Employment and Obama’s Stimulus Plan

The stimulus plan was designed to fail- not deliberately, probably, but in effect. It reflected priorities other than job creation or preservation, as had been advertized. It was not timely- we're still waiting for most of it to be implemented- and it was not focused. It was scattershot. At the time I likened it to "Shooting Wild Hogs with a Shotgun."

But, let's be fair. The fact that employment has continued to fall and unemployment has continued to rise is not sufficient evidence of its failure. That was already baked into the cake, and I expect those trends to continue for some time even if the stimulus package is working. Unemployment will peak above 10 percent, if not 11 percent.

The question, of course, is whether the unemployment rate will rise less than it would have without the stimulus package. My answer is probably yes, but not by much. I doubt that many net new jobs will be created, but some job losses may be averted by cash infusions to the states on the verge of more layoffs. But the modest gains I expect will come at much too high a price in terms of the future burden of the much higher deficits and debt. Some immediate tax-rate relief would have been much more effective and much less costly.

But my main message here is that critics of the stimulus bill don't serve their side of the debate well by judging it against unreasonable standards. I've heard some politicians say before actual working cameras that the stimulus package must be judged a failure because unemployment has risen further since it was enacted. Some have expressly ridiculed the counter-factual argument regarding what might have been.

Such politicians and pundits are making it harder for me to stay on their side by insulting my intelligence and the intelligence of the American people. Their case would be stronger if they stuck to legitimate arguments, and they wouldn't look so foolish.

Comments (4)

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  1. Well, we heard unrealistic predictions as to how effective the stimulus package would be from the administration. Now, the opposition is making hay by labeling it a failure. Sounds about right since these are politicians.

    Something that upsets me most about the current political climate, and probably the political strategies utilized during most of my lifetime, is the need to boil everything down quickly into little sound bites and not really putting forth intelligent opposition.

    There’s no doubt in my mind that the stimulus package won’t deliver as promised and will saddle taxpayers with loads of debt. But yes, it hasn’t had time fail as badly as I know it can given some time.

  2. John Booke says:

    Can Social Security retirees be counted as unemployed if they say they’re unemployed and looking for a full time job?

  3. Bob McTeer says:

    I agree with the first comment above.

    I don’t know the answer to the second. My guess is yes. I think the Bureau of Labor Statistics gives out names of analysts to call with questions. This one would go to someone involved in the Household Survey.

  4. John Booke says:

    Bob you guessed right. Tim Considene at the Boston BLS said, “Receipt of social security benefits (or other entitlements) has no impact on whether a citizen is considered to be part of the labor force.”