Feb 18 2010

Government Stimulus A Big Lie

Updates At End

The government cannot generate economic stimulus. Being a leech that lives off the general economy it is always a drag on the economy, not a force to create rapid growth (technology investment creates long term growth potential). Sometimes a needed one to ensure things do not run out of control or people are enslaved by the greed of others. But it is a drag on the economy, taking money from everyone who works to fund its missions – and its mistakes.

When the economy dips or stumbles the proven method used by George W Bush, Ronald Reagan and John F Kennedy was to lower taxes and reduce government spending to give some air to the economy so it can pick back up. This proven approach is evil incarnate to the liberal mind – one wrapped in fairy tales of left wing superiority. It is false to say nothing else could have been done. All the money wasted in the stimulus bill would have had an impact if taxes and spending were cut.

It is only the extremely naive and gullible who think the leech of government can stimulate the economy and create jobs. This week a very naive, young President came out to tout his liberal stimulus bill, to put lipstick on his bloated and lethargic pig. It truly was one of the dumbest political moves I have ever seen.

We all know the ‘stimulus’ bill failed to stimulate anything. That is because the 80% spent to date has all gone to cover state deficits, unemployment, food stamps and medicare. No one should buy the myth bloated state governments had no room to cut bureaucratic waste, salaries and services before the teachers, fire/rescue and police.

To date very, very little has been spent on job producing make-work projects. That is because even the builders of our vast and bloated bureaucracy (i.e., Congress) have never understood how slow and ponderous this federal leech has become. The fact is it takes years to move money from a congressional budget line to an actual spending project which is creating jobs. That is why this liberal mirage was doomed to fail before the ink dried on the bill – the jobs were not going to show up within a year.

We have the government generated data here to prove it. First, here is a reminder of the unemployment picture since January 2008, with a highlight of when the stimulus bill was passed. It illustrates the unaltered trajectory of the U3 (general unemployment) and U6 (all unemployed, underemployed, etc) – click to enlarge.

As anyone can see the trajectory of unemployment did not divert at all. It kept rising and apparently slowed naturally. The liberal lie that unemployment would not surpass 8% was meant to sell the package, since anyone with even modest math skills would know 8% was going to be broken in February or March based on the trajectory of the previous months. That was a lie, the stimulus bill was a lie.

The real damage to the job market can be seen in another federal statistic, and that is the number of poor souls clinging to the Emergency Unemployment Compensation (EUC) life line. These are people who have been out of work so long they have used up all the normal unemployment and extended unemployment benefits and are trying to stay alive on EUC. Unlike the slowly stabilizing curve of U3 and U6, EUC is skyrocketing to never before seen heights.

This is the true measure of lost jobs. Jobs lost so long that the EUC rolls have been expanding by 796,000 in January, 776,000 in December and 604,000 in November. If the stimulus bill was actually creating jobs this would not be the case, people would not be running out of unemployment assistance.

Right now the EUC rolls are a staggering 5,797,875 – which is nearly 3 times the number of people on the EUC rolls when the vaunted stimulus lie was passed a year ago.

As I said, these are all government numbers. And the most damning numbers come from the organizations that were directed to create all those jobs in all those make-work programs. Of what was the original $787 billion (now well over $800 billion due to the higher unemployment than ‘expected’), $300 billion was targeted to make-work programs. I have been monitoring 6 government organizations which represent 1/3rd of the make-work money. And here is what the stimulus bill has achieved in terms of spending on jobs one year after it was rushed through Congress:

The far left column is what each organization was authorized in the bill. Interestingly, the government stopped advertising this number on its website after a few months when it became apparent that the progress would look horrible if the value budgeted stayed up for comparison. You can find these numbers on the very early weekly report spreadsheets.

The next column (center-left) captures how much of the total has been applied to legal programs or projects. The government has to go through a lot of hoops to approve the spending program/project before they can even begin to spend. The next column (center-right) shows how much of the total budget has been actually spent. This usually kicks in once the contracts are let and the work really starts up (some planning, mostly doing). This is the job creating spending – and it is truly pathetic to date. The last column (far-right) is the money left unspent.

Since these budgets range from half a billion to 50 billion dollars the chart is not easy to read. So I have a second chart which shows the last three columns as a percentage of the organizations’ total budget. Here we can see the general progress in terms of percent complete:

So, we have percent of the total budget committed to programs/projects in the left column, percent of total budget spent creating jobs in the middle, and percent of the total budget stuck in the bowels of the federal bureaucracy in the far left column.

As we can see the spending to date on jobs has been meager.  On average only 11.6% of the total budgeted a year ago has been spent ‘creating or saving‘ ‘shovel ready‘ jobs. 88.4% of the $105 billion allocated to these organizations has done nothing! In other words $93 billion failed to make it out of the bowels of the bureaucracy to address unemployment. Is it any wonder the EUC rolls are climbing when all the stimulus money for jobs is stuck in DC?

Which makes you wonder, out of that $1.4 trillion dollars of debt racked up last year where did this money get spent if it was not spent creating or saving jobs?

