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THE STIMULUS WAS A FAILURE
Despite President Obama's claims that the stimulus plan brought the economy from the brink of collapse, analysis from a free market perspective shows that the plan was a predictable failure.
-- 2/20/2010

February 17 marked the first anniversary of President Obama signing the so-called “stimulus” plan into law. The stimulus allocated $787 billion (now adjusted to $862 billion), ostensibly to create jobs and battle the recession. At the time, Obama argued that this was needed to keep the unemployment rate below eight percent. A year later, the unemployment rate is stagnating at just under 10 percent.

The billions of dollars that were spent not only put our country deeper into debt, but it actually made unemployment worse. Why? Because governments cannot generate wealth. Only increased production can do that. Money spent by the government is money that must first be taken from the private sector in the form of borrowing, taxing, or printing. And money taken from the private sector leaves business with less money to increase production and create jobs.

In addition, studies have shown that the stimulus was not intended to be such a “stimulus” to the economy after all. Instead the trends show that most money went to districts and regions favoring Democrats, apparently as a “thank you” for the 2008 elections. Many of these areas were not necessarily hurting for jobs but were still awarded money anyway.

It is also worth noting that only about one-third of the stimulus money has been allocated. If the people supporting this plan truly believed that it was so important at the time, wouldn’t they have wanted as much money allocated as fast as possible to supposedly save jobs? Instead, two-thirds of the money is still held up. But instead of using it to pay down the debt, it will most likely be funneled to Democratic candidates in this year’s upcoming mid-term elections. That is another unintended consequence of government involving itself in the private sector—funds are almost always spent based on political, not practical, reasons.

In a speech celebrating the anniversary of the stimulus, Obama touted that it included tax cuts for 95 percent of families. However what he didn’t say was that this monstrosity will cost each American family roughly $6,300. Smothering this country in debt trumps any miniscule (and temporary) tax cut that the stimulus offered. The cost of this fiasco will be passed onto citizens in the form of inflation and high interest rates brought about by insurmountable and unsustainable national debt.

As for the jobs the stimulus supposedly created, there is no tangible way to estimate the amount of jobs created or saved. Obama’s estimates are disingenuous because they imply that he has a measurement to determine this. But the simple fact is that in 2009, four million jobs were lost, not gained. More jobs have been lost than created since the stimulus was enacted.

The downward spiral continues, one year later, after the Obama administration has signed off on more government spending in a one-year stretch than in George Bush’s previous eight years combined. This will not only fail to stimulate the economy, but it will ultimately cripple the private sector, create a permanent class dependent solely on government charity, and bankrupt this country.

The founders of this country understood that only the people, when granted the freedom to act without government interference, can pull this country through hard times, not some idealistic politicians. The stimulus only proves how ill-advised and ill-informed spending can damage this country. We can only hope that we will recover in spite, and not because, of this plan.