The Obama Stimulus Plan: Fantasy vs. Reality

The most recent unemployment figures from the Federal Bureau of Labor Statistics show an unemployment rate in September of 9.8% and a loss of 263,000 jobs during the month, despite the fact that we are now in the sixth month following passage of President Obama's massive $800 Billion "stimulus" plan. Just to give a bit of flavor to that number, in digits it is written as $800,000,000,000, or approximately $2,667 for every man, woman and child in the United States.  The "stimulus" plan passed through Congress without a single Republican vote in the House of Representatives and with only three Republican votes in the Senate.  The Republicans argued that the "stimulus" plan would not produce the desired effect of growing the economy and putting Americans back to work.  From where I sit, it looks like the Republicans were correct.

In a report prepared to hype the passage of a stimulus plan, President-elect Obama's chief economic advisor stated in January that the massive government spending program (for purposes of the report, assumed to be $775 Billion) would hold unemployment to 8% in the third quarter of 2009.  She also stated that without the "stimulus", unemployment would reach 8.75% in the third quarter of 2009.  So, based upon the Administration's own projections, the Obama "stimulus" plan has accomplished less than nothing since the actual unemployment rate WITH the "stimulus" plan exceeds the projected unemployment rate WITHOUT the "stimulus" plan.

Oh, but I know what my liberal friends are thinking:  it is all George W. Bush's fault.  Isn't it always?  At what point will the current economic problems cease to be George W. Bush's fault?  My guess:  as soon as the economy shows signs of life, at which point the credit will all miraculously belong to President Obama.

The better approach for actual economic stimulation would have been to reduce the capital gains tax rate to zero and to provide tax incentives to employers who hire new employees (such as a temporary cut in the employer's portion of the payroll tax).  This approach, coupled with a modest targeted spending package on infrastructure that would have created constuction jobs, would have been far superior to Obama's failed policy of special interest spending.