02.21.2012 in Featured, Politics by Bill Wilson 21

White House economic team never believed ‘stimulus’ would work

By Bill Wilson — Former White House Council of Economic Advisors head Christina Romer apparently never thought the $800 billion “stimulus” that was supposed to turn the economy around would work, a new book shedding light on the early days of the Obama Administration says.

A memo brought to light in “The Escape Artists” by Noam Scheiber shows Romer originally proposed a spending plan that totaled $1.8 trillion, but the figure was dismissed as politically infeasible by Larry Summers, Director of the White House Economic Council. Romer came back with a watered down proposal of $1.2 trillion, but that was left out of the final proposal brought before Barack Obama himself.

Nonetheless, even though the final proposal was a full $1 trillion short of what she thought would work, Romer penned the political document that justified the $800 billion figure. Romer’s “The Job Impact of the American Recovery and Reinvestment” warned that “The recovery plan needs to be large to counter the tremendous job loss that is likely to occur.”

Based on her methodology, she wrote, “the package contains enough stimulus that we can have confidence that it will create sufficient jobs to meet the President-Elect’s goals.”

Then Obama was promising to “save or create” 3 million jobs, a promise he fell way short of.  Since he took office, the labor force participation rate has dropped from 65.7 percent to 63.7 percent, resulting in over 4.7 million people have been dropped out of the civilian labor force.

In fact, there were almost 142.2 million people employed when Obama took office. Now, that number dropped to a low of 137.9 million in Dec. 2009 and has only risen to 141.6 million since then. The economy is not even keeping up with the growth of the population, let alone reclaiming a single one of the lost 8 million jobs in this recession.

Romer’s call for more “stimulus” was similar to that of New York Times columnist Paul Krugman.  In 2009, he claimed that the Obama “stimulus” was too small to fill a $2.1 trillion hole. So, with the sorry state particularly of the labor market, were Romer and Krugman right?

When actions by the Federal Reserve to expand its balance sheet are taken into consideration — it purchased $1.25 trillion of mortgage-backed securities, $150 billion of Fannie and Freddie debt, and $1.191 of trillion treasuries since Jan. 2009 — the total “stimulus” issued by government has totaled nearly $3.4 trillion.

That exceeds what Romer and Krugman called for by over $1 trillion — with little to show for it. Romer had claimed if the “stimulus” passed that unemployment would be down to 6 percent by now.

Not only did it pass, but the Fed threw $2.6 trillion on top of it for good measure. Yet, a true measure of unemployment that takes into account the drop in working age adults from being counted by the government shows that rate is at 11.01 percent. Those underemployed at 17.6 percent.

All together, that’s 28 million people that cannot find full time work in the Obama economy —in spite of the trillions of dollars the government threw at the problem.

“The Escape Artists” provides a convenient narrative for Obama apologists, following an old dictum from Britain: “The king can do no wrong.” If the king made any poor decisions, it was because he received poor advice.

In this case, Larry Summers is portrayed preventing Obama from ever seeing Romer’s original memo calling for $1.8 trillion in “stimulus”. The evidence, sadly, shows that it would not have made a difference — because the whole concept was flawed from the get-go.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

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  • sb36695

    You mean it was a slush fund?!

  • DEF

    And the bill will be due soon…crank up the printing press again!

  • Tallboy1964

    NONE OF WHAT ANY ROMER HAS EVER DONE HAS EVER AMOUNTED TO SQUAT!! 

  • http://www.wakeupamerica.com/constitutionalbelievers Constitutional Believers

    I don’t doubt this one bit. The “Powers That Be” have been planning
    on our economy to collapse for some time and are gearing up for the civil
    unrest afterwards.  Everyone need to prepare
    for the worst and Pray for the best! We need to gain control of our government
    again, so we have a lot to do and a short time to do it. We will need to elect the
    best constitutionalists into our public office that we can, to help save our
    Republic. Check out the new content on my site: http://www.wakeupamerica.com/constitutionalbelievers
    so we all can WAKE UP AMERICA!

