Obama’s summer of recovery has become our autumn of discontent.
By David H. Landon
President Obama decided to seize the economic initiative last week in a Labor Day speech to one of his main constituent groups: labor unions. His solution to get the anemic U.S. economy out of its doldrums was to announce yet another stimulus plan. Like a dog with his Keynesian bone, President Obama won’t let go of the notion that we can turn this economic downturn around if we can just spend enough money on the problem. The Community Organizer-turned-Economist in Chief is determined to spend our way out of this recession, even if it takes spending the last dollar that China will loan to us. In the latest version, “Son of Stimulus” proposes spending an initial $50 billion dollars on … wait for it … yes … “shovel ready” federal projects to rebuild our roads, railways and runways. Although the administration is uncertain of the final cost of these projects, they want us to believe that the initial $50 billion represents a significant percentage of the final cost.
Where have we seen this before? Oh yes – the iconic cartoonist Charles Schultz’s “Peanuts” cartoon. Just picture the U.S. taxpayer as Charlie Brown, President Obama as Lucy Van Pelt and the stimulus plan as the football. No matter how many times Lucy tricks Charlie by pulling away the football just as he tries to kick it and he lands on his back, Charlie wants to believe the next time Lucy won’t pull the ball away. President Obama wants us to believe that just another $50 billion will turn this economy around. Unfortunately, if Congress passes this latest stimulus plan, the taxpayer will still be flat on his back wondering why the stimulus didn’t work. President Obama will be shaking his head just like Lucy and saying “I can’t believe you trusted me again Charlie Brown, you blockhead!”
You can’t really blame the President for trying. At this critical moment he has nothing positive to point to going into the midterm elections that’s going to help him with a very irritated electorate. Democrats are facing a very hostile election environment. Unemployment remains at around 10 percent nationally. Foreclosures are forcing record numbers of Americans to lose their homes. Poverty in America is now at its highest level since 1965. The only thing the President has to sell is another stimulus project, and this time he assures us it will really work.
Unfortunately for Obama, the public isn’t buying it this time. Recent reports like the one released by the City of Los Angeles show the futility of using government spending to create jobs. The Los Angeles City Controller reported that the city’s use of its share of the federal stimulus fund has been disappointing. The city received $111 million in stimulus under American Recovery and Reinvestment Act (ARRA). In more than a year with those funds the city had created or retained only 55 jobs. And we all remember the embarrassment when the government’s Recovery.gov tracking site listed as a stimulus success story 30 jobs saved or created in Arizona’s 15th congressional district using only $761,420 in federal stimulus spending. There’s only one problem: in a state with only eight congressional districts, there is no 15th congressional district. This was not an isolated slip-up as the number of jobs claimed created or saved by the Obama administration have proven to be wildly inaccurate.
There is a real mistrust of the claims of jobs created or saved by the various stimulus plans. Whatever the correct number, it doesn’t come close to the 3.5 million it was supposed to create. The greater fallacy ignored by the administration is that these “jobs” will create no revenue stream to support them once the funding from the federal government is exhausted. These jobs require taxpayer funding. When the funding ends; so do the jobs. Creating an economic model which depends upon government to create temporarily-funded jobs is not a wise economic policy. Americans are becoming increasingly aware that our government spending is out of control and that more spending will not solve our economic problems.
Banks have record amounts of capital for lending but few loans are being made. Corporations have trillions in capital but no business expansion is taking place. Small businesses that survived the turndown are running with fewer workers, working longer hours and show no inclination of hiring to their workforce. Why are these stakeholders staying on the sidelines? They are all concerned that federal spending and the public debt it is creating is unsustainable. They are waiting for some sign from Washington that spending can be brought under control. They want reassurance that government will not continue to grow and bring new regulations down upon them. They are looking for an indication that we are not following the economic plans of Greece and Portugal.
This was supposed to be the “recovery summer.” Instead, it has become the “autumn of our discontent.” Obama and the Democrats have misread the 2008 election results. They have overreached in their zeal to grow government. Polls would indicate there is going to be a course correction by voters in November.
David H. Landon is the former Chairman of the Montgomery County Republican Party Central Committee. He can be reached at email@example.com