All the hoopla about the stimulus bill working is nonsense for the easily duped. The government’s own data shows that the stimulus bill did not change the trajectory of unemployment one bit. This is supported by the government’s data showing skyrocketing rolls on the EUC and the fact 88+% of the job creating money is still left unspent – one year later.

This is not an anniversary to celebrate, but a memorial for time wasted and lives financially destroyed by liberal ignorance.

Update: And of course today’s weekly unemployment report showed ‘unexpected’ declines.

Update: A clear example of the bloated bureaucracy in action.

Update: As further proof the liberal stimulus bill based on government spending failed is the fact the Democrats are scampering around trying to pass a new one. If the old one had worked we wouldn’t need a new ‘jobs’ bill.

28 responses so far

28 Responses to “Government Stimulus A Big Lie”

  1. dhunter says:

    Again Pinnochio and his shamsters come out of the woodwork and lie like a bedwetter to the American People!

    I wonder how many ignorant Americans are gonna buy the line that,
    “it was worse than we thought, Bush left such a mess it will take us two terms to clean it up”
    , when in fact their policies of bailing out failing states and municipalities with temporary influxes of cash from over burdened constituents is only prolonging the local day of reckoning and guaranteeing a longer recession and slower recovery!

  2. TGSG says:

    Even soon to be former (D) Senator Bayh has said there have been no jobs made by this damn bill… something has to give.

  3. kathie says:

    All the money shoveled to the states, think California, who did very little to curb their budget, will now have to lay off all those saved jobs, teachers, police, firefighters. So then what happens, there are many states who did nothing to reduce budgets leaving it for another year. Things are only going to get worse, and Obama and his Harvard graduates aren’t going to look so smart.

  4. Aitch748 says:

    I’ve just about had it with the “smartest people in the room.” I seem to remember that the “cowboy idiot” tended to keep things together for the better part of eight years, even if the leftists were screaming hysterically about him since forever, and even if things did start to unravel two months before the end (for whatever reason).

    Yes I miss George W. Bush.

  5. AJ,

    The inflation numbers are what you need to watch for.

    They were up 1.4%

  6. This is from the comments section of the Calculated risk blog


    Separately, the Producer Price Index for January made a 1.4% month-over-month spike, which is sharper than the 0.8% increase that had been expected. It also marks an acceleration from the 0.4% monthly increase that was registered in December. Excluding food and energy, producer prices increased 0.3% month-over-month, which is a more rapid clip than the 0.1% monthly increase that had been expected. The core measure of producer prices for December was flat.

  7. AJStrata says:


    Yea, I saw that. We all knew it was going to hit sooner or later. I was hoping later so the new Congress might have a chance to blunt the next wave of pain by cutting taxes and reducing the size of the federal government.

  8. kathie says:

    Please Mr. “Complainer in Chief”, close your mouth and govern. Where have you been for the last 9 years. Your predecessor inherited the dot com bubble bust, the Enron debacle, 911 when the stock market was at 12,000 and opened a week later at 7,000, believe me panic was in every heart of every American. With every loud boom we ducked for cover, with every truck that roared passed our hearts beat faster. We watched people jump from buildings and an airplane fly head first into the ground. We watched Rummy pull friends from the Pentagon. And most of all we watched our President cry, then gear up to answer the attack on our home land. What did he also inherit, an armed service that had had their budget cut to balance the budget of the 90’s that you brag so much about. So Mr.President in a free country we make mistakes, and messes that we need to clean up, but clean up we do and get on with the business of being free to make mistakes again. That’s life, we live it and love it, so get on with governing and stop complaining……I’m getting sick and tired of it.

  9. dhunter says:

    “Please Mr. “Complainer in Chief”, close your mouth and govern.”

    Kathi ,
    respectfully, the last thing we want from Pinnochio is for him to shut up or govern.

    Every time he Lies, which is all he has, he looses more votes for him and his party.

    Any “Governing” coming from him or his party will be “socialistic” in nature designed to “redistribute the wealth” and/or “fundamentally transform America”!

    He told us this and this is what they are doing!

    Believe them here!

    The best we can hope for is that they keep lying to us, telling us by their actions and policies who they are, and hope that we can hang on until the day we can rid ourselves of the current batch of vermin infecting our Government!

  10. Redteam says:

    He’s saving this giant slush fund to buy votes in November.
    look at this deal where black farmers get 1.4 billion because of discrimation. I’m not sure how plants know what color the farmer is, but seems as if they would grow the same no matter who planted them. So look at huge cash outlays that are directed toward vote buying for dimocrats.

  11. crosspatch says:

    More talk about Congress confiscating our 401k and IRAs. Basically what they are going to do is confiscate our retirement funds and convert them to government securities forcing us to finance the deficit by taking our retirement money to do it.

    But imagine the crash that will cause in the private bond markets if they have to sell all those bonds and convert them to government securities. And what happens if they can’t pay us back?

    I suppose then they will just have to euthanize us and take 50% of our money via the death tax.

