INSANE!!! Democrats Fight For New Stimulus As Part of Deficit Reduction Plan

It has become painfully obvious that the collective leadership of the Democratic Senate has taken one too many acid trips. Face it, that can be the only explanation for their latest folly.  The day after it was reported that the 2009 stimulus plan had little or no effect on ending the "great recession," and the same day the Congressional Budget Office painted a dire picture of America's economic future due to massive debt, the geniuses in the Democratic leadership have decided they want a stimulus as part of the deficit-reduction package being negotiated by Vice President Biden and six members of Congress. It makes no sense, lets waste more money in our save money program?

No formal proposal will be tabled in the session of the talks to be held Wednesday by Sens. Max Baucus (D-Mont.) or Daniel Inouye (D-Hawaii). The group is still reviewing various stimulus proposals and is not "wedded" to any one, Sen. Charles Schumer (D-N.Y.) told reporters.

Ah Little Chuckie Schumer is involved, he must think it will get him some extra time in front of a camera.

As part of deficit reduction, we can have job creation embedded as part of the deficit-reduction package. That’s what we are asking today,” he said.

"We're recommending to the Biden deficit commission that they put jobs as part of what they're doing to help stimulate the economy, because, I repeat, cutting is only part of the game," Senate Majority Leader Harry Reid (D-Nev.) said. He said that he was instructing committee chairs to hold hearings in the coming weeks and come up with ideas by Aug. 1-- the eve of the debt ceiling deadline.

Clearly these Senators have not talked to anyone in business. The issue behind the lack of jobs is not stimulus. It is the administrations full on assault on business, from higher energy and health care costs to the new and sometimes confusing regulations.

Schumer said extending or expanding the payroll tax reduction enacted in the December 2010 tax cut deal between the White House and Congress is high on the list. Infrastructure spending and support for clean energy are other possible Democrat demands.

In other words more "stuff" that doesn't work. As we reported yesterday, based on the numbers the stimulus had little or any role in ending the recession.

The chart below shows that the recession had pretty much bottomed out by the time the stimulus bill was signed.



According to economists,  the recession officially ended in June 2009. Only 15% of the stimulus dollars had been spent by that date, so its safe to say very little of those funds had anything to do with getting us out of the recession.

He told reporters that if the stimulus cannot be included in the package by Aug. 2, Democrats want it passed simultaneously. Democrats plan to launch a yearlong "Jobs First" campaign to pressure the GOP on job creation in September, he said.

Senate Majority Whip Dick Durbin (D-Ill.) said Senate Majority Leader Harry Reid (D-Nev.) has spoken to the President and the SCHMOTUS about including a new stimulus in the deficit reduction plan and not surprisingly they are open to it.

“We just made the formal proposal; we have been talking to them for a long time,” he said. “The Republicans are fixating on the deficit and it is a serious problem.”

It became even a more serious problem today as the new CBO report on long term debt, released today warned of economic doom for America if the deficit isn't reduced...fast!

Durbin said that he hopes Congress will raise the debt limit enough so that another increase is not necessary before the 2012 elections, but he is not sure Biden can get an agreement that would secure that.

“I think we can do it in two steps,” he said. He said that the $4 trillion in deficit reduction over 10 years that is needed likely will not be agreed to by Aug. 2.

By any rational measurement another stimulus right now is a lame-brained plan, adding it to a deficit reduction plan is even crazier, but another stimulus plan added to  deficit reduction plan after an unsuccessful attempt to turn around the economy with a similar stimulus plan is pure lunacy. Or as Albert Einstein once said,  “Insanity is doing the same thing over and over and expecting a different result.” 

Economic Data Suggests the Stimulus Had NOTHING To Do With Recovery

"True the economy still stinks, and true the stimulus didn't do what we predicted it would, but that's because Bush left the economy in worse shape than we thought. If it wasn't for our quick action, America would have fallen into a great Depression."

If you believe the President and is progressive followers, the $800+ trillion dollar stimulus plan saved America from falling into a great depression. Many are predicting that claim will be a big part of Obama's reelection campaign.

Like many other claims coming from the Obama the claim that the stimulus saved us from a Great Depression is pure hyperbole.

IBD reviewed records of economic forecasts made just before Obama signed the stimulus bill into law, as well as economic data and monthly stimulus spending data from around that time, and reviews of the stimulus bill itself.

The conclusion is that in claiming to have staved off a Depression, the White House and its supporters seem to be engaging in a bit of historical revisionism.

Economists weren't predicting a Depression.

White House economists forecast in January 2009 that, even without a stimulus, unemployment would top out at just 8.8% — well below the 10.8% peak during the 1981-82 recession, and nowhere near Depression-era unemployment levels.

The same month, the Congressional Budget Office predicted that, absent any stimulus, the recession would end in "the second half of 2009." The recession officially ended in June 2009, suggesting that the stimulus did not have anything to do with it.

 As a matter of fact, based on the numbers the stimulus had little or any role in ending the recession.

The chart below shows that the recession had pretty much bottomed out by the time the stimulus bill was signed.

According to economists,  the recession officially ended in June 2009. Only 15% of the stimulus dollars had been spent by that date, so its safe to say very little of those funds had anything to do with getting us out of the recession.

When the recession officially ended in June 2009, just 15% of the stimulus money had gone out the door. And that figure's likely inflated, since almost a third of the money was in the form of grants to states, which some studies suggest they didn't spend, but used to pay down debt.

Other programs Obama often touts — Cash for Clunkers, mortgage help, homebuyer tax credits, the auto rescue plans — either came as the recession had ended or was ending or were widely deemed to be busts.

....Also often overlooked is that a tremendous amount of stimulus already was in the economy when Obama took office, including President Bush's $150 billion stimulus, two unemployment benefit extensions and $250 billion spent on "automatic stabilizers."

More importantly, the Bush administration pushed through the controversial $700 billion TARP program (which Obama sustained), while the Fed pursued an aggressive anti-recession campaign by, among other things, effectively lowering its target interest rate to zero.

Princeton economist Alan Blinder and Moody's Analytics chief economist Mark Zandi studied the relative contribution of Obama's $830 billion stimulus compared with TARP and the Fed's "financial-market policies."

While the economists credit Obama's stimulus for helping end the recession when it did and keeping unemployment lower than it would have been, they concluded that TARP and the Fed's actions were "substantially more effective" at saving the economy from ruin.

 Is IBD suggesting that it was Bush rather than Obama who ended the recession?  I would not go that far.  But I would suggest that based on this research, the stimulus plan was nothing but a big waste of money.