Media still ignoring economists to declare stimulus has failed
SUMMARY: Media figures have continued to advance the claim that the American Recovery and Reinvestment Act has failed. In fact, many economists believe that it is too early for the stimulus package to have fully taken effect.
Over the past week, media figures have continued to advance the claim that the American Recovery and Reinvestment Act of 2009 has failed. In fact, many economists believe that it is too early for the stimulus package to have fully taken effect.
As Media Matters for America noted, several progressive economists, including Nobel laureate Paul Krugman, believe that the current state of the economy indicates not that the stimulus package has failed, but that additional stimulus spending may be necessary. Notably, Krugman said of the American Recovery and Reinvestment Act on July 5: "[I]t was never expected to do very much this soon. The problem, instead, is that the hole the stimulus needs to fill is much bigger than predicted. That -- coupled with the fact that yes, stimulus takes time to work -- is the reason for a second round, ASAP."
Mark Zandi, chief economist at Moody's Economy.com, has reportedly stated that while it is "premature" to consider "another dose of fiscal stimulus," the recovery act "has not had a sufficient opportunity to work." In a July 11 article, The Washington Post reported that, according to Zandi:
It is premature to conclude one way or another if the economy needs another dose of fiscal stimulus. The current stimulus has not had a sufficient opportunity to work, and while it has already provided some benefit to the economy -- the downturn would be even worse without it -- its benefit won't be fully felt until later this year. A reasonable judgment regarding the need for more stimulus should wait until year's end.
Additionally, on July 10, The Wall Street Journal reported on its most recent survey of 51 economists on the state of the economy, finding that while only eight of the economists supported an additional stimulus, "[w]hen asked how much the stimulus has helped the economy, 53% of respondents said it has provided somewhat of a boost but that the larger effect is still to come."
Media figures and outlets who have ignored the opinions of economists in order to assert or repeat the claim that the stimulus is failing include:
- In his column for the July 20 edition of The Weekly Standard, Bill Kristol wrote that "only six months into the new administration, even a talented hot air blower like President Obama, assisted by friendly gusts of wind from the media, is having trouble keeping the liberal blimp afloat. The stimulus hasn't worked. Cap-and-trade and health care reform are in trouble. The can't-we-all-get-along foreign policy isn't leading to a more peaceful world. And the administration seems to have no idea what to do about Guantánamo."
- On the July 11 edition of Fox News' Fox News Watch, host Jon Scott stated, "Critics claim the White House effort to fix our economy is failing. Is the press failing to push for answers?"
Later during the program, Scott asked: "[T]here's also talk, Kirsten, about this second stimulus, which does get a certain amount of stuff -- of coverage. But, I mean, if the first one hasn't even been spent yet, how do you propose a second one? And how is the media supposed to decide whether it's, you know, needed or not?" Democratic strategist and Fox News analyst Kirsten Powers responded, in part, "[P]robably the biggest problem with the one before was that it wasn't really a stimulus package."
- In his July 9 Washington Times column, chief political correspondent Donald Lambro wrote:
The Obama administration's latest lame excuse for its failed stimulus spending plan is that it underestimated the severity of the recession.
"We misread how bad the economy was," Vice President Joseph R. Biden Jr. said Sunday on ABC's "This Week."
The White House has been coming up with a lot of half-baked reasons why the president's massive $800 billion plan has not made a dent in the mushrooming unemployment rate, but this was a beaut.
- In a July 9 post to MSNBC.com's First Read blog, NBC's Domenico Montanaro wrote: "The Republican National Committee declares the stimulus a 'failure' and takes a shot at President Obama in a Web video, as it tries to capitalize on criticism that the stimulus hasn't done enough to stem the economic downfall. The video declares the stimulus has 'failed' and loops in a clip from an interview with Obama from Russia, in which Obama says there's nothing he would have done differently." Montanaro also posted video of the ad.
- On the July 8 edition of his Fox News show, Sean Hannity stated:
HANNITY: We are now 141 days removed from the signing of the president's stimulus package, and in that time more than 2 million more Americans have actually lost their jobs.
Now, in recent weeks, the administration has now been forced to acknowledge that its $787 billion spending spree is not producing the results that they promised you. Now, we've heard the vice president say that the White House, quote, "misread the economy," and that, quote, "everybody guessed wrong."
And a report issued this morning by the Government Accountability Office proves that the stimulus has, in fact, failed. And that is our headline tonight: "Stimulus Disaster." Now, a hearing on Capitol Hill earlier today highlighted the fact that the money intended to get this economy back on track is instead being used to cushion state budgets and to fund short-term projects that are not creating jobs.
