Remember the $787 Billion spending stimulus package? The one where the Government decided to use a large cash infusion to spur spending and ultimately turn the economy around, then place us on a path toward fiscal sanity?
Well, after five years of eagerly awaiting its benefits, it seems they may have alluded us. Signed by President Obama in 2009, the Stimulus Package was the largest economic recovery program in history. Adjusted for inflation, the Stimulus was nearly five times more expensive than the Works Progress Administration (WPA). Think that’s expensive? Well, it is, but the Stimulus EVEN dwarfs the cost of the Louisiana Purchase, which by the way, gave us 828,000 square miles and parts of 15 states for a cool $11.5 Million. The stimulus package was even more expensive than the Manhattan Project ($26 Billion for R&D to build the Atomic bomb in 1939), and the Marshall Plan ($158 Billion to rebuild Europe after WWII).
In case you forgot about how the Stimulus was supposed to work, let me refresh your memory. First, the Federal Government flooded the economy with tax cuts, food stamps and unemployment checks, in the hopes of spurring massive consumer spending. Then, a wave of “shovel-ready” (remember that term?) infrastructure projects would kick in, creating new jobs repaving roads and making homes more energy efficient. Then, as the economy got churning again, new investments in wind farms, solar panel factories, electric cars, broadband and high-speed rail were supposed to lead America out of the recession. Our world domination would resume and again we would be the envy of every other country in the world. Sounds great huh? Only problem is, being the inanimate and unpredictable object the ‘market’ is, proved it was impossible to control. The market seldom reacts the way intellectuals want it to. So, as a result the stimulus package turned out to be merely a colossal spending program with little benefit to the overall economy.
Here is food for thought: Instead of Spending $787 Billion on trying to persuade the market, what if all 310 million U.S. citizens got a check for $2538? Would this approach have spurred the economy in a more sustainable way? Surely there would have been less fraud, waste, and abuse. Surely there would have been less failed projects, like the $535 Million dropped on Solyndra, or the $98.5 Million wasted on Navada Geothermal. Poof, its gone!
Let me be fair, there were some positive effects from the stimulus package, a $116 billion tax credit for the middle class, lots of construction and green energy industry jobs. These were both helpful at a time when unemployment was teetering on 10%. But, outside of those who found a job or felt the effect of the tax credit, most would say the intended effect overall, fell woefully short. The Federal Government would have been better off handing out checks, as other presidents had done. Just think, 310 million citizens would have all received a check for $2538, this could have ‘stimulated’ the economy!
$10 Per Week
Instead, the current administration elected to go with the slow, dribbling of paychecks by adding about $10 a week to each. The economic team believed people were more likely to spend it if it felt like an increase in income, rather than a bonus. Huh? Common sense tells you that the majority of folks are not going to spend their entire paycheck, just because it includes $10 more per week?
My personal thoughts
I am a Laissez-faire, small government proponent for reasons such as this. Here we have a situation where $787 billion of borrowed money has evaporated. Let’s be honest, most of us would struggle to find any positive impact of this law, 5 years later. I was not in favor of the Stimulus package at the time, and am certainly not now. I believe we are in this proverbial, financial black hole in this country and sometime there will be a day of reckoning. We need to look at this from a common sense perspective, if your family were in awful debt, would you take out a loan to buy lottery tickets? That is essentially what The Stimulus was, lottery tickets, a game of chance. We’ll risk $787 billion to see if we can ‘prime’ the market, if not well, at least we did something!
What are your thoughts on the effects of the Stimulus Package?
Oh Jim, we are so on the same page with this. Although I certainly wouldn’t refuse the return of some of my money from the black hole the government usually throws it into, I was also opposed to the stimulus baaed on the sheer amount involved. Locally, we had all these signs touting the stimulus’ support of paving streets and changing intersections which indeed gave some road contractors work, but it certainly was not needed in many instances. And I was livid when I saw Obama at a press conference (the one with GE’ Jeff Immelt) where he laughed about the shovel ready jobs not really being shovel ready. That proved to me that it was all a big façade designed to put money in the pockets of his union buddies rather than do anything good for the economy. (And before someone rages at me for being anti union, let me say that my husband was a union chapter president for many years and I was a union member.) But the $700+ million could have been saved with no discernible deterrent to the economy.
Thanks Kathy, Yea, I remember that press conference it’s incredible that he would admit this, but I’m sure the media did its best to minimize its impact.
Oops, I meant $700+ BILLION…..not million.
I’m totally with you on this. That’s why I tend to vote Republican (although sometimes Democrat). I don’t like the idea of big government – almost every period of American prosperity (1950s, 1990s) has been characterized by small government. Like Reagan said, “government isn’t the answer to our problems – government is the problem”. What the federal gov needs to do is get their finances in order first and foremost.
Troy, I couldn’t agree with you more, love the quote from President Reagan its times like these where we miss him!
D-I-T-T-O on every bit of this, Jim. I especially agree with this line: “I believe we are in this proverbial, financial black hole in this country and sometime there will be a day of reckoning.”. This is why, instead of “taking out a loan and buying lottery tickets”, we are working fervently to pay off our debt. May all indebted Americans fervently, eagerly and quickly do the same, before that day of reckoning dawns on us.
Laurie, you are doing the right thing by paying off your debt! Its imperative for us all to get our financial houses in order so if that day of reckoning comes we will be more prepared.