The word “stimulus” has been completely dropped from today’s political vocabulary. “Jobs” is the word of the day.
But wasn’t that the point all along?
President Obama’s first stimulus package, known as the American Recovery and Reinvestment Act, had a specific purpose – to stop unemployment from reaching 8% by investing in “shovel ready” projects. But how long has unemployment been over 9%? The “stimulus” clearly didn’t stimulate.
Under the guise of an American Jobs Act, today’s bill submitted by President Obama is nothing more than another crippling spending bill. Government spending of this ilk, dating back to the $700 billion forced through by President Bush just before he left office, cannot fix the problem of unemployment.—Can it temporarily plug a hole in a dike with dollar bills? Yes. But that’s it. It can’t solve anything long-term.
How do we know for certain?
Since the 2008 Market crash, government has spent more than $4 trillion to correct the course of the economy – to “put America back to work” and to create jobs. That’s a long time and a lot of money, and still, unemployment hasn’t improved and the economy continues to be “fragile.” If this kind of robust government spending program worked, it would’ve worked by now.
Then why do it again?
What President Obama’s government is trying to do is spend its way out of the traditional definition of a recession (six consecutive months of negative GDP.) By spending $4 trillion dollars a year, the government has plugged a hole in the GDP dike that the free-market doesn’t have the capital to fill. This kind of recklessness (we’re talking trillions here) has stopped recession in the literal terms. But not in effect.
The free market is shrinking – it is in recession. That’s the real problem. More government spending will not fix that. It can’t. Nor is it meant to. This kind of government frivolity is intended to do one thing – increase GDP spending —to make things look like they’re better than they are.
President Obama is an intellectual. And he needs another $500 billion to continue the facade that there is no recession. That’s good for politics. But bad news for investors.
Stay tuned…