And President Obama is now forced to rewrite history. He once said the stimulus would create 3 to 4 million new jobs. But as this GOP video shows, he is changing his story. You're going to love this.
From Kristol's July 20 Weekly Standard column:
With the Democratic congressional victories in November 2006, the nightmare seemed to be ending. And in November 2008, with the election of Barack Obama and increased congressional majorities, it seemed to be over. A new era had dawned.
But did it? Maybe we're now experiencing a liberal interlude, not a liberal inflection point. After all, only six months into the new administration, even a talented hot air blower like President Obama, assisted by friendly gusts of wind from the media, is having trouble keeping the liberal blimp afloat.
The stimulus hasn't worked. Cap-and-trade and health care reform are in trouble. The can't-we-all-get-along foreign policy isn't leading to a more peaceful world. And the administration seems to have no idea what to do about Guantánamo.
From the July 13 AP article:
The upbeat economic report served as a supporter for President Barack Obama's $787 billion economic stimulus plan. Critics have said it has failed to provide the results promised; its supporters, including the president, urged patience.
The White House, seeking to calm domestic frustration, has insisted its plan would eventually boost millions of jobs. The CEA report stood by a prediction that the stimulus spending would save or create 3.5 million jobs by the end of 2010.
However, the job market continues to contract and more Americans are filing for unemployment. The economic recession has cost the United States 6.5 million jobs since December 2007 and has left states and cities in financial freefall.
From the July 11 edition of Fox News' Fox News Watch:
SCOTT: A reporter comes clean, admitting the press sided with Biden in '08.
Critics claim the White House effort to fix our economy is failing. Is the press failing to push for answers?
The world says goodbye to the "King of Pop." Can the media say goodbye, too?
And a Supreme Court nominee prepares for her hearings. Is the press prepared?
On the panel this week: Jane Hall of the American University; Andrea Tantaros, conservative columnist and FoxNews.com contributor; Jim Pinkerton, fellow, New America Foundation and Fox Forum contributor; and columnist and Fox News analyst Kirsten Powers.
I'm Jon Scott. Fox News Watch is on right now.
[...]
PINKERTON: When Warren Buffett, a strong Obama supporter, says that unemployment isn't going to 10, it's going to 11, and compares the stimulus package -- the air ball of the stimulus package -- to either candy or Viagra, neither of which are very nutrifying, then you know the media, too, fell for it. Because, remember, we were told what a rush we were in, in February -- had to do this right now because it's instantaneous how this has to happen.
SCOTT: Well, and, you know, hardly any of the stimulus funds have been spent. And you don't see that out there --
HALL: Well, there's a lot that's --
SCOTT: -- in the mainstream media.
HALL: I mean, to be fair, all this week, there were a lot of articles -- in The New York Times, in The Washington Post -- questioning, where is the money gone, how can he do health care, isn't he doing too much? These were news articles.
There's also a case to be made by the Paul Krugmans of the world -- the liberal economists -- that he didn't do enough, and now he can't come back and ask for more.
I think it's -- I think the media are following, in a way, the public's unease with how much money is being spent. I think we're not hearing a very good debate about -- about this. We're hearing the Republicans and conservatives saying, "It's over. He's done. And guess what? We're going to win back Congress." And other people saying, "I can't understand this," which is what a lot of people think.
SCOTT: Well, and there's also talk, Kirsten, about this second stimulus, which does get a certain amount of stuff -- of coverage. But, I mean, if the first one hasn't even been spent yet, how do you propose a second one? And how is the media supposed to decide whether it's, you know, needed or not?
POWERS: Well, we've talked about this before. I don't think that the media is capable of deciding those type of things. I don't think they understand what's going on. And it's very easy for them to sort of be told by, you know, whether it's Larry Summers, whoever sits down, that this is what has to happen, and they kind of transcribe it and they believe that.
I think that we don't know if there will be another stimulus package. I think that probably the biggest problem with the one before was that it wasn't really a stimulus package. And, you know, and I think that actually was covered to a certain extent. I mean, that it was sort of larded up with a lot of stuff from Congress, and it wasn't the type of -- it wasn't a pure stimulus --
SCOTT: You're not calling it the porkulus bill, are you?
POWERS: I'm not doing that. But it was not a pure stimulus package.
From Lambro's July 9 Washington Times column:
The Obama administration's latest lame excuse for its failed stimulus spending plan is that it underestimated the severity of the recession.
"We misread how bad the economy was," Vice President Joseph R. Biden Jr. said Sunday on ABC's "This Week."
The White House has been coming up with a lot of half-baked reasons why the president's massive $800 billion plan has not made a dent in the mushrooming unemployment rate, but this was a beaut.