  • Dimichino

    That “belief” is a lie!  Stimulous has never worked, if it did Cuba would be a Power House!  These DC-ites understand it well, they are not stupid people, they knew exactly what they’re doing!  This is the greatest overt theft in all of history! 

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  • Jim

     You are 100% correct.  The un-Americans in DC know what they are doing, they are setting the stage for our economy to fail. They are also working hard to take away our 2nd Amendment rights.  If the things that are going on now would have happened 50 years ago, they would have been arrested, kicked out of office and probably be in jail.  But today, it’s no big deal.  Break the law, re-write the law, disregard the Constitution. 

  • J42ERRY

    the number 1 criminal in the U.S.A. the chimp dick-tater obumbo

  • J42ERRY

    the number 1 criminal in the U.S.A. the chimp dick-tater obumbo

  • http://www.wakeupamerica.com/constitutionalbelievers Constitutional Believers

    If You Believe in this statement; “We hold these
    truths to be self-evident, that all men are created equal, that they are
    endowed by their Creator with certain unalienable Rights that among these are
    Life, Liberty and the pursuit of Happiness.”Then I ask you, will you help make
    sure this statement is not thrown out in the trash and made obsolete by the
    Tyrannical Entities that have become entrenched in our countries local, state
    and federal public offices? Make Corrections To This Travesty! Make the
    Difference and Take a Stand with other Good Men and Women.

    Info @ http://www.wakeupamerica.com/constitutionalbelievers Take Care and GOD
    BLESS!

    Sincerely

    Mr. Harris

    ConstitutionalBelievers@hot.rr.com

  • http://www.wakeupamerica.com/constitutionalbelievers Constitutional Believers

    If You Believe in this statement; “We hold these
    truths to be self-evident, that all men are created equal, that they are
    endowed by their Creator with certain unalienable Rights that among these are
    Life, Liberty and the pursuit of Happiness.”Then I ask you, will you help make
    sure this statement is not thrown out in the trash and made obsolete by the
    Tyrannical Entities that have become entrenched in our countries local, state
    and federal public offices? Make Corrections To This Travesty! Make the
    Difference and Take a Stand with other Good Men and Women.

    Info @ http://www.wakeupamerica.com/constitutionalbelievers Take Care and GOD
    BLESS!

    Sincerely

    Mr. Harris

    ConstitutionalBelievers@hot.rr.com

  • Jim Mayhew

    Anyone who follows this administration closely and has any doubt about their agenda needs to read one of the many books about Enron.  Incompetence, outright fraud, lying to the public, infighting, and a host of other atrocities brought down one of the darlings of our economy.  We are witnessing the very same issues with this group of elitist morons who are becoming wealthy at the expense of the suffering of our population.  Not only shame on them, they should be jailed.  While they throw their disdain for us in our faces (16 multimillion dollar vacations since in office) they pat us on the back and tell us everything is going according to plan.  They are right.  It’s their plan, their control, their final vitory to leave this country in economic shamgles while they become international residents on the money they have stolen.  Wake up America.  If you love your children you must become informed.

  • Jim Mayhew

    Anyone who follows this administration closely and has any doubt about their agenda needs to read one of the many books about Enron.  Incompetence, outright fraud, lying to the public, infighting, and a host of other atrocities brought down one of the darlings of our economy.  We are witnessing the very same issues with this group of elitist morons who are becoming wealthy at the expense of the suffering of our population.  Not only shame on them, they should be jailed.  While they throw their disdain for us in our faces (16 multimillion dollar vacations since in office) they pat us on the back and tell us everything is going according to plan.  They are right.  It’s their plan, their control, their final vitory to leave this country in economic shamgles while they become international residents on the money they have stolen.  Wake up America.  If you love your children you must become informed.

  • Marineh2ominer

    The whole intent is to bankrupt the country giving obamass the opportunity to impose his brand of marxism . So far the plan is right on schedule .

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  • Greg137

    YOU SEE?! THEY ARE FRAUDS AND THEY ARE ADMITTING IT!!!!

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