I asked, on October the oneth, if we would see the “son of stimulus” bill.
President Obama has argued that without the 2009 economic stimulus bill, our economy would have been in even worse shape. Well, there’s no way to know that or prove that, but he’s the President, so his opinion counts for something. But the article I linked cited increasing job losses, and the Department of Labor is scheduled to release the September unemployment figures; odds are that they’ll be no better than August’s 9.7%, and possibly worse.
Yeah, worse was what it was, 9.8% for September, and 10.2% for October; November’s unemployment statistics are scheduled for release just a few days after the President explains his new Afghanistan strategy, so those numbers might get drowned out of the news if they are worse than 10.2%. (If they’re better, then you can count on the Administration trumpeting their great success, and that will dominate the news.)
Obama eyes jobs package for 2010¹
Lawmakers conceded the stimulus was insufficient. Job creation is needed to attack surging unemployment.
By Peter Nicholas, The Los Angeles Times
WASHINGTON – Troubled by the rising jobless rate, President Obama and the Democratic majority in Congress are assembling a jobs package that would devote billions of dollars to projects meant to put people back on payrolls in 2010 and keep them working.
Discussions over the scale of the bill were fluid, but lawmakers said the intent was to move swiftly and get a jobs bill to Obama’s desk as early as January.
The renewed push to create jobs is driven by a recognition that the $787 billion stimulus program enacted in February is not a sufficient remedy for an unemployment rate that stands at 10.2 percent.
Nearly 16 million people were unemployed as of October, and 3.49 million jobs have been lost since January, according to the Bureau of Labor Statistics.
The stimulus boosted employment but “did it in a way that was not as highly visible as a lot of people would like,” said Rep. Betty Sutton (D., Ohio), one of the House members devising the jobs bill. “It did so in somewhat of a scattershot approach – a job here and a job there, trickled out over time. . . . Far too many Americans are without a job, and far too many more are worried about what tomorrow is going to bring.”
Oh, so the Porkulus Plan did create jobs, but just didn’t do it in a way that was highly visible? What explains, then, the President’s initial assertion that passage of the Porkulus Plan would hold unemployment to 8%, and that we’d see a whopping 9% unemployment if we didn’t pass that huge budget-buster?
This was what the President promised us, compared to what was actually achieved:
I wrote on the third of last month:
President Obama claimed that he was going to fix our economy, and that his plans for massive government spending would work. He told us what tragedies would come to pass if we didn’t pass the Porkulus Planm, and how some of them would be alleviated if we passed this massive, liberal-friendly spending plan. yet now the unemployment numbers are significantly worse than what the President claimed they’d be if we didn’t pass that bill.
That leaves us with two possibilities:
- Either the President and his economic team knew what would happen if the bill wasn’t passed, projected it correctly, and the passage of the bill acually made things worse; or
- The President and his economic team had no flaming idea what would happen with the economy, which means that we can’t trust them and their statements and projections, because they have no idea what they are doing.
So, what do we have here? We have a President who either knew what the economy was doing, and whose policies actually made things worse, or who had no flaming idea at all about what the economy was doing and had no idea how to fix it, and now, after transferring hundreds of billions of dollars of future taxpayer productivity into the hands of the Chinese, wants to pass yet another multiple tens of billion dollar stimulus plan — though, this time, they’ll call it a “jobs creation” bill — because the last time the Congress went along with the President’s plan, it didn’t work
at all well enough.
Congressional aides said the new program could cost tens of billions of dollars. Democratic House members who were disappointed that the stimulus was not larger said they would press for a substantial spending plan this time.
“I hope we don’t play around the edges with this and we do what will work. Invest the money now,” said Rep. Barbara Lee (D., Calif.), who is chairwoman of the Congressional Black Caucus. “We have to create jobs, and we have to create them right away.”
Now, from that I have absolutely no idea what the Democrats want to
borrow and spend. Is it “tens of billions of dollars,” or something even larger than the last, $787 billion bill? The language of the article is way, way too vague. Then again, it may be the Democrats’ ideas which are way, way too vague.
And, of course, if passed this will be on top of a God-only-knows how expensive health care destruction bill.
Our friends on the left will say, “You can’t complain about deficits, because you weren’t complaining about them when George Bush was president.” It’s true that we weren’t vociferous enough, but part of that was due to the fact we knew that, no matter how bad the Republicans were at overspending, they weren’t anywhere near as bad as the Democrats would be. And shazamm! look what has happened to the deficit since the Democrats took control of the Congress following the 2006 elections:
Remember, though deficits were too high, they were coming down again when the Republican-controlled Congress passed its last spending bills (FY2007). The Democrats took control of the Congress in time for the FY2008 budget — if you can call it a budget — and up went the deficit. Regrettably, it was President Bush who signed the FY2008 and some of the FY2009 spending bills, but he couldn’t spend a dime that wasn’t appropriated by the Democrat-controlled Congress. Republican fears that the Democrats would be far, far worse on spending have been proven with a vengeance.
And we are already seeing the downside of the out-of-control spending:
Wave of Debt Payments Facing U.S. Government
By Edmund L Andrews, The New York Times
Published: November 22, 2009
WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.
But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
More at the link; hat tip to DRJ. The Times article continued to note that an additional $500 billion per year for debt service would exceed the combined budgets for the Departments of Education, Energy, Homeland Security and the wars in Iraq and Afghanistan.
Remember the financial system collapse that triggered the unfortunate 2008 bailout, the one brought about by irresponsible mortgages? Well, the federal government is about to do the very same thing to itself:
“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”
Due to the weakness in the stock market, the Treasury has been able to sell T-bills at very low interest rates. But if investors start to see decent stability and returns in stocks, they won’t be satisfied with 1% returns in T-bills, and the prices will drop.² In effect, the government is dealing in its own version of the adjustable rate mortgage: as shorter-term T-bills were sold, to take advantage of much lower interest costs, the government will have to issue T-bills again, sooner, to pay off the short-term notes as they come due. I wish that I still had the picture that Ken once sent me, of a cute blonde girl wearing a t-shirt which said, “Can I pay my Visa with my MasterCard?”
I understand the motivations of the Democrats as far as this jobs bill is concerned: they want to ease the pain people are feeling — as well as enhance their chances in the 2010 congressional elections. But even if it worked — which seems unlikely, given that the first stimulus bill didn’t — it would simply postpone the pain: we would have to have much higher taxes in the near future, to pay these huge debts, and te American people would be, in effect, sending more of their money to help the Chinese economy, and taking their own hard work out of the United States.
Remember the 1971 Fram Oil Filter campaign with the auto mechanic telling you that, “You can pay me now, or you can pay me later?” where car owners were advised to get regular oil changes and service, to avoid major repair expenses in the future? It’s time to try and pay now, because we already have way, way, way too much that we have to pay later.
¹ – The Philadelphia Inquirer, Friday, 27 November 2009, p. A-1
² – Treasury Bills are sold at discounts of their face value at maturity. When the price drops, the effective interest rate increases. This means that the Treasury has to sell more delayed face-value to raise the same amount of immediate cash, meaning that the amount added to the national debt is greater than the amount of deficit financed.