Misread? Throughout his presidential campaign, and the early months of his presidency, President Obama repeatedly compared the recession to the Great Depression when one-third of the work force was unemployed.
Even his own economic advisers have since said such a comparison to a decade-long depression is preposterous. But Mr. Obama kept comparing the current difficulty to the worst economic catastrophe in modern American history -- if anything, exaggerating the recession, not underestimating it.
Mr. Biden, speaking for the administration, said it was unfair to say the stimulus has failed, because "no one anticipated, no one expected that recovery package would in fact be in a position at this point of having distributed the bulk of the money."
But not too long ago, the White House was predicting that the stimulus plan would soon be creating or preserving (which no one can verify with any accuracy) hundreds of thousands of jobs.
Then, when polls began showing increased public doubts that the plan was working, the administration said it would begin "ramping up" the snail's-pace stimulus spending over the next 100 days.
Now Mr. Biden says the plan is going to take more time than they anticipated because so many of the contracts for construction and other public works projects have only recently been completed or were in fact still in the pipeline.
From a July 9 post to MSNBC.com's First Read blog:
The Republican National Committee declares the stimulus a "failure" and takes a shot at President Obama in a Web video, as it tries to capitalize on criticism that the stimulus hasn't done enough to stem the economic downfall.
The video declares the stimulus has "failed" and loops in a clip from an interview with Obama from Russia, in which Obama says there's nothing he would have done differently.
The video's title? "Nothing."
From the July 8 edition of Fox News' Hannity:
HANNITY: We are now 141 days removed from the signing of the president's stimulus package, and in that time more than 2 million more Americans have actually lost their jobs.
Now, in recent weeks, the administration has now been forced to acknowledge that its $787 billion spending spree is not producing the results that they promised you. Now, we've heard the vice president say that the White House, quote, "misread the economy," and that, quote, "everybody guessed wrong."
And a report issued this morning by the Government Accountability Office proves that the stimulus has, in fact, failed. And that is our headline tonight: "Stimulus Disaster." Now, a hearing on Capitol Hill earlier today highlighted the fact that the money intended to get this economy back on track is instead being used to cushion state budgets and to fund short-term projects that are not creating jobs.
And President Obama is now forced to rewrite history. He once said the stimulus would create 3 to 4 million new jobs. But as this GOP video shows, he is changing his story. You're going to love this.
Heck, to even call this spending plan a "stimulus" is laughable but liberals lap it up and look like fools doing so. Less than 25% of the stimulus money was scheduled to be spent in fiscal 2009. Of that I wonder how much actually "trickled down" to programs that created jobs?
Well that beckons someone to really want to discuss this subject or any subject with you. Nice chumming you threw out but No Thanks.
But then you use the word 'laughable'..with that, I agree with you. You missed or did not read the writing above. Yes, before the box where you write appears, there are words with meaning above. Then you post your words about that....following your modus operandi, is ask the following, Where are the WMDs'?
http://www.realclearpolitics.com/articles/2009/07/10/the_stimulus__the_anatomy_of_a_failure_97387.html
The problem is that the Obama administration was much too optimistic about how quickly stimulus spending would affect the economy. Christina Romer, chair of the Council of Economic Advisers, and Jared Bernstein, chief economist to vice president Joe Biden, forecast in January that the stimulus would reduce unemployment almost immediately.
http://www.fundmasteryblog.com/2009/07/06/krugman-vs-bartlett-a-tale-of-two-charts/
It doesn't look good.
And that is not meant to be a rip on the current administration it just is what it is. I really don't believe there's much that can be done besides letting the economy cycle back around.
The point is to increase demand for good and services. When the private sector lays off people they decrease demand and this leads to more people laid off. The onle way to stop the cycle is for someone to create jobs. The private sector is not up to the t
Look, tax cuts will not work. It has been proven time and time again and yet you and your conservative brethren continue to follow this same failed policy even in the face of incontrovertable evidence to the contrary. In other words, you are insane. We are already among the lowest taxed first world economies.
Business are not buying even if they have money. That's the entire problem with the current recession. We could give every small business an extra million dollars right now and they wouldn't spend a dime. They are paying off debt and/or saving the money. Investment is at a near standstill. Taxes are not, nor have they ever been the problem in the current economy. Give it up, man. This talking point is DEAD.
You might be right.
Do you disagree with me that the more a business pays the government the less the business has available to buy, expand, hire, or invest?
If so, will you please show me?
