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No one’s happy about the economy right now and it doesn’t seem that anyone is happy about the stimulus package either. Whether someone is shouting socialism or directing other vitriol at President Obama or some fuzzy numbers and bad data show up in the records, the stimulus package can’t seem to get a break. Now, the Chicago Tribune reports that the $6.4 billion Illinois received doesn’t seem to add up to many new jobs.
According to the Tribune, stimulus money paid for hiring a records clerk at a health clinic in Peoria along with four other people, three new Evergreen Park Police officers, and maybe helped three Navy Pier actors and a little over two dozen workers at Children’s Home and Aid keep their jobs. However, those folks who were lucky enough to keep their jobs and receive a cost of living adjustment apparently were counted as “new” jobs. Vice president of quality and performance at Children’s Home and Aid Hilary Freeman said, “There were no jobs created with this. When we tried to report that, it would not let us enter zero. That was 34 people that actually got that cost-of-living adjustment at our agency.”
Plenty of pundits and politicians have criticized the Obama administration’s record keeping and transparency regarding the stimulus package. Republican Aaron Schock of Peoria, whose district received $3.4 billion in stimulus money, said the records (which can be seen at www.recovery.gov) could be “easily found and easily seen” but added the question, “Is it transparent?" Liz Oxhorn, a White House spokeswoman on the recovery act responded in the usual way the White House does by saying, “the data may not be 100 percent perfect, but overall we believe it offers an unprecedented look at the recovery process to date.”
While it may not be perfect or 100% accurate, the Obama administration’s stimulus website seems to be a better way to track and question the accuracy of records when compared to the supposed oversight of recipients of TARP funds. Numerous articles have pointed out than many banks simply shrugged their shoulders at record keeping when it came to the $700 billion they received in 2008. Of course, we can’t blame Obama for that, since the Bush administration pushed that bailout through. Interestingly enough, that administration had its own problems when it came to accountability in finances and jobs. It appears that we’ll still have to wonder if there’s any real accountability anywhere.
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"Of course, we can’t blame Obama for that, since the Bush administration pushed that bailout through."
That's not true. The bank bail out was pushed through by the Obama administration. The TARP was an unrefusable loan given to banks by the Obama administration even if it was thought up by the Bush administration.
In fairness, it prevented the collapse of the entire economic system, on the other hand, the actual results of it are somehwhat dubious in that they did not demand banks start lending again nor did any of this money necessarily make it out to main street america.
As far as the "stimulous package" is concerned, much of hte money seems to have been going into infrastructure projects which either create or retain jobs. These projects are necessities anyway (the blue line was completed with TIGER funding from the stimulous package).
I think the biggest problem with the recovery act is that it didn't go far enough, in regards to direct spending, up-front, on real infrastructure projects. And it seems that many economists agree.
Indeed!
The truly sad thing about this Depression is that Paul Krugman predicted this exact situation over six months ago.
But instead of listening to progressives, Obama chose to let Rhambow lead him out to the republican pasture. From there his administration and his National Rich White Public Radio fan base basically celebrated a recovery, which at best was akin to whistling past the grave yard and at worse like George Bush declaring victory on that battleship
Is anyone else as pumped as I am that Peter Schiff is running for Senate in Connecticut?
I agree with the point about a need for real infrastructure investment ... though honestly, I have to wonder how much difference even that would have made in job creation. We no longer live in a society where most income is generated by tangible work. Most of those who have lost their jobs weren't people who made anything or who know how to make anything. Aside from the construction industry, most of the lost jobs involved the shuffling of air from one place to another.
And that's only one part of the larger problem. So much of the economy is dependent on intangibles that really amount to nothing. It's an economy powered by credit intended to be paid back only through the creation of more credit. The goal of the various stimulus packages was never to back off from that. It was to continue it, with the primary hope that enough gains come of it to reverse the stock market declines so that millions of lower middle class people could get back what passes for retirement "savings" these days, and we could go back to living in our imaginary world.
My personal belief is that after about 1995 or so, this recent collapse was inevitable no matter what anyone did; the only variable was the timing. And I believe that any possible solution merely puts us on a temporary plateau. There will be no true recovery, as I don't believe one is possible in the current system, especially with our exponential increases in government debt that inch us close and closer to the dollar's failure. We'll ride this plateau for a while, we might see some small reduction in unemplyment, though I think we'll probably stay around 10% nationwide. And then some trigger will come along, and the whole thing will collapse again.
You're right in the contention that manufacturing has declined tremendously in the United States in the last decade and a half, but that doesn't mean that we still don't make things here, or that building infrastructure doesn't translate directly into jobs. Keynesian economics contends that the government can control the levers of the economy by adjusting consumer spending, corporate investment, consumer spending and exports through a complex mix of incentives (such as taxes and spending). The infrastructure spending the Recovery Act tried to do just that; there are strict regulations in the Act requiring that key building materials be manufactured in the United States. Steel, cement, rebar, glass, wire, lumber. Those are just a few examples of materials that directly put people back to work, and create the multiplier effect that Keynes wrote about. They're also things that are made right here in the United States, and will put people back to work immediately, if the spending is large enough.
When the end product is worth more than the sum of its parts (such as a car, a slab or steel or a cubic ton of cement) you've multiplied the dollar invested. And that dollar is then worth more. When those dollars are spent multiplying the economy through manufacturing and exports, it passes through to wages, which then work their way out into the economy, putting other people (such as service workers) back to work.
Unfortunately, we've set up our economy to depend on consumer spending and corporate investment, rather than exports and manufacturing. Other global economies have done the opposite (such as China, Western Europe and Brazil). Consequentially, their economies are in much stronger positions than our right now. Until we make a serious, calculated and heavy investment in manufacturing and exportation in the United States, our economy will continue to be anemic compared to other global nations.
I'm just saying....
I think, though, that the nature of the American worker has shifted to the point that the Keynes multiplier effect just doesn't have the job impact it once did. We've moved too far away from an industrial economy. According to the Bureau of Labor Statistics, only about 12 percent of the work force was employed in manufacturing in 2006, and this isn't new or the result of the recession. At the height of the economy in 2000, the number was only around 15 percent. The percentage of American workers in manufacturing has been in a steady decline at least since 1970, when almost 30 percent of Americans worked in manufacturing.
And this isn't just an American trend. You'll see similar numbers for all western nations. This has nothing to do with economic downturns or a lack of investment. It is more the result in increased productivity within manufacturing and increased concentration of the workforce in other fields.
So even if you invest heavily in the manufacture of all those things you note, while you will see an increase in productivity and some of that Keynesian multiplier, you will not see a significant shift in employment back to manufacturing, nor do I think you will see a flood of manufacturing sector job creation. That money will stay focused in a relatively small sector of the economy.
Or, to put it simply, the many tens of thousands of stock brokers and IT managers who have lost jobs in the last two years will not suddenly go to work making rebar.
Sounds like Paul Kennedy's The Rise and Fall of the Great Powers needs to be updated and fast