Daily Archives: June 21, 2011
That’s the spin from the White House and its supporters, or has been for quite some time. The story goes, “if we hadn’t passed the stimulus bill, we’d have seen even worse economic performance than we have and we’d have worse unemployment to boot”.
Investor’s Business Daily (IBD) took a look at the claim and found it … wanting.
White House economists forecast in January 2009 that, even without a stimulus, unemployment would top out at just 8.8% — well below the 10.8% peak during the 1981-82 recession, and nowhere near Depression-era unemployment levels.
The same month, the Congressional Budget Office predicted that, absent any stimulus, the recession would end in "the second half of 2009." The recession officially ended in June 2009, suggesting that the stimulus did not have anything to do with it.
Now we can argue the unemployment numbers and whether or not the real number of unemployed is approaching the Depression-era level (it’s not), but what can’t be argued are the forecasts from that time. Obviously, the supporters of the stimulus knew of these forecasts and believed that with the stimulus we could come in well under those numbers.
As it turns out, unemployment shot past 8.8% and the recession ended exactly as forecasts said it would without any stimulus. That makes it a bit difficult to argue the stimulus had a positive effect. In fact, it can be argued that it may have had a negative effect. But, there are also those who claim it would have been “a lot worse” without it, not to mention those who claim it was too small to begin with.
But that’s unsupportable in the face of the economic forecasts.
The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.
Monthly GDP, for example, stopped free-falling in December 2008, long before the stimulus kicked in, according to the National Bureau of Economic Research. (See nearby chart.) Monthly job losses bottomed out in early 2009 while the Index of Leading Economic Indicators started to rise in April.
So looking back we see all the indicators of an economy trying to begin a recovery. Yet here we are still struggling and we spent a trillion dollars of borrowed money in the meantime on goodness knows what.
One other thing to keep in mind – the establishment of the most hostile climate toward business I’ve ever seen from government in my lifetime began about this time as well.
No, per IBD, it appears if there’s any credit at all for saving the country from depression, it should go to the other guy:
Also often overlooked is that a tremendous amount of stimulus already was in the economy when Obama took office, including President Bush’s $150 billion stimulus, two unemployment benefit extensions and $250 billion spent on "automatic stabilizers."
More importantly, the Bush administration pushed through the controversial $700 billion TARP program (which Obama sustained), while the Fed pursued an aggressive anti-recession campaign by, among other things, effectively lowering its target interest rate to zero.
Now agree with it or not (not – I’m still not convinced it was necessary), and buy into the “saved us from depression” or not (not – we’d have gotten over the pain much more quickly and wouldn’t be at the beginning of a “lost decade”), it appears that economic history is being revised here. The Obama stimulus was a latecomer to the party. Most of the action had already taken place. What Obama and his administration did was create a hostile business climate. The business community reacted by sitting on its hands and its money waiting for a clear signal (one they’ve yet to receive) that they’re not going to be taxed and regulated to death.
But Obama save us from a depression?
Just for the record, It doesn’t appear to be the case.
At RightOnLine, Ann Macelhinny (author of “Not Evil Just Wrong) said that while many believe that the right wants to control what happens “in the bedroom”, it is the left which wants to control everything that goes on in every other room in the house to include the kitchen and garage (what car you should drive and what fuel it should use).
An example of her point comes to us today via this proposed “voluntary” regulation by the Federal Trade Commission, Centers for Disease Control and Prevention, Food and Drug Administration and the U.S. Department of Agriculture.
“The Interagency working group recommends that the food industry, through voluntary self-regulatory efforts, make significant improvements in the nutritional quality of foods marketed to children and adolescents ages 2 to 17 years,” the proposal says.
“By the year 2016, all food products within the categories most heavily marketed directly to children should meet two basic nutrition principles. Such foods should be formulated to … make a meaningful contribution to a healthful diet and minimize the content of nutrients that could have a negative impact on health and weight.”
The foods most heavily marketed directly to children and adolescents fall into 10 categories: “breakfast cereals, snack foods, candy, dairy products, baked goods, carbonated beverages, fruit juice and non-carbonated beverages, prepared foods and meals, frozen and chilled desserts, and restaurant foods.”
Again, this proposed regulation calls for voluntary compliance, but apparently there’s also a proposed penalty for those foods which aren’t reformulated:
If the food is not reformulated, no more ads or promotions on TV, radio, in print, on websites, as well as other digital advertising such as e-mail and text messaging, packaging, and point-of-purchase displays and other in-store marketing tools; product placement in movies, videos, video games, contests, sweepstakes, character licensing and toy branding; sponsorship of events including sport teams and individual athletes; and, philanthropic activity tied to branding opportunities.
That includes softball teams that are sponsored by food companies and school reading programs sponsored by restaurants.
That’s why the FCC is involved (in case you were wondering). Additionally, as most of us know:
“When regulators strongly suggest a course of action, it’s treated as a rule, not a suggestion,” said Scott Faber, vice president of federal affairs for the Grocery Manufacturers Association. “Industry tends to heed these suggestions from our regulators, and this administration has made it clear they are willing to regulate if we don’t implement their proposal.”
That’s just reality. Of course, the underlying premise is that parents are inept and children rule the household and make all the buying decisions as well as eating what they want when they want too. Thus government must step in.
Oh – and of course, any reformulation will cost money which will, of course, be passed on to the consumer, if the consumer buys the product at all (vs. going to a substitute or alternative).
Between the EPA, the Department of Interior, and now this bunch, the war on US businesses continues apace.
Choice – the lost concept of freedom.