Here is some Laffer Curve analysis from 2007 that counters your assertion. Interesting part at the bottom dissing the GOP. :-)
And if the Laffer Curve is discredited, someone needs to tell the European Commission (a bureaucracy infamous for trying to harmonize corporate rates at high levels), which recently admitted that “it is quite striking that the decline in the corporate income tax rates has not resulted, so far, in marked reductions in tax revenue, both the euro area and the EU-25 average actually increasing slightly from the 1995 level.”
Or, shifting from corporate taxes to broader measures, how about new research from two German economists (neither of whom are known as supply-siders), which reported that, “We find that for the US model of a labor tax cut and of a capital tax cut are self-financing in the steady state. In the EU-15 economy of a labor tax cut and 85% of a capital tax cut are self-financing.”
Or what about the experience of Ireland? Would critics deny that that there has been a Laffer Curve effect in Ireland, where corporate tax revenues have jumped from less than 2 percent of GDP to more than 3 percent of GDP (a result that is all the more impressive considering the rapid growth of GDP in the Emerald Isle)? And are they really willing to categorically deny any supply-side response following the Reagan tax rate reductions? The 1997 capital gains tax cut? The 2003 tax rate reductions?
Tax-cut advocates should be careful not to over-state the revenue feedback caused by tax cuts — especially for tax cuts that are poorly designed (such as the Keynesian rebates and credits adopted in 2001). But opponents of lower tax rates are equally misguided (or disingenuous) if they blindly assert that changes in tax policy never impact economic performance, and thus never cause revenues to rise or fall compared to static estimates.
Unfortunately, revenue estimating today is based on the absurd notion that tax policy does not affect macroeconomic performance. During 12 years of GOP rule in Congress, Republicans failed to modernize the revenue-estimating process at the Joint Committee on Taxation. No wonder they deserved to lose.
Daniel J. Mitchell • July 25, 2007 @ 3:13 pm
http://www.cato-at-liberty.org/2007/07/25/the-laffer-curve-separating-fact-from-fiction/
Correct me if I'm wrong, but you seem to be under the strange delusion that tax money somehow disappears and is never seen again. The closest you can actually get to this is money spent on ammunition, but even there that is not an accurate reflection of the situation. Money collected through taxes is almost always spent the same year. When it is spent on infrastructure, such as roads, bridges, the electrical grid, the internet and other communications, etc. business benefits a lot, arguably more than you or I do. Currently we have a 20th century infrastructure in decline. If this deterioration is allowed to continue, businesses will have no reason to remain in this country, regardless of the tax rate.
Even if tax dollars are spent on welfare programs, that money doesn't disappear. It's spent on things like food, clothing, and other goods made by businesses.
Tax dollars spent on salaries for government bureaucrats ends up being spent on goods as well.
In fact, it seems that taxes are simply an indirect way of taking money from people and giving it to businesses. Especially since personal taxes represent the bulk of our Federal Government revenue, not business taxes. After all, I personally have no lobbiests in Washington that report to me, but I doubt very many large businesses can make the same claim. There must be a reason for that, and I doubt that the thousands of lobbiests are spending all of their time trying to get corporate tax breaks. Many are arguing for more spending in one form or another.
I believe what is slowing the recovery is not taxation, it's personal debt. There are a few ways to help reduce this personal debt, but I'm not hearing anyone debating them. My guess is that people are afraid to address it because it is such a big problem.
Anyone like to comment?
Now I forgot why it was better but trust me, it is best to let the free market fix itself even if it means the total collapse of the economy.
With all due respect, I don't think we can get back to where Clinton left us in that time frame, regardless of what we do. In fact, I'm not certain that we would like to go back to that period.
My personal belief is that we need to do much more than simply go back a decade in time. A decade ago we had a good economy, but the foundations were already crumbling if you knew where to look. Problems with infrastructure and the environment were well advanced at that time, and going back is really not an option now. On the economic front we must move forward. If we are going to be a 21st Century first-world nation in the future, then we will need a 21st Century first-world infrastructure. We cannot choose not to participate in the 21st century, we can only choose how we will do so. If we decide that it is too expensive to have a 21st Century first-world infrastructure, then we choose not to be a first-world nation.
I don't care what a person's political persuasion is. If we decide to be a first-world nation in this century, certain things need to be done, and they will have to be paid for one way or another. A 21st Century first-world nation has a 21st Century transportation system, not a crumbling 20th century one. As much as 10% of our bridges are crumbling in this country, and much more than half are at the end of their design life now. We have experienced catastrophic electrical power outages several times in the last couple of decades that were not caused by major storms. Some cities in the U.S. do not have safe drinking water. A significant amount of the water sent to the city of New York for drinking water never gets there because the delivery system is so leaky. Sewers in some cities are backing up dangerously, or regularly spilling untreated sewage over into nearby waterways. These are not the hallmarks of a 21st Century first-world country. If you don't like the idea of using taxes to pay for these things than I am open to another option, as long as your option isn't "get used to the idea of becoming a third-world nation."
