Biden speaks truth: Stimulus won't work

Glad to hear the V.P finally speak the truth.
Want a recovery? Sack the Democrats.

VP Biden Admits Stimulus Bill Was Never Going To Stimulate Jobs This Year

Published by AJStrata at 7:57 pm under Measuring The Recovery

Updates Below

Most people knew that Vice President Joe Biden would be one of President Obama's major handicaps throughout his inexperienced administration's first years. It's not because Joe is incompetent, in fact he was selected to be the wise old man of experience. No, it's because Joe has trouble shading the truth. He is no good at spin. He is a blunt, 'tell it as it is' type.

On Sunday, VP Joe Biden played to this role and admitted to the country that the liberals' stimulus package passed in February was never meant to stimulate job creation until after this fall and well into next year:

Biden noted that the $787 billion economic stimulus package was set up to spend the money over 18 months. Major programs will take effect in September, including $7.5 billion for broadband Internet service, plus new money for high-speed rail and the nation's electrical grid, he said.

More here, including the video. In the video Biden admits 'no one' seriously thought the stimulus package would be stimulating jobs at this time (comes in around t - 4:50 minutes). But that is of course a lie, since the administration has claimed jobs have already been created (or saved) and the predictions they put out showed the bill creating jobs almost instantaneously (see chart at end).

Later Biden promised job creation is coming now that the needed contracts are finally being put in place (t- 3.50 minutes). This is the third 3rd admission that there was no way the stimulus bill could create jobs any earlier than September, and not in any great number until after that.

There you have it - the administration's mea culpa. They knew damn well the government bureaucracy was too sluggish to get the money out into the economy quickly. They had to rush the bill before the media exposed their little white lies.

Why did they go the long and arduous route of government spending for stimulus verses the quick and effective path of tax cuts? Biden has the answer there too, but this time it really is all about incompetence:

"We misread how bad the economy was, but we are now only about 120 days into the recovery package," Biden added. More jobs will be created in coming months, he said.

See, the Democrats did not understand the seriousness of the problem. That is why they passed off a pork projects bill as a stimulus bill. And because they did not think the economy needed any real stimulus, they just lied through their teeth pretending, knowing all the while the money would not start coming out of the government for months - as I have been saying and showing for months!

To date, in the government organizations I am tracking, less than 1% of the money budgeted in February for job creating stimulus has been spent. That is basically zero! No wonder we keep sinking deeper into recession. All the dems have been doing so far is taxing the hell out of us and holding the money back. Sort of a stupid economic plan if you ask me.

So how bad is it, since Obama and Biden have admitted they are still clueless? One thing people need to understand is the government and its lap dog news media do not tell the complete (or sometimes honest) picture when it comes to unemployment. The data is there for people to see if you know where to look. It's not pretty.

Here is a graph of the full unemployment picture, which is a lot worse than has been reported (click to enlarge).

These are all government data from the latest unemployment report. I just graphed them. The various reporting levels are defined as follows:

• U1 = Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.
• U2 = Job losers and persons who completed temporary jobs, as a percent of the civilian labor force.
• U3 = Total unemployed, as a percent of the civilian labor force (official unemployment rate).
• U4 = Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers.
• U5 = Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers.
• U6 = Total unemployed, plus all marginally attached, plus total employed part time for economic reasons, as a percent of the civilian force plus all marginally attached workers.

I have highlighted U3 (the reported number) and U6 in the graph.  U6 is the total percentage of people 'out of work', whether they are working part time to make ends meet or not. BTW, 'Marginally Attached' is defined by the government as: "Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time  schedule."

The U6 level for June 2009 is a stunning 16.4%! And it is this high because the stimulus, as VP Joe has pointed out, has yet to kick in.

The Vice President just admitted to the nation that his administration let the economic situation get this bad because they did not take the problem seriously.  He admitted their plan had no expectations of kicking in before September 2009. He admitted their rosy projections were almost all 'hope' that things would turn around on their own and they could claim credit later when the money did start flowing. This is now established and admitted fact.

The record of their failure is captured in this graph of the dems BS promises verses the tragic economic reality.

 

It can be argued the liberal experiment by Obama-Pelosi-Reid actually made things worse, since the expected path without a stimulus bill would be better than what we ended up with!

Joe, this is not some marginal mistake of judgement, this is a royal screw up which deserves to be answered by the cleaning out of Congress with competent, new people.

Update: Bruce Bartlett and Paul Krugman join the confessional chorus today in admitting there never was an intent to stem the job losses until later this year. Krugman, however, still seems to have problems reading graphs and doing simple math. He tries to use the graph above to note:

The predicted impact from the stimulus is indicated by the difference between these two curves. We're now at the very beginning of 2009Q3; they predicted that the unemployment rate right now would be only a fraction of a percent lower now than it would otherwise be. The impact wasn't supposed to be really noticeable until late this year, and wasn't supposed to peak until late 2010.

A fraction lower does mean the stimulus plan was to have taken effect - at least that is what the Democrats implied. Check Obama's speech after passage and all the uses of the word 'now' for confirmation:

"Earlier this week, I signed into law the American Recovery and Reinvestment Act - the most sweeping economic recovery plan in history. Because of this plan, three and a half million Americans will now go to work doing the work that America needs done.

Because of what we did together, there will now be shovels in the ground, cranes in the air, and workers rebuilding our crumbling roads and bridges, and repairing our faulty levees and dams. 

Krugman is being dishonest as he calls for more of the same failures. In fact, you can look at the chart and SEE that the Democrats were banking on the economy turning itself around because the delta for the supposed plan happens well before the stimulus passed (if Q109 is January). Maybe people should have read the fine print - ya think?

Krugman should note we are now 2% points higher than the plan predicted, not some fraction of a percent.

Then there is Bartlett, who just comes out and admits the lie:

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.

The forecast also showed the unemployment rate peaking at 8 per cent with the stimulus and 9 per cent without. Obviously this was wrong. Yet it would be incorrect to conclude that the stimulus was doomed to failure, as many Republicans and conservative economists argued.

I don't have to argue facts dude. I am simply showing the promises verses the results. I mean Bartlett is so poor at this he thinks the government creates money out of thin air (and I am not talking printing it):

Tax cuts and government transfers are slow to have an effect and have a low multiplier, raising GDP less than $1 for every $1 increase in the deficit even when fully effective after two years.

By contrast, government purchases stimulate growth much more quickly and have a higher multiplier, raising GDP by $1.57 for every $1 spent. Unfortunately, the low-impact spending has been the fastest to come online while the high-impact spending is dribbling out very slowly.

Got that? Tax cuts are slow, but spending is slower? and how does the government create a $1.57 for every dollar spent when it is chews up 40% of the dollar in wasted overhead? The guy is mathematically certifiable.

I am exposing the lies sold the America when everyone on the left said we needed to rush this through without debate. This is the Democrats' mess and they deserve all the credit for its failure.

1. # Mike M.on 05 Jul 2009 at 8:18 pm

   Ronald Reagan said something very appropriate.

   "A recession is when your neighbor loses his job. A depression is when you lose your job. And a recovery is when Jimmy Carter loses HIS job."

   The principle is still true. Want a recovery? Sack the Democrats.