Change by doing more of the same?
Written by Michael Vass
In 2009, President Obama laid out a massive plan to reshape the economic landscape of America, which was in need of help at the least. A vision of lower unemployment, secure banks, and a stabilization of monetary policy was explained - without detail - which was then handed over to the Congress. Speaker Nancy Pelosi moved forward and passed her Stimulus plan (intitially envisioned as a $50 billion stimulus when President Bush and Republicans were in office, and swelling immediately after the 2008 election results) with Senate Majority Leader Harry Reid following close behind.
Little more than a year and a half later, with a trillion dollars spent - of which only half has been used - President Obama is now calling for a new plan. But is it really?
The Obama Stimulus had several clear promises and objectives mixed in with the multitude of less known and less defined objectives. The Promise was to lower the unemployment rate, by this date, to 7.5%. The Promise was to take the nation out of the recession. The promise was to avert a depression that theoretically loomed on the horizon.
The Objectives to acheive those promises were in part:
Let’s stop there.
- Education -
The Obama Stimulus spent over $100 billion to keep teachers employed and to provide unions with cash flow for the retirement packages they had promised members. This money was explained as a means to help States that are underwater with their budgets, so that they could move forward and balance the budgets. It was meant as a means to keep unemployment low.
A year and a half later, after 4 months of debate and delay, another $26 billion was spent (in newly borrowed money). The purpose of this emergency funding (which could be defined as a stimulus) was to help States balance their budgets, and to help keep the jobs of teachers. Oh and to fund the pensions that unions had promised members.
The projection of some is that in 2011, another $25 - $50 billion will be needed to save the jobs of teachers, pay union pensions, and keep States from collapsing on their own debts.
- Mortgages -
$75 billion was allocated to ensure that over 1 million homeowners and families would not lose their home. All the homeowners had to do was apply to the Government programs, wait and be accepted. In total 1.3 million people signed up for the plan in 2009.
As of the summer of 2010, 50% of those in the program have dropped out. At least 25% of those that dropped from the program have lost their homes. Of the total 1.3 million over 60% are in default and/or foreclosure. Only some 25% of those in the program have been helped.
Programs like Cash for Caulkers and the temporary Home Buying Credit (funded with and without the Stimulus funds), have had no lasting effect nor have they altered the trend of home defaults and foreclosures.
Foreclosure and default rates on mortgages have maintained or exceeded the highest levels on record every month since the Stimulus was passed. In 2010 alone over 1 million foreclosures are expected. The rate of foreclosures are expected to increase steadily through 2010 and into 2011.
- Shovel ready jobs -
The infrastructure was a critical part of the Stimulus. Fully $175 billion of the funds were spent on infrastructure plans. Items like rebuilding roads, bridges, trains and so on were expected to lower the unemployment rate and create jobs. This funding would also allow States that were hemoraging debt to have a chance to slow or stiop their debts.
One and a half years later, unemployment has remained above the level where the Stimulus was passed at. On average the unemployment rate as maintained roughly 9.6%, which includes the manipulative temporary hirings of Census workers and the exclusion of hundrreds of thousands that no longer receive unemployment benefits (they don’t count according to the Government).
Unemployment benefits have been extended to 99 weeks. Over half have been on unemployment for a year or more (small business owners are not included as they do not qualify for benefits, just the taxes). Plans are in place to extend the unemployment benefits even longer. The funding for Unemplyment are not included in the Stimulus (therfore increasing the national debt at every extension).
The full effect of the “shovel ready” infrastructure jobs was to have impacted the economy positively by January 2010. Further spending of the initial Stimulus were to only prolong the positive effect until 2012. These infrastructure improvements were to allow cost savings to business that would create or “save” 3 million jobs - fully 2 million of which were to have been done by this date.
Currently 8.4 million are recognized as being unemployed. Over 16% of the nation is considered underemployed - meaning that they either have no job, are not looking, have gone to school, or work less than 40 hours a week and would like (need) to work full time.
- The “new” proposal -
As of September 6th, President Obama has proposed a plan (not a stimulus) to provide an additional $50 billion in funds to create infrastructure jobs (the initial cost of the plan, not the full - unknown - cost). This is new funding (new national debt) that will create jobs and provide businesses cost savings to allow them to hire employees and lower the unemployment rate. Any jobs created will not exist (according to the White House) until some point in 2011.
This new plan will be paid for in part by new higher taxes (which are seperate of previous planned tax increases, and seperate of the Health Care Reform tax). There will alos be new taxes on energy production companies - that will eventually be passed onto the consumer in the form of higher bills.
In conclusion the questions must be asked. What is different in this plan than what is already in place? How much money is the Obama Administration and the Democrat-led Congress willing to throw at the problems the nation faces? Beyond providing elected officials a means to have positive soundbites on political ads, what positive is reaching the average American?
Perhaps the biggest question, If an ordinary person and/or business cannot spend their way out of debt, how can the Government?
Consider all this as elected officials seek to gain your vote in ads on television and debates (if they will attend them) and soundbites. Because it is obvious that the Obama Administration and Congress do not want you to consider it at all.