In addition, a 21st century First-World nation needs well educated people to make itself possible. Continuing to cut education, or mandating the teaching of inaccurate information undercuts our ability to be a first-world nation.
Without laying blame, because there is much that can be passed around, this is the situation we have to live in. Both the Democrats and the Republicans need to purge their parties of the backward-looking naysayers that would allow this country to continue to slide downhill because we no longer have a strong foundation.
I'm willing to do that. How about everyone else?
The republicans haven't countered the stimulus grants and contracts that have been awarded (and by their position haven't worked) with details on how tax breaks for high income individuals and companies would have completely solved this economic crisis under 5 months. Some executive makeing $350k a year is going to hire more employees because his take home pay went up? Corporations hire, and continue to employ, people because there is work for them to do - a need that must be met. If consumers are not purchasing your product or services are you going to hire additional staff with your tax break and have them stand around? Or are most of these companies going to shore up their balance sheets and make the investors happy (which doesn't translate into greater demand for your product/services). I think the bank bailout is a great example: The banks received bailouit money to get lending going again and what happened?? JACK. Most of the recipients don't know where the money went (accounting 101) or won't tell. Credit is still very sluggish and the economy is struggling.
I am sure tax cuts for those who sent our jobs overseas would have created instant jobs here and things would be all better by now.
Oh, and if the Bush tax cuts were going to work then we wouldn't be in this mess since they have been effect for a while now. So lets take a tax cut we currently have and make it permanent so that more jobs would be created.
It may not look good so far but it looks a lot better then the alternative that got us here.
Look at all the business that went to Ireland because of the tax incentives. They had to bring in migrants to fill all the jobs! Then, after 10 years when the incentives go away, business is pulling out. They should have made those incentives permanent.
Cut the corperate tax rate to 10 percent and business would flock to this country and we'd have more jobs then we'd know what to do with.
Beyond that, I agree that there is an economic cycle and we need to fell some pain before it'll get better. Artificially propping up the economy, the way Bush tried to by sending out checks, only prolongs the pain.
I disagree in almost every respect. Countries with nationalized health care, health care as proposed in the new legislation, or health care as we currently have it, all did well up until a couple of years ago, and now they are all doing pretty poorly. Our businesses would do better if they were not expected to foot the lions share of health care costs, as they currently do.
The problem with our consumer-based economy is that people are not spending money the way they were. Forty years ago, the average worker was making enough money to buy a home, a car, and some luxury items, as well as save for retirement, on one income at about 40 hours per week of work. Then they were encouraged to spend more, and the savings started to disappear. This heated up the economy. When the savings were gone, we went into a recession. Strange. So then regulations were liberalized on consumer debt. We started to charge more, and the economy started to heat back up. Enough so that there were enough jobs that households started having 2 incomes to help pay for more stuff. Eventually that wasn't enough and we had another recession. Odd. So regulations on mortgages were liberalized and people started borrowing against their homes. Home values started going up, and more people started borrowing more money, until two incomes weren't enough to make mortgage payments. Then we went into a depression (according to the IMF.) Strange. Taxes were cut dramatically pretty much the entire time. Current tax rates, personal or corporate, are nowhere near what they were 40 years ago.
Now, I'm not totally against tax cuts, but you have to realize that if we cut taxes right now, all of that savings is just simply going to go into servicing that debt. People who don't have the debt are going to save the money in case the depression gets worse. This will not improve a consumer-based economy. In fact, we call this the "paradox of thrift." Strictly speaking, if I am thrifty, and spend only what I absolutely need to, saving as much as possible, this is good for me. If everyone does this in a consumer-based economy, the economy collapses.
If we want to get out of this depression we need a good personal income. Realistically this means good paying jobs. In a consumer-based economy in a downward spiral (like ours is right now) the public sector will not realistically be able to provide this. In our current circumstances probably the best way to do this is to soak-up the excess labor pool by putting people to work fixing our infrastructure. This has the benefit of making sure previously unemployed people have money to spend on things business makes, making sure business has the infrastructure to do their jobs (roads, electricity, water & sewer), and perhaps reducing personal debt. This is going to take money, most likely by increasing taxes now on those who have money (not the unemployed) as well as borrowing against future revenue (that's government debt.)
If you really want tax cuts, I would recommend waiting until the economy is starting to recover. A tax cut at that point might help the economy. A tax cut now would only make things worse by restricting government spending at a time when businesses and individuals are saving money.