Those on the Left who think that FDR’s New Deal spending yanked us out of the Great Depression are still in the dark as to how jobs are really created. They seem blind to—or deny— the fact that from January 2008 to July 2010 federal employment rose 10 percent, but private employment plummeted 6.8 percent despite federal spending that has created a four-fold deficit since Obama took office.
In July of last year, the degree of ignorance was expounded by then-Speaker of the House Nancy Pelosi. She said: “Let me say that unemployment insurance…is one of the biggest stimuluses (sic) to our economy…and it’s job creating. It creates jobs faster than almost any other initiative you can name.”
In truth, extended unemployment benefits discourage recipients from looking for work, as Heritage Foundation scholar William Beach has explained. But Ms. Pelosi said she believed that families spend, rather than save the money they get. This, in the face of academic studies showing only 55 cents of every dollar in benefits gets spent, and unemployment benefits dissuade spouses from working.
Congress and the Obama administration have proved beyond even a shadow of doubt that government spending does not create jobs. Government programs give us valuable goods and services, such as education and infrastructure, the spenders argue. But federal expenditures typically create waste and misallocation of resources at best.
As we know, budgets are proposed by presidents, but spending is disposed—or more often, imposed–by Congress. Since January 2007, the Democrats have been at the helm of the spending process for fiscal years 2008, 2009, 2010, and 2011. In FY 2008, the Democrats still had to put up with the hated George W. Bush in the White House. This meant compromising with him on the level of spending.
But once the congressional Democrats had free rein, it was “Katy bar the door.” Spending, according to the Congressional Budget Office (CBO) shot to $1.85 trillion. Pelosi in the House and Harry Reid (D-NV), the Senate majority leader, no longer had to compromise on spending, with Bush gone. Once Obama took office, he sat at the White House, smiling broadly as dollars flowed out of the federal Treasury.
Bush was painted as the inventor of big-budget deficits. The poor fiscally-abused Democrats had inherited a Mount Everest of debt, they claimed. It seemed to have been lost in the bellyaching that Obama was a member of the Senate before winning election as president and had been an enthusiastic contributor to the budget-busting bills that were shoved through the Congress. And as president, Obama signed the huge omnibus bill to complete fiscal year 2009.
If the Democrats inherited any debt, it was the relatively ant-sized few hundred million dollar deficit in FY 2007, the last of the Bush Republican budgets.
According to CBO figures, the deficit for fiscal 2010 is put at about $1.4 trillion; for 2011, at about $900 billion; for 2012, at near to $700 billion. Then, it is projected to rise to $1.2 trillion by 2019.
The central question is: What has this spending done to stimulate job growth? Not much. The latest U.S. unemployment situation for February, reported in March, was 13.7 million persons without jobs. The unemployment rate was little changed at 8.9 percent, according to the Bureau of Labor Statistics (BLS). Some red flags were unemployment among blacks of 15.3 percent, Hispanics of 11.6 percent, and teenagers, 23.9 percent.
In the week ending March 5, the unemployment claims were 397,000, an increase of 26,000 from the previous week. The total number of people claiming benefits in all programs for the week ending Feb. 19 was 8,772,818, reported the Employment and Training Administration.
Ms. Pelosi is probably wondering: Where are the jobs hiding? Well, there are plenty in the federal government. Some 198,100 new ones from the start of the recession up to last July. In the private sector, however, even Pelosi’s unemployment insurance solution hasn’t worked, because 7,837,000 were lost for the same period.
Not only has the Obama administration brought us more indebtedness, but it has also brought less freedom. Nearly all economists agree (and that’s not a field where agreement comes naturally) that lower levels of government spending enhance economic and job growth. The days of Keynesian economics, of government spending as a stimulator of growth should be at dead end.
We may spot people working at a federal stimulus-sponsored job site. All such sites have bragging signs. But whether Uncle Sam pays for this from direct taxation or from borrowing, every dollar is taken by force from taxpayers or through future inflation.
Every dollar spent by government means one less dollar in the productive private sector.
Leave a Reply