    If they grab my 401K I am going to go ballistic.

  12. crosspatch says:

    More on the 401k grab here.

  13. Redteam says:

    President Barack Obama is unveiling $1.5 billion in housing help,

    From his giant, vote buying slush fund….

    you’ll see much more of this..

  14. WWS says:

    Here’s news I find almost impossible to believe: Sebelius is saying that the White House may back 18 Dem Senators and try to push Public Option Health Care through the Senate on a Reconciliation vote?? That’s insanity!


  15. crosspatch says:


    Narcissists don’t believe they are responsible to anyone nor do they believe in consequences for their actions. They probably believe we are “just too stupid to understand” and that after it passes we will “get it” and love them for passing it.

  16. WWS,

    When you see businessmen doing stupid things it is usually for money reasons (perverse tax or legal incentives).

    When you see politicians doing insane things it is for political campaign contributions for their next election.

    There is a very important reason for this.

    There are_ a lot_ of people in our society with a lot of money trying to meet psychic needs that have very little to do with reality.

    The religious with that bent tend to give their cash to their churches and at the extremes to “Holy roller” televangelists, who sometimes get involved in politics like Pat Robertson.

    The secular hard left turns to politics directly with many fewer intermediaries.

    This is what causes Federal legislators (and most state government legislators when you get to brass tacks) to pass laws to satisfy the psychic needs of these non-business special interest groups composed of idiots with far too much money than is good for them, to get said idiots to share with deserving legislators, and those laws require armies of bureaucrats to administer.

    This is why the public sector keeps growing like kudzu and why, in the course of that administration, those bureaucrats harass and impede most everyone else, but particularly those who in government do all the real work (such as teachers cops and firemen) or in private sector business that create the real wealth of society.

    California and a number of blue states like Mass, Ill. NJ are all in an advanced state of this process.

    All of the above is why I hoot at AJ when he talks about the “politics of the center” in the general election making a difference in D.C.

    Bottom line up front:

    The next election is for a Congressman in the House and a US Senator is their _partisan_ primary.

    This is true for all but five months every two years (20.8%) for a Federal House Representative and five months every six years for Senators (6.9%).

    If you as a Federal or State Legislator do not pay attention to the “money election“ between the general election and your next partisan primary, you won’t survive the partisan primary.

    And in the case of the US House, gerrymandering makes the partisan primary _the_only_election_there_is_.

    Even overturning the SCOTUS decisions requiring racial set aside House seats and making gerrymandering unconstitutional won’t fix this problem.

    Gerrymandering is not even most of the problem. See book “The Big Sort: Why the Clustering of Like-Minded American is Tearing Us Apart” by Bill Bishop.

    California is self-sorting is by counties. This is mostly driven by parents selecting homes based on the quality of local public schools, i.e., minimum blacks and Hispanics. The results are very red and blue in terms of politics, and gerrymandering by the politicians is minor force by comparison.

    On a higher level, American states are increasingly sorting the same way as private sector and cheap family housing policy friendly state governments are getting more powerful economies, lots of stable family formation, and new exurbs with new school districts that are not over run with out of control public employee unions.

    Meanwhile blue states like California have 12% of the national population and 30% of the welfare dependents.

    When the Democrats get pounded in 2010 and 2012, the survivors in the national legislature will all be in majority-minority urban districts and in public employee union local politics dominated counties and states.

    They will all be worse than Rep. Barney Frank when they get their shot at power again after Republicans again become too corrupt.

    There are reasons why I keep mentioning a 1930’s Spanish style civil war in America’s future.

  17. WWS says:

    Very good points, Trent. The only reason I don’t see a Spanish style civil war is that I don’t think the left has much staying power in an actual civil conflict. Are they the ones stocking up on ammunition these days? I don’t think so. And being concentrated in large urban areas is catastrophic in any kind of real conflict – lines of supply can be cut and any major city brought to it’s knees within a week or two by even a small outside force.

    However, I do think it likely that we achieve a high enough level of unrest to bring about the rise of another Sulla. Culturally, we’re about at that point in the life of a republic. And he won’t come from the left, he’ll come from the right.

  18. crosspatch says:

    I don’t think anything like the Spanish civil war is in the offing either. We are pretty good here about politicians leaving when they are thrown out of office and I don’t see anyone getting away with canceling elections, either.

    What we need to keep in mind this election cycle is that the stakes are high in state elections, too. This is a redistricting cycle. It is important to kick out the Democrats at all levels of government.

    They have robbed us until there is nothing left to take and now I fear that inflation is just around the corner.

    They are going to cover the losses in the housing market by inflating the entire economy. So yeah, your house will be worth a million dollars but a loaf of bread might cost ten bucks, too.

  19. WWS, Crosspatch,

    The Leftists were the elected government for Spain at the time. They had some of the military on their side and they had foreign intervention.

    It would be no different in the scenario I fear, with air and sea transport to other nations being part of the rules of the game.

    The big difference in a US Civil war is where the US Navy falls.