News Story

Have We Really Been Stimulated?

The Lansing State Journal reported last week that the federal stimulus has been working.

The White House projects the spending act created or saved between 2.5 and 3.6 million jobs.

Experts at some limited government public policy think tanks give their opinions of the White House report.

Brian Riedl: Research Fellow for Federal Budget Policy at the Heritage Foundation

Of course the stimulus is a failure. Since it has been passed we have lost 3 million more jobs. If that is success, what does failure look like?

'Jobs saved' is impossible to measure. We can point out that the White House predicted that even without the stimulus unemployment would peak at 9 percent. And with the stimulus it would top out at 8 percent. We did the stimulus and it hit 10 percent.

The economy was still getting worse when the stimulus was passed. But they also based their policies on outdated economic theories, such as those claiming that you can spend your way out of a recession. Stimulus spending has no history of ending recessions before.

This shouldn't surprise people, yet the White House used the stimulus to ram $800 billion in unrelated spending through Congress.

Michael LaFaive: Director of the Mackinac Center's Morey Fiscal Policy Initiative

Government stimulus programs have a history of failure throughout the 20th century. Where they succeed is in creating the illusion that the political class is actually doing something. That's probably why officials have put up millions in signs along highways reminding taxpayers that they delivered the bacon.

John Berlau: Director of the Center For Investors and Entrepreneurs at the Competitive Enterprise Institute.

They use the phony statistic 'saved' or 'created.' To say saved or created, who knows if this job would have been eliminated if you didn't do this program? It's impossible to know that.

You could go to any job and say, "If it weren't for the stimulus it would have been eliminated.'"

They are trying to make up for [the fact that] not enough jobs were created to justify this. How many jobs did it take out of the private sector with the money it took?

Job growth is still lagging and it is lagging because of the uncertainty of new regulations, the looming tax hikes and the level of spending to pay for things like the stimulus that is bringing on fears of inflation. There is a continuing lag in job growth because of the uncertain and negative prospects the Obama administration's big government plans are creating.

If there is a change in Congress that puts the brakes on big government programs, then there will be more certainty for the private sector and more businesses and jobs will be created.

One hundred  percent of the net new jobs are created by businesses five years old or less. Other businesses may create jobs but they also eliminate jobs. The companies that are creating more jobs than eliminating are the new businesses.

Tad DeHaven: Budget Analyst at the Cato Institute

Obama can go to Michigan and talk about the new battery jobs that will be created with federal money, but that's a classic example of what is seen. What isn't so easily seen are the jobs that won't be created or lost because of the diversion of economic resources from the private sector to the public sector.

The White House economists are touting how many jobs they are saving. It's almost laughable because they are using a model - basically a math equation - to come up with these figures. The equation is designed to give the answer that the government is creating all these jobs. It is meaningless. It is frankly embarrassing as far as I am concerned at this point.

Quite honestly, the intent of the stimulus package was to reward the unions at the state and union level. There are jobs not being created and jobs being lost because those resources are being diverted out of the private sector.

Who do you want directing scarce resources? Do you want entrepreneurs or do we want folks in Congress and the various bureaucracies trying to direct those resources?

The government spends money not on the basis of economics but on the basis of politics. Politicians don't think on the basis of the long term, they think in the terms of an election cycle.

The government doesn't possess a magic wand that can just create economic prosperity.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.