risks, they make choices that cause them to grow slower — or not grow at all — in an effort to protect themselves from unpredictable losses caused by unforeseen events.

    It’s why companies — and individuals — have car, health, life, house/apartment insurance — to protect ourselves from unforeseen events.

    If, however, those unforeseen events include the whim of the gov’t, well, how do you protect yourself from that?

  • http://hathor-sekhmet.blogspot.com VRB

    So you would let all of your talent go? Cutting your nose to spite you face? Most companies are not the size of Chrysler.

  • Merf

    Cutting your nose to spite you face? No, just taking the safe route.

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